Three guys start a hedge fund in Brooklyn. Only one problem. Nobody knows what a hedge fund is. Think, “American Psycho,” but funnier. In this opening episode, Claude overhears Dickerson and VanMeter talking cars and money and decides he can have a hedge fund, too. Which is good because he’s going to need a new career after getting fired from his job as a waiter by Jackie, who vaguely resembles and sounds like Chrystia Freeland.

VanMeter: “What are you doing next weekend?”

Dickerson: “I’m gonna be in Sardinia, uh, 500-foot yacht. Call me on my sat phone if you need anything.”

VanMeter: “I can’t, I’m gonna be in space.”

Dickerson: “F**k you.”

VanMeter: “For real. I got the first civilian ticket on the new Chinese space program’s shuttle. You know in space they let you wipe your ass with hundred-dollar bills.”

And on like that. First in a series, apparently. Good for a giggle.

Former Goldman trader Joe Nelson is on a one-man moral mission to kit men out with custom-fit condoms.

“An ex-client, a quite vocal one, told me that I’ve gone from working for a bunch of knobs to working with a bunch of dicks,” Nelson tells Reuters. (more…)

If you don’t know any better, an article printed in a well-established financial rag may go unquestioned in your mind. The Wall Street Journal, Economist, Financial Times, and so on may seem above reproach, and the real-time commentary seen on CNBC and BCNN may seem like the best reporting the world has ever seen.

Until you start to think about what’s being said… and that’s where this week’s newsletter comes into play.

If you follow our blog, you know we tend to slam the financial media quite a bit. It doesn’t help that several of the folks in our office revel in the opportunity for a good debate, but we do try to be selective about the fights we pick. It usually happens when someone says something so factually disconnected from reality that we would feel irresponsible letting the piece go unrefuted, and, truth be told, we could probably get up on our soap box far more often than that.

Let us be clear- we don’t hate everyone in world of financial media. We don’t think all financial press are incompetent. In fact, over the past several weeks, we’ve been pretty impressed with several journalists who have called to inquire about the MF Global scandal, the futures market, and what the whole mess means for investors. We also are not trying to discourage anyone from reading coverage of the markets or investing world; knowledge is power.

That being said, the pursuit of knowledge from the financial media still requires some diligence on the reader’s behalf. Most of the time, mistakes or bias inserted by authors are not intentional (at least, that’s what one has to hope), but their presence means that investors need to cultivate and filter their media consumption. Doubt what we’re saying? Well, that’s a step in the right direction. Let us explain…

Click here to read the full piece.

To read more Managed Futures research pieces, visit Attain’s Managed Futures Newsletter archive and our Managed Futures Blog.

DISCLAIMER

Forex trading, commodity trading, managed futures, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.

The entries on this blog are intended to further subscribers understanding, education, and – at times- enjoyment of the world of alternative investments through managed futures, trading systems, and managed forex.  Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts.

The mention of asset class performance is based on the noted source index (i.e. Newedge CTA Index, S&P 500 Index, etc.) , and investors should take care to understand that any index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices:  such as survivorship and self reporting biases, and instant history.

Managed Futures Disclaimer:

Past Performance is Not Necessarily Indicative of Future Results. The regulations of the CFTC require that prospective clients of a managed futures program (CTA) receive a disclosure document when they are solicited to enter into an agreement whereby the CTA will direct or guide the client’s commodity interest trading and that certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA.

Copyright © 2011 Attain Capital Management, licensed Managed Futures, Trading System & Commodity Brokers. All Rights Reserved. Reprinted with permission.

At the opposite end of the Madoff Meter from Bernie’s Red Zone are these clowns.

Twenty-five years ago today, Sports Illustrated and George Plimpton pulled what may be the greatest April Fool’s gag ever. To me, anyway, it’s the gold standard, and will likely never be duplicated. Google gave it a shot today, but there will never be another Sidd Finch

Read it here: http://sportsillustrated.cnn.com/vault/article/magazine/MAG1119283/index.htm. Enjoy.

I often encounter this quote, and I often wonder about its provenance. In fact, in the eight years now over which I have had the privilege of writing for HedgeWorld, I have repeatedly been tempted to quote it. But I never have, and I’ll now divulge the reason.

It is supposed to have been John Maynard Keynes who said, as a warning to traders looking for a quick buck on some return-to-normalcy theory: “The markets can stay irrational longer than you can stay solvent.”

The words sound like hard-earned wisdom. Indeed, if they came from Keynes, they were. It was in May 1920 that he lost disastrously on currency speculation. His brokers were rather lenient with him and at one point allowed him to meet a margin call by pledging to them the future proceeds of his then new book, The Economic Consequences of the Peace.

But did he actually say this? I google the phrase and arrive easily at 226 sites where he is quoted to this effect. I have not, I confess, thoroughly chased down each of the 226 references. But when I do go to any one of them and look for the primary source in the old-fashioned fact checker’s sense – a book with his name on the title page in which that sentence appears, or a collection of letters, or perhaps the name of a student of his who first heard it from his lips – some Boswell for this Johnsonian aphorism — I come up empty every time.

This source takes it from that source who takes it from another, and so forth.

So I put it to you, dear reader. Does anyone know the origin of this felicitously worded expression?

Aphorisms can remain mysterious longer, perhaps, than I can remain curious.

I was astonished in recent days to learn that David Einhorn and his Canadian counsel, the distinguished R. Paul Steep, have been tripped up by what may be the most basic, and the best-known, principle of evidence in the common-law world: the exclusion of hearsay.

But there it was in black and white: Justice Katherine Swinton in a lecturing mode. Ontario’s corporate law is somewhat different from that of the state of Delaware, so phrases such as “oppression application” may sound odd on the sunnier side of Niagara Falls. Nonetheless, the rules of evidence are very much the same in Canada as in the United States, and for that matter in the mother country we share.

Hearsay is “an out of court statement offered for the truth of the matter asserted.” As such it isn’t admissible unless there is a good reason why it should be, and there are certain narrowly-defined good reasons, or exceptions, to the general rule of exclusion.

Greenlight sought to establish that as reasonable stockholders they would have expected that the role of one of their portfolio companies in one of its portfolio companies was to be relatively passive. Why was this expectation reasonable? Apparently because two representatives of the issuer, MID, had told a Greenlight figure, Venit Sethi, exactly that.

What if Sethi had prepared an affidavit saying, “They told me they weren’t going to bet on the horses”? Would that affidavit itself have constituted hearsay? No. It would have been the repetition of an out-of-court statement, but that statement would not have been offered for the truth of the matter asserted. It would have been offered in order to show something about the reasonableness of Mr. Sethi’s subsequent expectations, i.e. that he reasonably believed they thereafter weren’t going to bet on horses. That sort of thing is not hearsay, and when reasonableness is an issue in dispute, it is admissible.

The crucial point though is that Mr. Sethi didn’t sign any affidavit. According to the two judicial opinions now available: Mr. Einhorn signed an affidavit. This document said, in effect, “Mr. Sethi told me that they told him that they weren’t going to bet on the horses.” This was in fact offered for the truth of the matter asserted. Messrs Einhorn and Steep presumably wanted the court to infer that MID honchos had in fact told Mr. Sethi this. By definition, then, it was hearsay.

Mr. Steep, by the way, isn’t some straight-out-of-law-school greenhorn. He’s been a member of the Ontario bar for a quarter of a century. He recently spent four years as the chair of his law firm’s litigation group. I’m certain he knows the hearsay rule, which is precisely why I repeatedly sought to speak to him while working on a story on the case. Unfortunately, that conversation didn’t happen.

I have to suspect, in lieu of any other more plausible inference, that Mr. Steep was engaged in client management when he submitted Mr. Einhorn’s affidavit. He may have known he had a losing case on his hands, but wanting to seem to be earning his fee, he went through the motions anyway – and this hopelessly hearsay affidavit was a result.

I’m a big admirer of activist investors – both as a hedge fund strategy and, for that matter, more generally. Activism, even when it comes to the point of litigation, is an affirmation of the plain and vital truth that it is the shareholders who own the company, and that the managers work for them: all of them, of however large or small a stake.

Still, litigants in such a cause must expect to abide by the rules, especially rules that go back centuries. I wish the position into which Messrs Einhorn and Steep have worked themselves didn’t seem as untenable as it does. But it does.

As a confused nation searches for real satire and irony, once again, The Onion gets it exactly right.

Recession-Plagued Nation Demands New Bubble to Invest In.

“What America needs right now is not more talk and long-term strategy, but a concrete way to create more imaginary wealth in the very immediate future,” said Thomas Jenkins, CFO of the Boston-area Jenkins Financial Group, a bubble-based investment firm. “We are in a crisis, and that crisis demands an unviable short-term solution.”

The entire story is suitable for printing, framing and hanging on the wall next to your MBA, but I have to share these tid-bits. They’re priceless.

The most support thus far has gone toward the so-called paper bubble. In this appealing scenario, various privately issued pieces of paper, backed by government tax incentives but entirely worthless, would temporarily be given grossly inflated artificial values and sold to unsuspecting stockholders by greedy and unscrupulous entrepreneurs.

“Little pieces of paper are the next big thing,” speculator Joanna Nadir, of Falls Church, VA said. “Just keep telling yourself that. If enough people can be talked into thinking it’s legitimate, it will become temporarily true.”

We are living through times of great uncertainty, and many an investor is understandably looking askance at equities and bond markets right now. If one had invested $100 with, say, Fannie Mae or Freddie Mac at the beginning of the week, you’d be left with a little more than half that by the time Friday’s closing bell rang.

This uncertainty—as well as inflation, the swooning U.S. dollar, and a variety of other factors—has pushed more investors in recent months to put their money into gold, that time-tested way of maintaining value through times both thick and thin, in spite of the fact that owning gold outright actually costs investors money for storage.
(more…)

Last week, HedgeWorld received an anonymous tip about some executive shakeups at Highland Capital Management LP, which could suggest that hard times have befallen the asset manager. A few of the tips were right, though the firm supposedly plans to continue adding new staff in the coming months.

But our nameless detective also said Harold Siegel, a lead marketing staff member, resigned from Highland Capital. If this person had only picked up the phone or written an email or two, he or she would have learned that as of about 6:15 p.m. EST on July 2, Mr. Siegel still works in Highland Capital’s New York office. I know this because I spoke with him, and this was the first rumor he’d heard that he “left the firm.” Though he confirmed that he was himself and that he had not resigned, maybe I’ll have to look into a potential conspiracy.

But in the meantime, while it’s nice to get a heads up on industry goings on from our readers, reporters—amateur or professional—should always check their facts.