Operation of hedge funds
In the initial hedging operation, the fund manager buys a put option with a certain price and term after buying a stock. The utility of put option is that when the stock price falls below the option-limited price, the holder of seller option can sell his stock at the option-limited price, thus hedging the risk of stock decline. In another hedging operation, the fund manager first chooses a certain bullish industry, buys several high-quality stocks in this industry, and sells several inferior stocks in this industry at a certain proportion. The result of this combination is that if the industry is expected to perform well, the increase of high-quality stocks will exceed other stocks in the same industry, and the gain from buying high-quality stocks will be greater than the loss from shorting inferior stocks; If the expectation is wrong, the stocks of this industry will fall instead of rising, then the decline of the stocks of poor companies will be greater than that of high-quality stocks, and the profit of short selling will be higher than the loss caused by the decline of buying high-quality stocks. It is precisely because of this mode of operation that early hedge funds were regarded as a conservative investment strategy for fund management. But with the passage of time, people's understanding of the role of financial derivatives has gradually deepened. In recent years, hedge funds have been favored because of their ability to make money in a bear market. From 1999 to 2002, the average annual loss of ordinary Public Offering of Fund was 1 1.7%, while the average annual profit of hedge funds was 1 1.2%. There is a reason why hedge funds have achieved such impressive results, and their gains are not as easy as the outside world understands. Almost all hedge fund managers are excellent financial brokers.
The financial derivatives used by hedge funds (taking options as an example) have three characteristics: first, they can leverage larger transactions with less funds, which is called the magnification of hedge funds, which is generally 20 to 100 times; When the transaction volume is large enough, it can affect the price (see figure1); Secondly, according to Lorenz Glitz, because the buyer of the option contract has only rights but no obligations, that is, on the delivery date, if the exercise price of the option is unfavorable to the option holder, the holder can not perform it. This arrangement reduces the risk of option buyers, and at the same time induces people to make riskier investments (that is, speculation); Thirdly, according to John Hull, the greater the deviation between the exercise price of the option and the spot price of the asset (specific subject matter) of the option, the lower its own price, which brings convenience to the subsequent speculative activities of hedge funds.
After hedge fund managers discovered the above characteristics of financial derivatives, their hedge funds began to change their investment strategies. They changed the investment strategy of hedge trading to manipulate several related financial markets through a large number of transactions and profit from their price changes.
At present, there are more than 20 investment strategies commonly used by hedge funds, which can be divided into the following five methods:
* (1) long position and short position, that is, buying and selling stocks at the same time, which can be net long position or net short position;
* (2) Market neutrality, that is, buying stocks with low stock prices and selling stocks with high stock prices;
* (3) Convertible bond arbitrage, that is, buying convertible bonds at a low price and shorting the stock at the same time, and vice versa;
* (4) global macro, that is, analyzing the economic and financial systems of various places from top to bottom, and trading according to political and economic events and general trends;
* (5) Managing futures, that is, holding long and short positions in various derivatives.
The two most classic investment strategies of hedge funds are "short selling" and "leverage".
Short selling, that is, buying stocks as a short-term investment, is to sell the stocks bought in the short term first, and then buy them back when the stock price falls to earn an arbitrage. Almost all short sellers borrow other people's stocks to make short positions ("long position", which means buying their own stocks for long-term investment). It is most effective to take a short strategy in a bear market. If the stock market rises instead of falling, and short sellers bet in the wrong direction of the stock market, they must spend a lot of money to buy back the appreciated stocks and eat into losses. Shorting this investment strategy is not adopted by ordinary investors because of its high risk.
"Leverage" has multiple meanings in financial circles. Its English word basically means "lever". Usually refers to expanding one's capital base through credit. Credit is the lifeblood and fuel of finance, and entering Wall Street (financing market) through "leverage" has a "symbiotic" relationship with hedge funds. In high-risk financial activities, "leverage" has become an opportunity for Wall Street to provide chips for big players. Hedge funds borrow money from big banks, while Wall Street provides services such as buying and selling bonds and backstage. In other words, hedge funds with bank loans will in turn invest a lot of money back to Wall Street in the form of commissions.
In addition: the financial turmoil on Wall Street is a subprime mortgage crisis (real estate), not a hedge fund.
Famous hedge funds
quantum fund
George Soros
The predecessor of 1969 Quantum Fund, Shuangying Fund, was founded by george soros with a registered capital of USD 4 million. 1973, the fund was renamed Soros fund, and its capital jumped to120,000 USD. There are five hedge funds with different styles under Soros Fund, and Quantum Fund is the largest one and one of the largest hedge funds in the world. 1979 Soros renamed his company again and officially named it Quantum Company. The so-called quantum comes from Heisenberg's uncertainty principle of quantum mechanics, which is consistent with Soros's view of financial market. The law of uncertainty holds that it is impossible to accurately describe the motion of atomic particles in quantum mechanics. Soros believes that the market is always in an uncertain and constantly fluctuating state, but it is possible to make money by gambling with obvious discounts and unpredictable factors. The smooth operation of the company and the price exceeding par value are based on the supply and demand of stocks.
The headquarters of Quantum Fund is located in new york, but its investors are all non-American foreign investors, in order to avoid the supervision of the US Securities and Exchange Commission. Quantum funds invest in commodities, foreign exchange, stocks and bonds, and make extensive use of financial derivatives and leveraged financing to engage in all-round international financial operations. With Soros's excellent analytical ability and courage, quantum funds have gradually grown in the world financial market. Because Soros has accurately predicted the extraordinary growth potential of a certain industry and company many times, he has gained excess returns in the rising process of these stocks. Even in the bear market where the market fell, Soros made a lot of money with his superb short-selling skills. By the end of 1997, the quantum fund had increased its total asset value to nearly $6 billion. The $65,438+0 injected into the Quantum Fund in 65,438+0969 has increased to $30,000 by the end of 65,438+0996, which is an increase of 30,000 times.
Tiger fund
From 65438 to 0980, Julian Robertson, a well-known brokerage, set up his own company-Tiger Fund Management Company with a financing of 8 million US dollars. 1993 Tiger Fund, a hedge fund under Tiger Fund Management Company, successfully attacked the pound and lira and gained huge profits in this operation. Since then, Tiger Fund has gained great fame and been sought after by many investors. Since then, the capital of Tiger Fund has expanded rapidly, eventually becoming the most prominent hedge fund in the United States.
Since the mid-1990s, the performance of Tiger Fund Management Company has been rising, and great achievements have been made in stock and foreign exchange investment. The company's highest profit (excluding management fees) reached 32%. 1in the summer of 998, its total assets reached the peak of $23 billion, and it once became the largest hedge fund in the United States.
1998 In the second half of the year, Tiger Fund made a series of investment mistakes and went downhill from then on. During the period of 1998, after the Russian financial crisis, the exchange rate of the Japanese yen against the US dollar once fell to 147: 1. It is expected that the exchange rate will fall below 150 yen. Robertson ordered his Tiger Fund and Jaguar Fund to short the yen in large quantities, but the yen soared to 1 15 yen within two months without any improvement in Japan's economy, and Robertson suffered heavy losses. Among the biggest losses in a single day (1998 10.07), Tiger Fund lost $2 billion, and in September of 1998 and June of 10, Tiger Fund lost nearly $5 billion in yen speculation.
During the period of 1999, Robertson invested heavily in the shares of American Airlines Group and Waste Management Company, but the share prices of these two commercial giants continued to fall, and the Tiger Fund was hit hard again.
From 1998 to 12, nearly $2 billion of short-term funds were withdrawn from Jaguar Fund, and from 1999 to 10, a total of $5 billion was withdrawn from Tiger Fund Management Company. The withdrawal of investors has prevented fund managers from focusing on long-term investments, thus affecting the confidence of long-term investors. Therefore, on October 6th, 1999/kloc-0, Robertson requested that the redemption period of his three funds, Tiger, Cougar and Jaguar, be changed from March 3rd, 2000 to semi-annual, but on March 3rd, 2000, Robertson was in Tiger Fund. After the collapse of Tiger Fund, it liquidated $6.5 billion in assets, of which 80% was returned to investor Julian? Robertson personally left $654.38+$50 million to continue his investment.
Hedge fund investment case
1992 sniper pounds
Since 1979, the European economy, which has not yet unified the currency, has unified the currency exchange rates of various countries and formed the European currency exchange rate linked insurance system. The system stipulates that national currencies are allowed to float within 25% of the European "central exchange rate". If the exchange rate of a member country exceeds this range, the central banks of other countries will take action to intervene. However, the economic development of European member States is unbalanced, and fiscal policies cannot be unified at all. The currencies of different countries are affected by their respective interest rates and inflation rates. Therefore, sometimes, the linked insurance system forces the central bank to take actions against its will. For example, when foreign exchange transactions fluctuate violently, these central banks have to buy weak currencies and sell strong currencies to maintain the stability of the foreign exchange market.
1989, after the reunification of East and West Germany, Germany's economy grew strongly, while the German mark was firm. 1992, Britain was in a period of economic depression and the pound was relatively weak. In order to support the pound, the interest rate of British banks has been high, but this will inevitably hurt Britain's interests, so Britain hopes that Germany will lower the interest rate of the mark to ease the pressure on the pound. However, due to the overheating of the German economy, Germany hopes to use the high interest rate policy to cool the economy. Due to Germany's refusal to cooperate, the pound continued to fall in the money market. Although Britain and Germany joined hands to sell marks for pounds, it still didn't help. 1In September, 1992, the governor of the German central bank published an article in the Wall Street Journal, in which he mentioned that the instability of the European monetary system can only be solved by currency devaluation. Soros had a premonition that the Germans were going to retreat, and Mark no longer supported the pound, so his quantum fund borrowed a large sum of pound, and 5% of the deposit bought Mark. His strategy is: before the exchange rate of the pound falls, buy the mark with the pound, and when the exchange rate of the pound plummets, sell part of the mark to pay back the original borrowed pound, and the rest is the net profit. In this operation, Soros's quantum fund shorted the pound equivalent to $7 billion and bought the mark equivalent to $6 billion. In more than a month, it made a net profit of $65.438+$50 billion, while European central banks lost $6 billion. The event ended with the pound exchange rate falling by 20% within 654.38+0 months.
Asian financial turmoil
1In July 1997, Quantum Fund sold a lot of Thai baht, forcing Thailand to abandon its long-term fixed exchange rate pegged to the US dollar and float freely, thus triggering an unprecedented crisis in Thailand's financial market. After that, the crisis quickly spread to all countries and regions with freely convertible currencies in Southeast Asia, and the Hong Kong dollar became the most expensive currency in Asia. Later, Quantum Fund and Tiger Fund tried to attack the Hong Kong dollar, but the Hong Kong Monetary Authority had a large amount of foreign exchange reserves, and the authorities raised interest rates sharply, which made the hedge fund plan unsuccessful. However, high interest rates caused Hong Kong's Hang Seng Index to plummet by 40%. They realized that short selling the Hong Kong dollar and stock futures at the same time, the former led to soaring interest rates and dragged down the entire Hong Kong stock market, and they were "sure" to make a profit. However, the Hong Kong government intervened in the market in August of 1998, which made hedge funds fail in both the foreign exchange market and the Hong Kong stock futures market. The world monetary system is centered on the dollar.
The final result of the American financial turmoil is the depreciation of the dollar.
Non-American appreciation
Global economic disharmony
The financial turmoil has covered many fields.
Credit crisis, real estate crisis and so on.
About 1000 small banks were forced to go bankrupt.
Lehman went bankrupt because it didn't have enough economic strength to cope with the credit crisis.
Loss for three consecutive quarters
Stock decline value 100%
Lehman is an investment bank.
The Federal Reserve did not provide financial support.
Other big banks don't support it either.
going and coming
Have to go bankrupt
For China's economy
Presumably, everyone has seen the changes in the real estate field.
Troubled by the American real estate crisis
China's real estate industry has also been implicated.
House prices fell again and again.
China's economy is declining.
In order to promote development
The state decided to lower the loan interest rate.
It is to promote economic development. 1. China holds a large number of American bonds and stocks of its financial institutions. Once a company like Renault Brothers goes bankrupt, China's holdings of these two things will become zero ... There are at least several billion dollars here (if the financial turmoil on Wall Street continues, China may lose tens of billions of dollars).
2. Investors' confidence in the investment market was greatly reduced, and the stock price plummeted due to shipment. Our listed companies, especially the share price, will inevitably be affected, and then our GDP will naturally decrease.