How do Hedge Funds Guarantee 20% to 30% to RICH Investors?

 

How do Hedge Funds Guarantee 20% to 30% to RICH Investors?

Simple they cheat.  The story is now unfolding with all the secrets of how huge hedge funds can both guarantee and deliver 20% to 30% short term returns to their rich investors in a market that only returns on average 7%.

Are the people behind these funds three times smarter than the people running mutual funds?  Nope! 

Federal prosecutors have released some information about how one hedge fund pulled off huge returns to investors through inside information they paid millions for.

Galleon Group produced fantastic returns by buying information from insiders.  Galleon seemed to know just the right time to buy and sell.  They seemed to have a crystal ball that told them what earnings each company would announce before the announcements.  Their crystal ball also could see into board rooms and hear information about expansion, lay-offs and other important information.

Millions were made with each trade and millions in fees were taken.  Most of these hedge funds reserved of the very rich, guarantee a 20% plus annual return and the fund takes 20% of the profits for delivering these unbelievable returns. 

The secret for Galleon was they paid off executives at consulting companies, and insiders in the companies themselves for this secret information not available to the public. 

It seems that 21 individuals are charged with insider trading in one of the biggest cases ever brought for this illegal activity.  A few have already pleaded guilty and are helping the prosecution. 

Names being thrown around as being a part of this conspiracy are McKinsey & Company, IBM, Intel and others.        

Is this the model for most hedge funds?  No one knows for sure but the question remains; how can these funds consistently produce 20% to 30% annual returns in a market that averages 7%.  This is not luck. 

Some have suggested market manipulations, pumping stocks and then dumping stocks is one way.  In this activity you buy massive amounts of a security fast driving up the price and then dump it as the market follows.  Or you spread rumors to key insiders about companies the fund has either bought or sold, causing these insiders to advise their clients to either buy or sell causing the desired market movement.  There are many other unethical and illegal activities that can move a stock in one direction.  Does this happen?  We simply don’t know because the crooks are smarter than the regulators and the regulators aren’t paying any attention.  In many cases the regulators appointed by Bush don’t think insider trading is either bad or that it should be regulated.  The SEC has looked the other way for 8 years and now we have some actual law enforcement taking place to protect the small investor.

What we should ask is what purpose do these hedge funds serve?  Do they create jobs?  No!  Do they finance new start-ups?  No!  Do they provide market stability?  No! 

They produce abnormal returns for a few rich and greedy at the expense of others.  They cause market instability and uncertainly and can cause panics and sell offs based on their powerful money trades.

In a country that is trying to promote honest work, why is this activity allowed.  Why does the SEC allow gamblers, speculators and scammer jammers to screw over the rest of us?

Those running the SEC are working for the scammer jammers and not protecting the public.  We need real live regulators that are dedicated to making sure everyone plays by the rules and stops these kinds of activities.  We need new rules that punish speculation and gambling in our markets. 

One way to help reduce these kinds of trades is to tax all trades at 5% of the value of the trade.  Most investors don’t trade daily, weekly or even every year.  Most are investors not gamblers.  This tax wouldn’t hurt them, but it would punish high volume traders, those that create instability and confusion in the markets.  

Congress should pass a bill implementing this transaction tax on all market trades at 5% of the trade value.  This would also produce an estimated $500 billion per year in revenue to help reduce the deficit.   

Many people have suggested this tax, but Wall Street, the hedge funds, the major banks and REPUBLICANS are against it.  I’m beating on Wall Street against the congress.  What do you think and what odds are you giving.