How much is Your Hedge Fund worth?

It seems no one knows. The Wall Street Journal recently reported the industry assets (this is real cash mind you, not the value of their leveraged influence on the financial system) at roughly $2.4 trillion. Then a week later said, "Whoops, we missed the mark." in so many words. The SEC claims $1.2 trillion is closer to reality and the $2.4 trillion total reported previously by the SEC after tallying up some 2500 hedge funds assets came from some "double counting".

OK, so let me get this right. The hedge fund industry has invested $1 trillion dollars in itself! If there is $1.2 trillion dollars in the hedge fund industry but when you count the total dollars that trickle down from hedge fund to hedge fund you get $2.4 trillion something tells me we have a "house of cards". The industry is investing in itself and raking in big fees.

Now the oldest trick on Wall Street is to create a "product" that rises in value faster than the market. Draw in lots of money. Attract the attention of bankers etc. Borrow lots of money. Feed the Lion. Pay out huge rewards to early investors. Run into a "cash squeeze". Default on those loans that helped you to extend the party. Collapse. Don't forget the big one... Leave the founders filthy rich while everyone else scrambles for the crumbs. You might throw an indictment in here and there.

I can rightly say with ease and confidence: Any "industry" that produces nothing tangible and invests some 80% of its money in it's own industry is a scam. Get out now. As I have said before you MAY have till 2008 to party. But as usual everyone will try and scram at the same time and you are likely to get stuck in the door.