LBO Funds

I actually read this in the WSJ last Friday, but Marc Andreesen does a pretty good job of analyzing and explaining what it really means. The fees are the reason that private equity, hedge funds and LBO funds are making so much money. The profits help as well, when there are profits they make billions of dollars, not hundreds of millions like they can make in normal years.

Managing a hedge fund is really my dream job, although I'm not sure how good I would be at it considering how I have been doing in my own private portfolios. But having billions of dollars to work with would seem to make things a lot easier. If you cut your losses quickly and let your winners run you should be able to make money just buying random stocks.

There are now at least two hedge funds in the small office complex I work in, one of which rents out half of the whole bottom floor of one building for the manager's personal gym, so obviously he is swimming in money. I have a hard time paying the $100 monthly fee for my gym membership, much less $20,000 a month to rent out my own personal gym.

So I believe that the hedge fund markets are getting overly saturated and profits will start to die out as there is too much money out there chasing after vanishing amounts of profit. The time to start a hedge fund was about 10 years ago - now it is too late.

Here is the link to the actual story, which you need to be a subscriber to read.