Do you know that Hedge funds serve no useful purpose except to make extremely rich people even richer?

Question

put a million or more in a hedge fund and all the money is put together to hedge(bet) on an issue. It can be to go up or down.
The sheer size of the fund guarantees you win because you out bid the other side regardless of the merit. (like bluffing in poker)
These funds should be taxed at a 75% rate as it is really play money and creates no jobs, products nor research. The new tax money could feed and shelter all hungry and homeless people in the USA, No more homeless begging on the streets and no more food stamps.

Answer 1

Yah, and Bill Gates is rich because he stole my lunch money....

Hedge funds make bets. They make good money because only really smart people run them - some of the smartest people on the planet (Nobel Prize winners in economics, for example) - with the best resources in computers, finance theory, and information.

Most of their money is made on arbitrage - finding imperfections in the markets, and making money "fixing" them. They do this millions of times a day, and make a little bit each time, which adds up. In other words, hedge funds make most of their money making the financial markets more efficient (more accurate). Thus, yes, they actually make the world better.

I've got a better idea - let's take 100% of all the money from all the rich people, feed the homeless, and see how much better the world is. Oh, wait, that's already been tried...it's called Communism.

If you think that's such a great idea, move to North Korea and starve to death. Don't live in a country that gives you wealth and freedom, and then criticize its very foundation. What an ingrate. Wealth creates inequality. Live with it.

Answer 2

You really don't understand hedge funds at all if you think that the sheer size of the fund guarantees you will win. Many hedge funds lose money. It is hard to discuss a subject with you when you appear to have no understanding of how hedge funds operate. Read up about them, and when you understand them better, come back here and pontificate.

Answer 3

You could drive a Mack truck through the holes in your statement.

1. Your generalization of how hedge funds operate is way off point.

2.There are no guarantees. Generally speaking, the larger the fund, the more difficult it is to earn high returns.

3.It isn't play money. Unless you think education and pension funds are play money. I guess you're right, who needs any of that?

4. Hedge funds pay little kids to count their money and pay them 25 cents a day. These jobs had to be created.

To recap: You're wrong.

Have a nice day :)

Answer 4

Have you always been a cynic? I am in the middle income bracket and by no way can be considered wealthy. Some of my retirement is in hedge funds. The poor, hungry, homeless, uneducated, unmotivated, mentally ill, addicted, and unfortunate will always be there. We spend millions helping them. It will never get better. Robbing from those who have to give to someone else will make this economy collapse. But if you would like to take care of me with your money I suppose I would not object.