Quotations

"Bob Rubin as Secretary of the Treasury — I mean, if he was a Hindu and he was being reincarnated, he'd come back as a pail because this guy bailed out everything you can imagine." - Kevin Phillips on Bill Moyers show

HT: Big Picture

Taylor Rule

If certain people used certain data series (like MacroAdvisors' Monthly GDP series and CPI) to make a Taylor Rule, they might be pleasantly surprised by investing when Fed Funds is above what is suggested by the Taylor Rule.

Why doesn't this exist

By law, a hedge fund needs to avoid having too many (100) accredited investors in order to avoid coming under additional regulations. An accredited investor can include a pension fund, a bank, a hedge fund of funds, someone with a million dollars, and other rich persons. An investment company can also act as an accredited investor. However, people who make less than 200k dollars in either of the past two years are not accredited investors and therefore cannot invest in hedge funds. Also, a fund may require a large initial investment that more marginal investors cannot invest in. Furthermore, some of the better funds are hard to invest in, even for large investors. And I'll add in the fact that fund of funds charge an additional layer of fees that are pretty absurd.

So I think if it is legal, there should be structures like a closed end fund that solely invests in a particular hedge fund marketed to these marginal investors in hedge funds. The ideal organization to launch something like this would be an already respected fund of funds, a global investment bank, or some other organization with many contacts among large hedge funds. You could start with like the five or ten largest hedge funds that are open to investors and then expand into more.

Again it would be best sold to the marginal hedge fund investors. Someone with a 500,000+ portfolio and willing to invest 50k in a hedge fund might be willing to do it if they can buy in with a share in a closed end fund that is investing many millions more in a fund. Seems like a winning idea to me, if it's legal and the organization behind it has the relationships.