The Real Crash - 30% Of Worlds Hedge Funds to Collapse Market Braced for "Sheer Panic" Monday

Thousands of hedge funds to close, says GLG chief Emmanuel Roman

Thousands of hedge funds are on the brink of failure as the global economy contracts with unexpected severity, according to the chief executive of GLG, Europe's biggest hedge fund.

Emmanuel Roman, of GLG Partners, said 25pc-30pc of the world's 8,000 hedge funds would disappear "in a Darwinian process", either going bust or deciding meagre profits are not worth their efforts.

"This will go down in the history books as one of the greatest fiascos of banking in 100 years," said Mr Roman, who co-runs London and New York-based GLG, a former division of Lehman Brothers Holdings with assets of $24bn (£14.8bn). "There need to be some scapegoats, and the regulators are going to go hunt people. That will be good in the long run."

Well guys this is the thing, besides the eventual run on the $ I have been fearing.

This is much more serious than Traders on the Dow, both shorters and Day traders. This where the remaining majority of the worlds wealth not sold is placed.

If Europes Largest Hedge Fund believes this is about to start, and being backed up by:

His views were echoed by Professor Nouriel Roubini, a former US Treasury and presidential adviser known for his accurate prediction of financial crises, who estimated that up to 500 hedge funds would fail within months.

Well it will. Many Hedge fund Managers will take flight from the stock market now trying to liquidate any at risk stocks, and turn those funds where they can into tangible cash.

If all the hedge Fund Managers go on a Run as many private and personal investors have done recently the recent drops on the markets, will seem like good days.

In all liklihood now this out in the open this weekend, and with many who make the call on the Funds position this weekend digesting, recent events, taking leads from the worlds experts on this well I don't see how they wont start liquidating them by Friday of next week at latest.

Both men were speaking at the same hedge fund conference in London on Thursday, and Prof Roubini said he would not be surprised if the US and other countries soon had to close their stock markets for more than a week to halt descent into "sheer panic".

and further

Research from Hedge Fund Intelligence (HFI) shows that despite one of the worst months on record for credit funds, US hedge funds alone still have $1.7 trillion (£1 trillion) in assets.

Can anyone even begin to imagine only 50% of that sold off next week?

With No Buyers of the stocks?

Dow at? mmmm

5000?

4000?

2000?

Also

Highbridge Capital Management, which is majority owned by JP Morgan Chase and has $25bn under management, is axing 10 per cent of its New York-based staff and plans cuts in Europe and Asia. It will also close several funds that it believes are unsustainable during the current financial crisis.

The volatility in global stock markets has savaged the performance of some of the world’s best-known hedge funds, raising fears of a collapse in the sector, which could cause a fresh crisis in the financial system.

Big names including Deephaven, Marshall Wace, Citadel Investment Corp, Lansdowne Partners, Third Point and Harbinger, have in recent weeks sustained losses of as much as 20 per cent in some funds.

investors pulled at least $43bn (£25bn) from US hedge funds in September, according to TrimTabs Investment Research. This is nearly five per cent of the global sector’s estimated $2 trillion in total assets.

SO only 5% of the USA hedge funds have been liquidated so far, and we have seen the results without this sell off.


Source1 (and 2 are) Telegraph Uk

Source 2

Good Luck all is all I can say.

Kind & worried Regards,

Elf

Hedge Funds?

What are they?

And so what weve seen falls everywhere some might think.

Well this affects the attempted Bailouts of the US Housing Market too!

Several Democratic lawmakers lashed out Friday at hedge funds that have threatened to block attempts to renegotiate mortgages for struggling homeowners.

At least two funds, Greenwich Financial Services and Braddock Financial, have told banks that they may take legal action if loans are renegotiated in a way that hurts the funds’ financial interests.

Many hedge funds have purchased securities backed by mortgages. The New York Times reported Friday that Greenwich Financial and Braddock Financial, and possibly other funds, were resisting attempts to renegotiate the loans.

“For the hedge fund industry, which has flourished from much of the past decade, to take steps so actively in opposition to what is currently in the national interest is deeply troubling,” the letter stated.

NY Times

So it has started already, they want their money and will have people repossed, even if the banks and government attempt to stop to get their cash back!

National interest and Prime Ministers and presidents matter not, Fed Chairmans all mean nothing, this and all the Pension Funds that are not hedged is where the real power and money is.

and:

Bloodbath in Mayfair as half of all hedge funds face termination

Analysts warn that global hedge funds are facing the biggest bloodbath since their rapid expansion in the early 1990s, especially in Britain, where about half of 2,000 firms are expected to be taken over by larger rivals or liquidated.

But don't expect the funds to shout from the rooftops about their travails. They are notoriously secretive, preferring to work quietly in a sector conservatively estimated to account for around $2trn at the height of the boom.

Unlike Man, most hedge funds are not public companies and many are registered offshore, so do not have to tell us very much about their operations. Suffice to say that they take huge bets on the future direction of interest rates, currencies, commodities, bonds and shares.

UK fund, Peloton Partners, founded by Ron Beller, was forced earlier this year to admit that its flagship $2bn fund, which invested in mortgage-backed securities, was worthless. It has since been wound up.

Gaurdian

IN addition:

Industry managers are concerned that renewed market turmoil, leading to weaker performance and client redemptions, could lead to a vicious circle of selling by hedge funds.

One prime broker said the situation was "on a knife edge". "Everyone needs to keep their nerve," he added.

Financial Times

This is truly worrying, and the actual bullet that will kill the markets, not the smoking gun like the recent falls in house prIces and general Stocks.

Because of their hidden nature and secretive basically very lightly regulated nature I have been for want of a better term terrified of this. Unless you know much about economics have a peek at the below to get a grasp of what has been hidden til now, and probably will start unravelling properly, in plain sight so to speak on Monday's opening:

As the name implies, hedge funds often seek to offset potential losses in the principal markets they invest in by hedging their investments using a variety of methods, most notably short selling. However, the term "hedge fund" has come to be applied to many funds that do not actually hedge their investments, and in particular to funds using short selling and other "hedging" methods to increase rather than reduce risk, with the expectation of increasing return.

Hedge funds are typically open only to a limited range of professional or wealthy investors. This provides them with an exemption in many jurisdictions from regulations governing short selling, derivative contracts, leverage, fee structures and the liquidity of investments in the fund.

The assets under management of a hedge fund can run into many billions of dollars, and this will usually be multiplied by leverage, meaning that their influence over markets is substantial. Hedge funds dominate certain specialty markets such as trading within derivatives with high-yield ratings and distressed debt.

Source


In a nutshell all the Hedges against risk they have taken,

Diverse stocks & emerging markets

A BIG LOSS so far

Currency

A BIG LOSS so far

Mortgage Backed Securities

A HUGE LOSS

Art Wine Alternative Investments

Slight gain

OIL futures

A Big Loss

GOLD

A HUGE RISE.

All of the hedges against risks have produced huge losses which are getting worse. In many countries due to stock market closures etc and bans they cant regain this from Shorts etc.

What do you think they are going to do next week?

SELL SELL SELL

Give us the $ will be the motto, which will then lead to that being invested in alternative or Defensive things such as gold, which will speed up the Deflation of the Dollar.

Honestly guys weve seen the lion roar for a while now, it has been circling us and getting closer, but this will kill the markets and maybe even countries over the coming weeks.

Again I cant say this strongly enough this is when the true crash will occur, and it seems like its days away from starting.

Kind regards,

Elf.

This sounds about right, they were bound to be the next thing that crashed. Hedge funds were one of the main causes of the original loss of confidence in the stock market because they kept short selling. Countries had to ban short selling to stop ( almost exclusively) the hedge funds from crashing the markets.

The fact that an investment system like 'hedge funds' was allowed to be developed and become so big shows how stupid this system of capitalism is.

I'm not sure if this adds to your thread or not, but there are articles coming up that support what your thread said.

TEL AVIV -- California Public Employees Retirement System, the largest U.S. pension fund, is selling stocks to ensure it has enough cash to meet obligations to private-equity firms and real-estate partners, The Wall Street Journal reported on Saturday. Calpers had $188.8 billion under management as of Wednesday; it normally keeps less than 2% of its assets in cash but has had to raise that level, the Journal reported. The Calpers board's investment committee met last week to discuss ways to raise cash, people familiar with the matter told the paper.

www.foxbusiness.com...

Originally posted by MischeviousElf

Emmanuel Roman, of GLG Partners, said 25pc-30pc of the world's 8,000 hedge funds would disappear "in a Darwinian process", either going bust or deciding meagre profits are not worth their efforts.

"This will go down in the history books as one of the greatest fiascos of banking in 100 years," said Mr Roman, who co-runs London and New York-based GLG, a former division of Lehman Brothers Holdings with assets of $24bn (£14.8bn). "There need to be some scapegoats, and the regulators are going to go hunt people. That will be good in the long run."

Did New York-based GLG break up with Lehman Brothers long before it went bankrupt on the advice of Mr Roman who can see so clearly the future developments?

with the many Hedge Funds liquidating their holdings of MBS (mortgage backed securities) at least the 9 major banks, with unlimited Federal Funding & $ guarantees,
will swoop down on these securities available at dirt cheap prices, as the Hedge Funds get terminated by lack of funds to meet margin requirements.


talk about following the 'roadmap' ...
the BoA, GS, JPM and others who are sitting on 'rescue program' Billion$
have the ready cash to absorb the fallen Hedge Funds assets.

Let the Hedge Funds burn to the ground. I applied for a job once at Citadel Investment Group and they totally blew me off. They wanted only PhDs in Physics and Mathematics for quantitative analysts and financial engineering positions. I wasn't brainy enough for them, but I was smart enough not to lose everything in these challenging times.

In retrospect, I don't think it was brains they were looking for, it was people who were amoral enough to carry on a lie to the bitter end.

Ha! Total destruction of their livelyhoods is what all those brains got you.

[edit on 26-10-2008 by bruxfain]

[edit on 26-10-2008 by bruxfain]

Hedge funds problems were the beginning of the bank foldings in Iceland back in April.Hedge funds are in all probability headed for a fall.
My main worry is when all these Treasury notes that are out there mature.
That's when TSHTF.

Originally posted by bruxfain
I applied for a job once at Citadel Investment Group and they totally blew me off.

Citadel is in serious, serious trouble right now. Don't be surprised to see them go boom real soon.

Originally posted by bruxfain
Let the Hedge Funds burn to the ground. I applied for a job once at Citadel Investment Group and they totally blew me off. They wanted only PhDs in Physics and Mathematics for quantitative analysts and financial engineering positions. I wasn't brainy enough for them, but I was smart enough not to lose everything in these challenging times.

In retrospect, I don't think it was brains they were looking for, it was people who were amoral enough to carry on a lie to the bitter end.

Ha! Total destruction of their livelyhoods is what all those brains got you.

Anyone has the guts to endorse what the OP title says about Monday?

If 30% of world hedge funds will collapse, what impact would this have on DJIA before the trading closes on Monday? Where will DJIA close point-wise?

"Sheer panic" is a very broad term to describe an activity. Sounds like someone is hedging his prediction.

Originally posted by stander
If 30% of world hedge funds will collapse, what impact would this have on DJIA before the trading closes on Monday?

If nearly a third of the hedgies collapse in a matter of days?

Kaboom.

Nouriel Roubini is calling for this as well.

Oct. 23 (Bloomberg) -- Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said.

``We've reached a situation of sheer panic,'' Roubini, who predicted the financial crisis in 2006, said at a conference in London today. ``There will be massive dumping of assets,'' and ``hundreds of hedge funds are going to go bust,'' he said.

The markets may have to go on "vacation".

Indeed, we have now reached a point where fundamentals and long term valuation considerations do not matter any more for financial markets. There is a free fall as most investors are rapidly deleveraging and we are on the verge of a a capitulation collapse. What matters now is only flows - rather than stocks and fundamentals - and flows are unidirectional as everyone is selling and no one is buying as trying to buy equities is like catching a falling knife. There are no buyers in these dysfunctional markets, only sellers and panic is the ugly state of this destabilizing game.

Source

He has predicted this entire fiasco. I would keep a close eye on the markets over the next 2 weeks - particularly AFTER the election.

Originally posted by bruxfain

In retrospect, I don't think it was brains they were looking for, it was people who were amoral enough to carry on a lie to the bitter end.

That is exactly why I changed my major from finance and accounting to philosophy.

I realized that even though I was at the top of my class in terms of grades, I did not have what it took to really make it to the top in the business world. It truly isnt brains they are looking for. It is unscrupulousness.

So now it is the hedge funds. I feel bad for all the people who have been sitting on their stocks hoping to ride it up again. I have retired neighbors and this is devastating to them, but they were going with the traditional wisdom of not selling after a dive. Thats what all the "experts" were advising.

I myself bailed out September 19 on the rally. I did get caught in the initial mess, but I decided to cut my losses and get out early. I dont ascribe to the "dont sell on a loss" wisdom if my gut tells me we are headed for a rollercoaster I dont have the nerve to ride. I just get off.

Peter Shiff on Glenn Beck Friday

www.youtube.com...

IF the hedge funds go, not only the dollar, but bonds will be right after it. I put over a 3rd of my 401k and other investments in to bonds since they are "safe" (well safer then stocks) early this year when this started. Those bonds have actually grown a bit about 1% in all this. Alot of people hold bonds of one type or another in addition too, or in lieu of stocks and other investments, because traditionally bonds are (traditionally) much safer.

Has anybody got a handle on the overall assets in Hedge Funds - levered up?

The number I hear being tossed around is $150 Trillion.

Thx, JK

Jesus... I'm glad I went out and stocked up on food, as well as bought silver & gold. THANK YOU GUYS here on ATS if this does happen, because I'm now prepared for it because of you. Now I need to get my firearms license and a rifle so I can hunt if need be, if it gets that bad.

S&F too, great work and awesome thread!

[edit on 26-10-2008 by JipStix]

Originally posted by anachryon

Originally posted by stander
If 30% of world hedge funds will collapse, what impact would this have on DJIA before the trading closes on Monday?

If nearly a third of the hedgies collapse in a matter of days?

Kaboom.

I go by the OP title. I know that that banks and investment firms are run by an increasing number of incompetent cretens who contradict each other whenever their open their mouth.

Do you really believe that those idiots who messed up so badly have something to say that is even close to the reality?

Hedge funds use fancy ways to make money: These dudes say that they can make a buck by betting on a share price going down. Well, they had to amass considerable wealth since September 1, 2008. But now I hear that they are in trouble. Why? Because they are imbeciles by birth.

Btw, how much money is left in hedge funds piggybank? They won't tell you. They always tell you something that ain't worth sh-t.

So I have a honest question here. So when this doesn't come to fruition tomorrow and things just drop a like it has been, What are we going to claim to be the next big thing according to everyone.

I mean isn't everyone just getting a little tired of "the sky is falling" routine we have been hearing for the last month and a half.

I guess my biggest question is this. What makes this claim and more correct than the others? Why is it i should take this claim as serious when the 50 or so other predicted collapses have not happened?

I guess im just getting a bit tired everyone teeling us everything is about to go to hell, and scare the crap out of everyone and then nothing happens.


So please someone tell me what makes this prediction the one thats going to come true, and not just another failed claim like the last 50 or so i've seen.

[edit on 10/26/0808 by Trayen11]