Phenomenological Study of elite hedge funds and their management

[Dave1001]

Hedge funds are very interesting to me phenomenologically:

http://ftalphaville.ft.com/blog/2007/04/27/4159/ft-special-on-hedge-funds/

Any one else share this interest from a scientific perspective? If the human brain is the most complex or intelligent discrete biological things in the known universe, elite hedge funds may be the overall most effective outcome maximizing things with apparent agency in the known universe. Thoughts?

Good sites studying and tracking them?

[Rob Lister]

phenomenologically? I looked it up in a couple of dictionaries and still can't make heads or tails of it. Me thinks it has something to do with smoking to much of the good stuff.

[CurtC]

A guy who lived about a block from me until December, and our sons were good friends, was formerly a hedge fund manager. The SEC convicted him last year.

Doesn't directly address your point, but be careful with hedge funds because they're not very regulated.

[andyandy]

the most effective outcome maximising thing with apparent agency in the known universe.

what the....? :confused:

[andyandy]

i've also had to reach (metaphorically :) ) for the dictionary....

phenomenology
(redirected from phenomenologically)
A philosophy or method of inquiry based on the premise that reality consists of objects and events as they are perceived or understood in human consciousness and not of anything independent of human consciousness.

how do hedge funds fit into this?

[Dave1001]

andyandy, I'll answer as time allows.

Renaissance Technologies in particular seems to be the most effective outcome maximizing entity with agency in apparent reality.

http://en.wikipedia.org/wiki/Renaissance_Technologies

[Dave1001]

i've also had to reach (metaphorically :) ) for the dictionary....

phenomenology
(redirected from phenomenologically)


how do hedge funds fit into this?

I'm using the word as it's commonly used in empirical inquiry.

For example, here:

http://scitation.aip.org/getabs/servlet/GetabsServlet?prog=normal&id=JAPIAU000089000007003907000001&idtype=cvips&gifs=yes

and here:

http://209.85.165.104/search?q=cache:joQ1bDUjwMgJ:www.usuhs.mil/graded/anatomy.html+phenomenologically+genetics&hl=en&ct=clnk&cd=9&gl=us

[andyandy]

the linked articles.....

Phenomenologically derived electric field-temperature phase diagrams and piezoelectric coefficients for single crystal barium titanate under fields along different axes
A. J. Bell
Department of Materials, University of Leeds, Leeds, LS2 9JT United Kingdom

(Received 18 July 2000; accepted 4 January 2001)

The possible domain states of perovskite ferroelectrics under applied fields are reviewed and, as an illustration, a phenomenological study of barium titanate is carried out. Electric field-temperature phase diagrams, the polarization, and the lattice strain of barium titanate single crystals are calculated from the Landau–Ginzburg–Devonshire theory of ferroelectrics for applied fields up to 20 MV m–1 and for temperatures from 1 to 450 K. The calculations are carried out for fields applied along the pseudocubic [001], [101], and [111] axes, revealing the temperature and field dependence of all the ferroelectric phase transitions. Large piezoelectric coefficients can be identified close to field-induced transitions.

and

Numerous studies have shown that regulated exocytosis is activated simultaneously by calcium, guanosine triphosphate (GTP) and protein kinase C (PKC), and that this process is specifically inhibited by botulinum toxins (BoNTs). Although phenomenologically well known, the specific sites of action for these agents in the late stage of exocytosis, membrane fusion, remain unknown.

In this research project, we combined both in vitro and in vivo approaches to directly test the effects of these agents on annexin 7. Annexin 7 (ANX7) is a calcium-dependent GTP-activated membrane fusion protein. In a reconstituted membrane fusion system using artificial liposomes, ANX7 membrane fusion activity is substantially increased by the combination of individually optimal concentration of guanine nucleotide and PKC.

don't really explain the applicability of the term with regards to hedge funds.....

in fact i only understand about 1 word in 3 in both :)

[CapelDodger]

the linked articles.....


don't really explain the applicability of the term with regards to hedge funds.....

I can't fathom what is meant by it in the first example - I have it on good authority (my sister) that Leeds Uni geeks are spectacularly inarticulate, even for the breed - and in the second I'd have thought "empirically" would have suited the case. Rather more elegantly. Empiricism doesn't seem, IMO, to jibe with the dictionary definition you provided. So not much progress being made in this neck of the woods either.

[Jeff Corey]

Same here. The use of the term seems quite inappropriate given its historical usage in philosophy and psychology.

[joobz]

Same here. The use of the term seems quite inappropriate given its historical usage in philosophy and psychology.
That may be, but i've always seen it used as a fancy way of saying empirical, which is how it seems to be used in this thread.
I like how you can make a simple concept sound really really smart by using 7 syllables.

[Jeff Corey]

I've never seen phenomenology to mean empirical. Empirical means "based on reliable observation" whereas phenomenology always implied an introspective, subjective and private view of reality

[CapelDodger]

That may be, but i've always seen it used as a fancy way of saying empirical, which is how it seems to be used in this thread.
I like how you can make a simple concept sound really really smart by using 7 syllables.

There's a saying in my family, "He uses long words, like 'marmalade' and 'tangerine'." I'm blessed with irony in my nature and my nurture.

[CapelDodger]

I've never seen phenomenology to mean empirical. Empirical means "based on reliable observation" whereas phenomenology always implied an introspective, subjective and private view of reality

Dave1001 didn't do himself any favours with those citations, did he?

So anyway. Hedge funds. Crash and burn written all over it. Not even wrong (stealing from Pauli).

[Jeff Corey]

There's a saying in my family, "He uses long words, like 'marmalade' and 'tangerine'." I'm blessed with irony in my nature and my nurture.
And really long words, like "smiles".

[andyandy]

And really long words, like "smiles".

lol :D

[Dave1001]

I'm using the word as it's commonly used in empirical inquiry.


That may be, but i've always seen it used as a ... way of saying empirical,

<snip>



Same here Joobz. As I demonstrated to AndyAndy with disparate results from a few second google search.

So, fellow thread participants, I'd appreciate further discussion on proper (or utilitarian, or populist) uses of "phenomenological" be done in a new thread which I'm creating for your convenience.

[Dave1001]

Tangentially interesting press release on Simons being named Financial Engineer of the year for 2006.

http://www.iafe.org/JamesSimonsFEOY2006.htm

[CapelDodger]

Tangentially interesting press release on Simons being named Financial Engineer of the year for 2006.://www.iafe.org/JamesSimonsFEOY2006.htm (http://www.iafe.org/JamesSimonsFEOY2006.htm)

Financial Engineer. Oh my. It can't be long now, then. 2012 tops, probably much sooner.

[fuelair]

the linked articles.....



and



don't really explain the applicability of the term with regards to hedge funds.....

in fact i only understand about 1 word in 3 in both :)

In the second, it meant "we know that it works" but not how it works ("although phenomenologically well known" specific sites...remain unknown).

The first essentially says we made it work, looked at what happened and reverse engineered tables to describe it. With no further reference to phenom, They took a crystal of a compound of barium and titanium and oxygen (BaTiO3) applied current to it and stressed it to produce electrical fields and measured same.
Interestingly, (translation: I did not know this and it has useful mind inserts)
BT turns out to have useful functions in making ceramics, optics, possible superconduction, microwave work, radioactive waste storage and a few other areas. A related compound - Barium Titanite (Silicon doped BT from a quick look) has further uses . I will be spending a bit of time on my own looking into this - thanks Dave.

In case missed from two: in vitro meant "we tested the cells membranes in a cell culture" and in vivo meant " and we ran the test in something living too, so there!!"

[andyandy]

So, fellow thread participants, I'd appreciate further discussion on proper (or utilitarian, or populist) uses of "phenomenological" be done in a new thread which I'm creating for your convenience.

oh goody....dave1001 is back to tell everyone exactly what he wants discussed in his threads....

:rolleyes:

how about actually expanding on your initial assertion?

elite hedge funds may be the overall most effective outcome maximizing things with apparent agency in the known universe

[fuelair]

oh goody....dave1001 is back to tell everyone exactly what he wants discussed in his threads....

:rolleyes:

how about actually expanding on your initial assertion?

I would have thought he would have known better about that option by now. Sigh.
All together now" Dave picks the topic, we discuss it however we want too and guide it wherever we wish within (more or less) the forum rules!! And since this isn't CT, that's more less than more more!.:D :D

[Dave1001]

how about actually expanding on your initial assertion?

Great idea. I'll do so as time allows. But I welcome people posting contradicting assessments while I write that post.

[Cuddles]

Great idea. I'll do so as time allows. But I welcome people posting contradicting assessments while I write that post.

Has anyone worked out what we're supposed to contradict yet?

[Dave1001]

Has anyone worked out what we're supposed to contradict yet?

As AndyAndy quoted in post #21:


elite hedge funds may be the overall most effective outcome maximizing things with apparent agency in the known universe

[CapelDodger]

As AndyAndy quoted in post #21:


elite hedge funds may be the overall most effective outcome maximizing things with apparent agency in the known universe


"Thing" is such an ugly word, don't you think? It reeks of Anglo-Saxon brutishness. "May", on the other hand, is mellifluous and subtle.

Elite hedge funds may be the next financial delusion to tank like the dot-con fiasco. I am strongly of that opinion. (I'm convinced that they're a financial delusion, I'm just not convinced another one won't tank first.)

What's your opinion?

[Ziggurat]

the most effective outcome maximizing entity with agency in apparent reality.

I know the definition of every word used in this sentence. And the words seem to be assembled in a grammatically correct fashion. And yet, I cannot parse any meaning from this sentence.

Or, to put it more bluntly, what the hell are you talking about?

[Dave1001]

"Thing" is such an ugly word, don't you think? It reeks of Anglo-Saxon brutishness. "May", on the other hand, is mellifluous and subtle.

Elite hedge funds may be the next financial delusion to tank like the dot-con fiasco. I am strongly of that opinion. (I'm convinced that they're a financial delusion, I'm just not convinced another one won't tank first.)

What's your opinion?

Well, I'm really only talking about elite hedge funds, as in the title. Elite dot coms didn't crash: they're now some of the most valued, profitable, and highest earning corporations in the world. As for whether or not the industry as a whole will crash, honestly, I don't know. Really we're talking about entities focused on maximizing growth of capital through investment -the elite hedge funds are just the biggest and most successful at doing that. But what they're doing isn't different in principle than the various European West and East India corporations of the 17th century, and what Roman, Germanic, and Indian subcontinent based prot-companies did 1,000+ years earlier.

(Sorry if this post doesn't read too clearly, I'm also prepping for an Evidence final exam).

[Cuddles]

As AndyAndy quoted in post #21:

And as Ziggurat quoted in post #27:
What the hell are you talking about?

"Maximising things with apparent agency"? That is not English. Please translate.

[Big Les]

What a thoroughly confusing and frustrating thread. I'm beginning to see why Dave feels the need to fend off ad hominems in his signature.

[Dave1001]

What a thoroughly confusing and frustrating thread. I'm beginning to see why Dave feels the need to fend off ad hominems in his signature.

Thank you, Big Les.

[joobz]

Well, I'm really only talking about elite hedge funds, as in the title. Elite dot coms didn't crash: they're now some of the most valued, profitable, and highest earning corporations in the world. As for whether or not the industry as a whole will crash, honestly, I don't know.
So, we are only to consider the successful ones? How can we know which these are unless they have time to prove themselves? Remember that amazon didn't look much different than any other dot com in the beginning. It was in the red for quite some time.

Really we're talking about entities focused on maximizing growth of capital through investment -the elite hedge funds are just the biggest and most successful at doing that. But what they're doing isn't different in principle than the various European West and East India corporations of the 17th century, and what Roman, Germanic, and Indian subcontinent based prot-companies did 1,000+ years earlier.
exactly. So, if the hedge fund concept is truly the best thing since sliced bread, the overall performance of the entire hedge fund industry should be successful. Otherwise, if we only consider the "elite" ones, then we are simply looking at a group of investors who got lucky. No different than any other investment strategy.

[Dave1001]

So, we are only to consider the successful ones? How can we know which these are unless they have time to prove themselves? Remember that amazon didn't look much different than any other dot com in the beginning. It was in the red for quite some time.

exactly. So, if the hedge fund concept is truly the best thing since sliced bread, the overall performance of the entire hedge fund industry should be successful. Otherwise, if we only consider the "elite" ones, then we are simply looking at a group of investors who got lucky. No different than any other investment strategy.

I don't have time to give your post the answer it deserves right now. Hopefully soon.
In short
-why I'm more interested in elite hedge funds: same reason I'm more interested in cognitive performance of elite brains. Was Feynman just lucky in his cognitive accomplishments versus most people (or even most physicists?) Or was there something qualitatively different about elements of his neural structures and/or methods of thought. I have a similar interest in elite hedge funds for similar reasons.
-Although, as I made clear in another thread, I'm also interested in discussing "getting lucky" vs. "most effective" and how to parse them out (to the degree possible).

[CapelDodger]

Well, I'm really only talking about elite hedge funds, as in the title. Elite dot coms didn't crash: they're now some of the most valued, profitable, and highest earning corporations in the world.

joobz has covered this perfectly adequately. Dot-con companies are still highly-valued, they're not high earners, taken as a sector.

As for whether or not the industry as a whole will crash, honestly, I don't know. Really we're talking about entities focused on maximizing growth of capital through investment -the elite hedge funds are just the biggest and most successful at doing that.

Is biggest identical with most successful? That's questionable. When you consider the leveraged investment houses of 20's Wall Street (the financial delusion de jour) the biggest went the most spectacularly wrong in '29. Success is never absolute, it just says "not dead yet".

(Warren Buffet excepted, of course. A remarkably insightful and enlightened individual.)

The industry will crash, and quite soon. Hedge funds are already investing in the hedge-fund sector, which is a classic sign. The industry is seeking (and finding) celebrity to get Joe Public's dollar behind the lever. At this point elite capital is being withdrawn discreetly.

But what they're doing isn't different in principle than the various European West and East India corporations of the 17th century, and what Roman, Germanic, and Indian subcontinent based prot-companies did 1,000+ years earlier.

It's very different in principle. Companies in those days were brought together for practical purposes, by practical people. The South Sea Bubble is the appropriate analogy for hedge funds. The Dutch and British East India Companies existed to put real fabrics, spices, and porcelain on real markets at a humungous mark-up. Hedge-funds are triumphantly un-real; undistracted by detail they can treat any graph as just another mathematical entity.

Graphs have no predictive power if they're not interpreted. Certainly not where human affairs are concerned.

[chriswl]

If the human brain is the most complex or intelligent discrete biological things in the known universe, elite hedge funds may be the overall most effective outcome maximizing things with apparent agency in the known universe. Thoughts?
Don't hedge funds hedge? That is they track, control and compensate, rather than maximise. They are elaborately engineered regulatory control systems. As such, I doubt they compare with the most complex examples of this sort of thing in nature.

[Kaylee]

When you are finished with your exams and you have time to study this area, be sure to include the federal govt.'s bailout of the Long Term Capital Management hedge fund in September 1998 to the tune of over $3.6 billion dollars.

The US govt. was not required by law to bail them out, but practicalities forced them to.

Sometimes when you are so big, others are forced to keep you propped up, or else they will be crushed by your fall.

I'm not sure this is still the same situation for hedge funds today, but before you come to any conclusions, I think this is an area that should be considered.

Links:
http://www.gametheory.net/News/Items/002.html (http://www.gametheory.net/News/Items/002.html)
http://www.luc.edu/orgs/finroundtable/statement99.html

[Eos of the Eons]

Excuse my ignorance, but is this anything like the Portus (formerly known as Paradigm) funds a past boss of mine sold to all her richest clients, that ended up with all their funds getting frozen while the owner went through the courst system?

I found it quite humorous, as my boss was a female version of Hitler who treated anyone "beneath her" like complete crap.

http://home.att.net/~fcwriter/news49.htm

http://www.rgm.com/articles/torontostar.com.html

The marketing material for the funds made them look like they were 100% safe, and you'd make sooo much profit. I had to raise my eyebrows at the minimum investment required (tens of thousands of dollars). But, it was supposedly easy money, and all risk-free!

My boss sold them to anyone with 10 grand or more to throw around.

Portus in return spoiled my boss with so much free stuff, like free booths to advertise in at trade shows, and gift certificates to put clients' names in a draw to win, etc.

It all seemed so unethical. I'm so relieved I quit that job just before the funds were frozen and Portus had some questions to answer.

http://forum.advisor.ca/thread.jsp?forum=5&thread=114&start=45&msRange=15

Note the discussion about insurance and the BancNote Trusts series in the above link.

I wish I had kept some of their marketing materials. They truly were too good to be believed, and they actually were too:

Portus offered more lucrative compensation compared to other products. But, more importantly, it offered the lure of something even rarer at that time - an investment with big potential but low risk if held to maturity.


http://www.ndir.com/SI/funds/05162005.shtml

They also spoiled and pampered any financial advisor willing to try to sell them like hotcakes.

[CapelDodger]

When you are finished with your exams and you have time to study this area, be sure to include the federal govt.'s bailout of the Long Term Capital Management hedge fund in September 1998 to the tune of over $3.6 billion dollars.

I guess that disqualifies LTCM from "elite" status :) .

The US govt. was not required by law to bail them out, but practicalities forced them to.

Sometimes when you are so big, others are forced to keep you propped up, or else they will be crushed by your fall.

If you owe the bank a million and can't pay it, you're in trouble. If you owe them a billion and can't pay it, they're in trouble.

[Kaylee]

I guess that disqualifies LTCM from "elite" status :) .
:) Certainly the way Dave intended, I think.

But then again as you say ---



If you owe the bank a million and can't pay it, you're in trouble. If you owe them a billion and can't pay it, they're in trouble.

They were in a position to get special treatment. :rolleyes:

Another interesting link:
http://www.sjsu.edu/faculty/watkins/ltcm.htm

Two of the founders were Nobel prize winners. I would love to hear their reasoning as to why they invested so much money in Russian investments that it put them into financial jeopardy.

[CapelDodger]

They were in a position to get special treatment. :rolleyes:

There's another old saying in the City : "If you're going to put your hand into the cookie-jar, then put it in up to the elbow".

Two of the founders were Nobel prize winners. I would love to hear their reasoning as to why they invested so much money in Russian investments that it put them into financial jeopardy.

I know this one!

The Russian bonds weren't like other bonds, but the Russians didn't say so until they defaulted on them. The formulae weren't wrong, they were just being applied to the wrong thing. Therefore the Nobelists - who were not executives - were still entitled to eight-figure bonuses for the year. I never found out if they got them; about this point in the story I always start giggling uncontrollably ...

You and I would think, Russian bonds? Not your ordinary bond, are they? No track-record, no reputation to maintain, Yeltsin to blame - even before he was dead. The only way you want to get in there is selling them on commission. The vig will be sweet, even after the 3% kickback - and you can earn fees for placing that. (Not in Russian bonds, obviously. The Russian maffia doesn't do irony, from what I've heard.)

[CapelDodger]

They also spoiled and pampered any financial advisor willing to try to sell them like hotcakes.

That's some kind of cookie-jar. "Hey, nice car!" Bish-bosh, you've got one. "Kids today, eh?, it's all 'Playstation' this and 'Plasma TV' that" and as if by magic ... Holiday? "You must use our place in Acapulco, we're so seldom there and the staff get lonely ..."

Not that I ever got a sniff of it directly. Plenty of snorts of it indirectly :) .

[Dave1001]

I'm not ready to comment on LTCM due to final exam period time constraints, other than to say (in contradiction to Capel Dodger and Kaylee) that their failure doesn't mean that I don't think they were an elite hedge fund. Nor does it mean that they weren't part of a cohort that are the best known "outcome maximizing things with apparent agency" (as I wrote in the OP). Just like an efficient market can be a better future predictor than an individual expert and still make incorrect predictions, elite hedge funds may be better outcome maximizers (in terms of resources under control of the fund) than anything else with agency and yet still fail on a regular basis.

[joobz]

I'm not ready to comment on LTCM due to final exam period time constraints, other than to say (in contradiction to Capel Dodger and Kaylee) that their failure doesn't mean that I don't think they were an elite hedge fund. Nor does it mean that they weren't part of a cohort that are the best known "outcome maximizing things with apparent agency" (as I wrote in the OP). Just like an efficient market can be a better future predictor than an individual expert and still make incorrect predictions, elite hedge funds may be better outcome maximizers (in terms of resources under control of the fund) than anything else with agency and yet still fail on a regular basis.
I have to admit the langauge you use is too vague for me to get any read on.

"Outcome maximizing?"... This is a strange "thing" to compare. WHat kind of outcomes are we considering? Any? Then isn't evolution trumping this for shear fortitude/robustness? OR what about multivariant model predictive controllers used in the specialty chemical industries. High efficiency/ highly reproducible batch to batch yields can be obtained on complex polymerization reactions using rapid and delay based measurement methods. Out would call this the state of the art in "outcome maximization" But again, what KIND of outcomes are you considering?

[Dave1001]

Significant to this discussion. Not to brag but I think it does make me look a bit prescient:

http://money.cnn.com/magazines/fortune/fortune_archive/2007/05/14/100008848/

[Dave1001]

I have to admit the langauge you use is too vague for me to get any read on.

"Outcome maximizing?"... This is a strange "thing" to compare. WHat kind of outcomes are we considering? Any? Then isn't evolution trumping this for shear fortitude/robustness? OR what about multivariant model predictive controllers used in the specialty chemical industries. High efficiency/ highly reproducible batch to batch yields can be obtained on complex polymerization reactions using rapid and delay based measurement methods. Out would call this the state of the art in "outcome maximization" But again, what KIND of outcomes are you considering?

All good points, which is why I had the qualifier "with apparent agency" in the OP. Because I think hedge funds do act with apparent agency (there's a decision-making process, weighing of options). Of course I don't know if hedge funds (or humans, or any natural phenomena) have actual agency. Sorry for the abbreviated reply but I'm in a super-busy period.

[dogjones]

Daaaaaaave1001 drankabuggerloadarum
With “Hedge Fund!” on the label,

Heidegger, Heidegger was a boozy beggar… etc