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So stocks up again it down now what five weeks in a row that is the longest winning streak all year in fact.
And what -- week it was one of the biggest money managers around Steven Collins suffering a spectacular.
He's hedge -- SAC capital hit with a raft of criminal insider trading charges.
Pleading not guilty to those charges today but will the case against SEC hurt investor confidence.
And is the lesson cheating is the only way to make the big bucks in this market.
Let's bring in the man millionaires invest their money with Eddie Kathy from chop -- investments Ed so good to see you.
Well thanks for -- Mueller since coming your take on the message being sent by this indictment SAC capital I mean.
Is it that truly the only way to make big returns I'm talking double digit percentage returns.
Outpacing the broad market average.
He's to push -- also little bit.
-- a lot -- -- allegedly.
Yeah and again you said the key word allegedly because you know nothing has been proven there are allegations out there and I guarantee that there is going to be a vigorous defense coming.
There's a lot in that indictment.
And a lot of people -- the automatically just assume that everything in that -- correct but the answer your question is absolutely not in fact.
They're a great hedge fund managers out there that have never had an allegation of insider trading.
I've been in this business 27 years and I'm not seen it's easy to get great returns because it isn't.
But if you just compound your money and leave your money fully invested you know history tells you that you're gonna -- about 10% to 12% in the stock market over a period of time.
But there have been some spectacular insider cases of -- the Galley on case -- Russian front and -- that is behind bars right now SEC front headlines right now back to your point right.
Pleading not guilty you know innocent until proven guilty of course we're gonna see this went through but.
Just the reputation of the hedge fund industry as a whole which as you know overall.
I have to -- perform too great lately.
Well you know you bring up a great point because -- there is definitely a tarnishing going on of the hedge fund industry and it shouldn't be because.
Investors need to have alternatives in their portfolio in a lot of them turn to hedge funds and managed futures and the last couple of years the S&P 500 southeast.
Most hedge fund managers even though there's eleven to twelve different unique styles of hedge funds they've outpace that.
But you know what we never evaluate a portfolio over 12 or three year period when you normally evaluate -- -- five -- ten year period and I will tell you anybody out there.
That is pulled money away from hedge funds rethink get because at some point you're gonna need to have -- your portfolio -- Okay what sort of allocation if I'm looking at my asset allocation hi how much of it should be comprised of these.
He's all of come alternative investments hedge funds private that we like.
Well all -- make it all make it really simple there was a study done out of one of the major business schools.
About -- -- what is the best mix to have an import -- they took all the alternative all the investment that exist all the publicly traded investments click the button to get the best to return with the least amount of risk.
Went into hedge funds so US -- -- the best -- best to use and how much money -- we typically try to put about twenty to 25% of our money.
In most portfolios in the investments that have non -- relation and that -- correlation you know -- and you're gonna find hedge funds managed futures.
In that so that's 125%.
All right so if alternative investments are underperforming right now the broader stock market -- Can you pinpoint a time when you see that trend reversing.
Well halting nobody can I mean -- -- -- to do that so that.
I think we heard this you know you're gonna you -- -- expansion right.
I'm sure a lot of people are so characterizing the point where we are in this growth cycle as as early to -- Kate -- best.
So if you're investing stay in cyclical stocks and you see a lot of a lot of potential growth ahead you know maybe.
There -- a couple years ahead of a big second -- in hedge funds and other alternative investments now.
Yeah and a look might you know might my hair is great for re E.
Coli have some investments -- -- always have some investments that are not gonna do well at a period of time because of everything one up.
Based on a positive economic condition the moment that economic condition changes -- you never know when that's gonna change.
Everything would go down together so I always have -- -- properly managed portfolio always has some things that aren't doing well.
So you say what is gonna switch and when he put money into hedge funds you should always have money in alternatives you should always have money in the equity markets as well because you just never know.
-- her -- let me tell you -- extremely distinguished.
Looking for you think you -- because I think people -- Their money managers and do you think take care if they're pushing the rules at all how important.
Easiest -- you as a money manager to have a solid reputation.
For playing by the rules among your clients.
Yeah I -- is any question about it I mean everyone's out to tarnish everybody.
And you know even in our side of the business you know not the hedge fund manager but in the registered investment advisor in a broker market.
I don't think clients appreciate anybody who's cheating I think people are disgusted by people that she and I -- that way as well.
So having said that I I actually look at this end.
If these allegations are true it is in other there's probably going to be some truth to this because when the Fed gets involved you know something -- is gonna end up happening.
But I will tell you that individuals don't wanna be around that people and I don't want to be around and either.
We'll leave it there.
Ed -- -- -- thanks so much.
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