Life is “solitary, poor, nasty, brutish, and short.” Thomas Hobbes might say the same about life in the stock market for hedge fund managers. The mortality rate found in the hedge fund world is extremely high; it is an ecosystem that is filled with predators and would-be predators. By mid-2007, an estimated 9,700 hedge funds controlled approximately $1.7 trillion in assets. According to Hedge Fund Research, 1,518 launched in 2006 and nearly as many called it quits. The battle for investment survival mirrors Hobbes’ State of Nature found in his …

Bear Stearns plunges amid trade risk worries – Bear Stearns (BSC) was a pathfinder in the securitization of mortgages, but its over-reliance on mortgage-backed securities led to big losses in a couple of its hedge funds. Now external hedge funds, clients of its prime brokerage, are fleeing in droves for fear the bank lacks sufficient cash or liquidity. Oh how our mighty investment banks have fallen. Funny how the top in these stocks coincided with record numbers of MBAs coming out of our business schools to join the likes of …

Since my current work is in new media and social networking, I am keenly interested in the turbulence facing the newspaper industry. Clients, ranging from Fortune 2000 companies to small innovative startups, come to my team at SocialOptimize to gain an understanding of the new media landscape and to develop an actionable strategy for building a meaningful presence in social networks. They ask about their traditional marketing budgets and I tell them that we will see the disappearance of many old model newspaper, radio, and television companies as they struggle …

As a Boston Red Sox fan (a long-suffering, loyal fan I might add), I’ve watched nervously Gary Sheffield‘s at-bats against my favorite team. Ever since moving over from the National League, he’s been a threatening presence at the plate against my boys from Boston, especially when he played for the hated New York Yankees. Only after John Henry, a wealthy hedge fund manager, bought the Red Sox and instilled a philosophy of scientific management based on sabermetrics did the Fenway Faithful enjoy the team’s recent dominance over the …

Two finance professors from UCLA and the Helsinki School of Economics released a study exploring the correlation between individuals prone to getting speeding tickets and the tendency to churn investment portfolios. They conclude that an average investor’s portfolio saw an 11 percent increase in the turnover ratio for each additional ticket received. This is a highly significant finding according to statistical methods.
A couple of possible explanations the academics propose are overconfidence and thrill seeking behavior. Although overconfidence might play a small explanatory role, they find that the trait of thrill …