So there’s this Great
Moderation, right? And the hedge funds are part of it. Look at all of them
with their high alpha underperforming the S&P 500: in other words, by bringing
down beta to incredibly low levels. Which is all well and good, but it’s hardly
exciting. We want activist investors like Patrick
Degorce: high risk, high return! Or even, for that matter, Brian
Hunter. A bit of excitement – you can lose your money or you can double
it, treble it! And so: "Best
Ideas" funds. Which are getting a bit of a bad
rap. But the returns have to come from somewhere, right? One alternative:
just lever up before you invest in that high-alpha, low-beta fund.
But then you run the risk of losing more than all your money.