The Hedge Fund Crash of 2016

Hedge Funds Have a Bad Year, Again. Coming out of the tech crash in the early 2000s, investors everywhere were looking for a new edge. One of the trends that came out of the next decade was an increased interest in a little known structure that had been used sparingly since the 1920s, the hedge fund. Most of you are scratching your heads. “Hedge fund”, I have heard of those, but nobody has ever explained to me what they are exactly. Well, it is pretty simple, think about a mutual fund...and then remove most of the rules. Hedge funds are allowed to use much larger leverage (borrowed money). Since the borrowing restrictions are not in force, hedge funds, are allowed to take much much more risk than most mutual funds are allowed. With all the added risk hedge funds are allowed, there are restrictions. Hedge funds are only available to [...]