Among the many hedge funds disclosing recent losses is the main one run by Renaissance Technologies. Jim Simons, the spectacularly successful hedge fund manager of Renaissance, just reported that his main hedge fund has lost 8.7% so far in August. Nonetheless, in a letter to investors, he claims that "The culprit is not our Basic System" of investing (no online link yet). (According to Wikipedia, Simons’s personal compensation was $1.7 billion in 2006 and $1.5 billion in 2005.)
Hedge funds that severely restrict withdrawals may not be subject to severe challenges in the next few weeks, but others that don't routinely restrict substantial redemptions from investors may be selling parts of their portfolios — both to deleverage their investments and to raise cash to pay investors.
For the last few months, I have been developing and forward testing some statistical models to predict daily moves in the US stock market, ETFs, and some no-load, no-fee mutual funds. I noticed that in late July, my models ceased predicting moves in both the stock market and in commodities. I then completely redid the models, which have performed well in August, but they are much less consistently correct than they were in the May to mid-July period. Things have changed from the way they were from mid-2003 to mid-2007.
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