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Fortune Magazine - Is the current downturn merely a severe slump, or are we facing a second coming of the Great Depression? That’s the question everyone is asking these days. But Ray Dalio, founder of Bridgewater Associates and manager of what is now the world’s biggest hedge fund, has been preparing to answer it for eight years.
In 2001 he had his investment team build a "depression gauge" into the firm’s computer system, line by line in the code, to adjust the portfolio’s strategy and risk profile if the economy ever entered a massive deleveraging period – the kind of multiyear process that ricocheted through the world economy in the 1930s and that has eviscerated markets periodically through the ages.
Times of India – Can the wealthy trust their wealth managers any more after losing 30 to 60% of their wealth during the current global financial crisis?
The world’s top banks including brands like Morgan Stanley, UBS, Barclays and Standard Chartered operating in Asia are desperately struggling to find a suitable answer to this question.
It is interesting to see the usually suave and self-confident community of private bankers looking dazed and fearful of survival. There is already a run on deposits with some of Asia’s wealthy pulling out money from accounts of private banks. The future looks dismal. Some of the world’s top banks have either gone bust or merged with others to stave off closure.
"Professional advisers have failed to prove their worth," Peter Flavel, senior managing director of The Standard Chartered Private Bank told a conference of wealth managers in Singapore on Friday. "The players have changed in a way that was unimaginable a few months back. They will continue to change," he said.
Times of India – Often-touted as manipulative, hedge funds have been time and again blamed for indiscriminate selling and thereby pulling down the domestic stock prices even in India. But India-focused hedge funds have also been affected by the meltdown.
The big and secretive India-focused funds have booked losses to the tune of 46% in 2008 — in the process effectively wiping out the 50% returns clocked by the posted by them in 2007. Hedge funds have an aggressively managed portfolio of investments which use advanced investment strategies such as leverage, long, short and derivative positions in both domestic and international markets with the goal of generating high returns.
