http://www.cnbc.com/2016/05/27/financial-times-bridgewater-secures-22m-in-state-aid.html
Corporate welfare going to new heights. Now we are giving a shit ton of money to a fucking hedge fund...
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World's largest hedge fund gets 22 million in state aid to remain in CT
- Thread starter Piecake
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http://www.cnbc.com/2016/05/27/financial-times-bridgewater-secures-22m-in-state-aid.html
Corporate welfare going to new heights. Now we are giving a shit ton of money to a fucking hedge fund...
This isnt a tax dodge or anything like that.
This is the state of Connecticut giving this hedge fund 5 million dollars as basically a bribe to stay in the state, and also 17 million dollars if the hedge fund manages to create 750 jobs.
Think of it like a sports team. Team threatens to leave the state then politicians build the team a stadium at the public's expense. Hedge fund threatens to leave the state, so state gifts that hedge fund 22 million dollars to keep them in the state.
ClosingADoor
Member
So they gave the company money to create jobs, at a rate of just under 30.000 per job. Let's hope those are some good paying ones and there is a required length to them to make it back in taxes.
Zaraki_Kenpachi
Member
I'm hard pressed to think of a job at a hedge fund making less than $50k let alone $30k.
yep...cant take living here anymore. with the baseball stadium in hartford looking like a massive failure, i cant wait to move down south.
I guess what I'm asking is, what makes it worth it to keep this fund in the state if it costs more to keep it there than the fund pays back to the state in taxes? What is the state getting out of keeping them there if they have to spend so much to do so? Just potential jobs?
ClosingADoor
Member
Sure, but someone making $50k will take some time to add up to 30k in taxes to the state.
whyamihere
Banned
Dan Malloy is not very good at this governing thing.
Connecticut should be an easy sell. Easy access to New York in Fairfield County, Hartford is right in between Boston and New York, highly educated work force along with Yale, cheaper than Massachusetts.
But Rell and Malloy have been such shitty governors in terms of actually trying to build a working economy. The Eastern part of the state is basically forgotten, Hartford is a nightmare at every possible level, and you basically have the tax base in suburbs of Hartford and Fairfield County keeping the state afloat.
Connecticut should be an easy sell. Easy access to New York in Fairfield County, Hartford is right in between Boston and New York, highly educated work force along with Yale, cheaper than Massachusetts.
But Rell and Malloy have been such shitty governors in terms of actually trying to build a working economy. The Eastern part of the state is basically forgotten, Hartford is a nightmare at every possible level, and you basically have the tax base in suburbs of Hartford and Fairfield County keeping the state afloat.
Zaraki_Kenpachi
Member
Fair point
NYCmetsfan
Banned
As if that's the whole picture. They're likely to spend a lot on consumption, supporting local businesses, paying property taxes, plus income taxes, plus the fact that they'll now be paying into unemployment and able to provide to their family. That seems like a great deal.
Did you miss this?
He raised taxes on businesses which is what the left wants, they want to leave now because its super easy to do in the US system.
Malloy tries to keep them here with a tax package. The head line looks bad but aren't hedge funds like CT's factories? Its a big business. Do we bat an eye at money given to factories to keep jobs?
The US system allows easy moves since state can't set up tariffs or penalties for leaving. So when taxes are raised they often want to move. There's a balance at play. How much is being raised by the new business tax?
Here's an article from last year about business taxes and companies wanting to leave:
http://www.forbes.com/sites/taxanal...-and-the-revolt-of-corporations/#568b849738e1
This is why a lot of fiscal funding in the US is screwed up. The federal level is the only way to significantly prevent capital flight.
Giving money to private companies with the promise of creating jobs always ends up a shitty deal. It's almost always temporary and worked around in some way, something similar happened with an AC company in Ohio I believe and the ATT merger thing that was supposed to create jobs here did locally for a couple years, then they managed to literally get rid a union rep center and create a new one in Texas not union repped and sent jobs back over seas, yayyy for monopolies and businesses to big to fail.
Any government, local, state or federal, should take money earmarked for that bullshit and create jobs themselves like DOT jobs or how about more construction jobs to fix our roads. Maybe create a high speed rail system, nah fuck that noise right Governor Scott? Douchebag.
Any government, local, state or federal, should take money earmarked for that bullshit and create jobs themselves like DOT jobs or how about more construction jobs to fix our roads. Maybe create a high speed rail system, nah fuck that noise right Governor Scott? Douchebag.
ClosingADoor
Member
I just hope the contracts for this are set in stone, so there isn't some chance that in two years they pack it up anyway, don't create the amount of jobs promised, they are only low income jobs or temp jobs.
750 low wage intern jobs will soon be coming to CT
Zaraki_Kenpachi
Member
What do you consider low wage? Because even interns are paid well at financial institutions.
Doesnt really matter what wage because those intern jobs will be temporary
Because people or organizations with money laying around (pension funds, university endowments, nonprofit organizations) need something to do with their money. Hedge funds are just one way in which they can invest their money. (and yeah i realize that this is probably a rhetorical question but whatever, i'm sick of the blanket characterization that the whole HF industry is evil)
to accumulate fees from rich people
Good god man. lol it ain't that simple. Do some research for yourself instead of blindly parroting whatever you hear from bernie sanders
(and no I don't work for a hedge fund; I work for a nonprofit organization with sizeable investments in hedge funds. I can say without a doubt that the money our hedge funds have made for us have allowed us to increase our giving to various charitable causes)
Zaraki_Kenpachi
Member
Ah, so they won't be low wage then.
To be fair, hedge funds are seeing some of the biggest outflows ever and they many think they'll have to substantiate why they do exist sooner rather than later.
shadowsdarknes
Member
In general, Piecake is right. Hedge funds use more complex means of money management, but the general performance of those funds are not that impressive.
You could make it big with the right hedge funds. But the likelyhood of that is fairly small.
Their fee structure is higher because of the small chance that these hedge funds are going to make huge returns.
ArkhamFantasy
Member
This reminds me of sports teams that always threaten to leave the city if you dont build them a 50 trillion dollar arena with aquariums that have blue whales in them.
Well yes, hedge funds more likely than not do not outperform the market (and therefore are not gonna generate relatively impressive returns). But the faulty premise is that their objective is to beat an index. The term hedge fund is soooo broad. There are funds which have strategies that are designed to beat the market. There are funds that are designed to generate a low volatility absolute return. There are short biased funds which will on average lose money but will provide "insurance" in the context of a market downturn. It's impossible to judge hedge funds as an asset class because the term hedge fund doesn't really tell you much.
I don't support Sanders.
http://money.cnn.com/2016/05/18/investing/hedge-fund-golden-age-over-fees/
http://www.businessinsider.com/index-funds-beat-actively-managed-funds-2013-6
http://www.cnbc.com/2016/02/16/warren-buffett-slips-but-still-winning-epic-hedge-fund-bet.html
Though I am a fan of passively managed index funds.
He gave a simplistic but accurate answer to the question about the nature of the business model.
A factory exists to overcharge for the tat it produces in bulk.
A corner store exists to overcharge harried locals for basic goods.
A gas station exists to encourage snack purchases to supplement gasoline profits.
A hipster yogurt store exists to fleece white people for something they should have bought at Safeway.
Starbucks exists to feed mild addictions in the morning
Etc
Etc
See my post above. Most hedge funds aren't trying to beat the market.
Also the HFRI Fund Weighted Composite Index will without a doubt never outperform any index in the long term. Think about it, if you form a composite of all the hedge funds out there and their holdings, you'll get a rough approximation of the whole market in general. Overlay that with the typical fees and of course you'll underperform.
Kinda hard to make back the investment if its a temporary position.
And lets be real here. The company is not in a financial crisis. They don't need the money. They simply want it. They will hire people if it makes sense from a business perspective and do some creative shit to meet the 750 jobs created by the deadline to not have to pay back that 17 million, but make a profit.
Will it benefit the state? It could, but it definitely isnt benefiting the general US economy because all it is is a wealth transfer from citizens to a corporation. America is not going to add any more jobs from this deal.
Vigilant Walrus
Member
Is Dan Malloy unpopular due him raising taxes?
Or you could just add more bonds to your portfolio if you want a less volatile protfolio and not pay like 60% of your earnings to a hedge fund
And you'd be better off simply not investing money at all if a hedge fund lost money for you, but provided 'insurance' in a down market.
I have a hard time believing that the vast majority of hedge funds aren't trying to generate alpha because the only way you would pay someone an obscene amount of money would be to get you that alpha.
Imperfected
Member
So, raise business taxes, but then refund big business the difference in bribes and benefits so only small businesses are affected by the raised taxes?
Great plan.
Great plan.
Or maybe bonds don't provide enough of a return in this hyper low rate environment?
I agree with your insurance point. But some people are generally pretty loss averse and are willing to pay a premium in exchange for a little insurance.
And of course they are trying to generate alpha, but alpha relative to what? Like I said, many different funds with different styles and objectives.
Well, going by the results of hedge funds a good mix of a stock/bond index portfolio would still crush the average return of a hedge fund.
And alpha related to the market or their particular index. What other Alpha is there?
The goal of any portfolio is to generate the most money within the customers accepted level of risk. That's it. All this talk about different objectives and styles is just a load of bullshit. Sure, that portfolio can change significantly depending on the customer thanks to timeframe and risk, but you don't need a hedge fund manager taking 2% of your return rate and 20% of your total return to achieve that.
Yeah, hedge funds will never outperform the entire market as a whole. I edited an earlier post with a simplistic thought exercise outlining why, but the punchline is that the hedge fund index that people love to cite is a rough rough approximation of just the whole market minus normal fund fees.
Hedge funds are simply one tool that can be used in the context of an overall portfolio. Don't think of them as a be all end all solution.
rokkerkory
Member
This is truly a messed up system
http://www.marketwatch.com/story/investing-in-a-hedge-fund-isnt-really-worth-the-bother-2014-05-23
I am still waiting for you to provide research showing that hedge funds are actually worth the price considering that you patronizingly asked me to do so. So far, all you are providing is generalities and platitudes.
Even if your goal is to find a hedge fund that provides consistent returns in all markets, the research and data suggests that the vast vast majority of hedge funds aren't able to do it.
Is this sort of like David Tepper moving out of New Jersey and causing the state to freak out because of the huge amount of money they will lose in taxes?
Wouldn't a hedge fund worth that much be paying way more than 22 million in taxes a year?
Hardly a bribe. More like, uh oh, we raised taxes and now our States biggest tax payers are leaving. How do we get them to stay?
Wouldn't a hedge fund worth that much be paying way more than 22 million in taxes a year?
Hardly a bribe. More like, uh oh, we raised taxes and now our States biggest tax payers are leaving. How do we get them to stay?
Lol the only patronizing thing I said to you was in response to a snarky post you made that added nothing meaningful to your own thread.
There is no definitive piece of research that says one way or another whether hedge funds are worth it. Even the quote you pasted references conflicting studies. We can go back and forth flexing our respective google fu skills finding and copy pasting these respective studies, but whatever. And again, the article employs the faulty logic that you can compare vol/return comparisons between an "average" hedge fund versus a simple benchmark (in this case a 60/40 portfolio) which is not fair given that, I'll repeat this again, there is such wide dispersion in strategies in the hedge fund industry.
But its true. The goal of all businesses is to increase their profits, and the profits of hedge funds come from fees generated by wealthy people and organizations.
That is why they exist. Its not my problem that you don't like it.
I would imagine that you simply avoided this bit right here because you do not have a response. Unless not being able to repeat success from one year to the next is another one of these 'strategies'
Anyway, I am done discussing this topic with you until you can actually bring anything more substantial than generalities and platitudes.
Yes the post I was making fun of is factually true, but it is still intellectually dishonest to present it so simply.
And I did address that point...your excerpt you keep copy pasting even says so itself!
Yes, the 'best' hedge funds. Out of sheer statistical probability some funds will enjoy persistence. Of course, you would be hard pressed to figure out if that was luck or skill.
How do you identify what those best funds are? How do you make a profit off of these best hedge funds? By gains? All you would be doing then is chasing gains, and that is a problem because persistence drastically decreases as you increase time (a pretty good indication that persistence is mostly luck). You simply do not know if that 'persistence' will disappear when you decide to invest in it. Not to mention that more money pouring into a fund makes it more difficult to get those gains.
The point of a hedge fund originally was to be an alternative asset, not strongly correlated to the general market, that would therefore help to diversify portfolios that held large market risk. This is what investors said they wanted.
But, a non-correlated investment can be a bad thing when the market is doing well and people lie; actually they just wanted strong returns. So many hedge funds fell into the trap of chasing returns rather than diversifying risk and ended up doing neither very well.
Most hedge funds today have middling returns, aren't very good at diversifying risk, yet retain onerous fee structures. This has only been amplified as funds have gotten larger, and more numerous, and therefore unique strategies harder to find.
As for tax breaks: the problem with paying people to stay is that you can't buy loyalty. The state can keep up the tax breaks as long as they make financial sense, perhaps longer, but not indefinitely. In my opinion, any company that can and would move for tax breaks, eventually will move.
But, a non-correlated investment can be a bad thing when the market is doing well and people lie; actually they just wanted strong returns. So many hedge funds fell into the trap of chasing returns rather than diversifying risk and ended up doing neither very well.
Most hedge funds today have middling returns, aren't very good at diversifying risk, yet retain onerous fee structures. This has only been amplified as funds have gotten larger, and more numerous, and therefore unique strategies harder to find.
As for tax breaks: the problem with paying people to stay is that you can't buy loyalty. The state can keep up the tax breaks as long as they make financial sense, perhaps longer, but not indefinitely. In my opinion, any company that can and would move for tax breaks, eventually will move.
You would think the studies would control for sheer probability and luck, but I dunno, the article doesn't really source the underlying papers so who knows. I'll try looking them up.
Somewhat agree on your second point. Chasing returns will not get you anywhere thats for sure. I know you hate generalities, but there are certain things you can look for in hedge funds that are positive signals (eg. some firms have caps on how the amount of dollars they are allowed to run to ensure that they can invest in the less efficiently priced smaller cap market and also to prevent them from getting rich off of management fees alone; some firms might have a super differentiated research process, for example, while web scraping might be super simple to do in the present, if you're a fund doing that sort of data gathering say five years ago, you definitely have an edge).
I'm looking for actual academic papers ...these don't exactly meet that bar.
And yes, I know that the first link does cite studies (both fully baked ones and one that the author did himself) but they either are not applicable (he cites a study looking into individual investors not hedge funds) or do not really meet the bar that is expected of a typical academic study (the correlation analysis he did himself).
Anyway, here are some random studies I dug up that argue for hedge funds having persistence of returns:
http://www.analyticsresearch.net/Documents/001.PERSISTENCE.SKILLS.HF_IBERJ_2013.pdf
http://www.ckgsb.edu.cn/uploads/201409/Ashley Wang's paper_April2014.pdf
Notice how they both actually have conflicting conclusions? Like I said earlier, there is not going to be a definitive study for either side (and the two papers I highlighted show that there probably will be disagreement even amongst those who do believe in persistence of returns - it's a controversial topic without any real conclusion) and all you're doing is devolving the conversation into a war of who can google the most articles. Yes I can acknowledge that my generalities are not the most compelling of arguments, but there's not exactly strong, peer-reviewed research that can definitively prove one of us right.
old
Member
I've seen the deals far too often. And every time the politicians are dumbasses by not specifying what kind of jobs they demand be created in return. Nobody wants jobs with wage slave pay and entirely lacking of benefits. If this aid is contingent on the creation of jobs then those jobs must:
- meet a minimum salary requirement, say $50,000.
- meet a minimum healthcare benefit requirement, say industry standard healthcare plan.
- meet a minimum pension/401k benefit requirement.
- meet a minimum general benefit requirement for maternity leave, sick days, vacation days
- th jobs must be through the company directly and not throw a third party.
...etc.
Or else you make these deals and they add a bunch of minimum wage temp jobs or independent contractor jobs.
- meet a minimum salary requirement, say $50,000.
- meet a minimum healthcare benefit requirement, say industry standard healthcare plan.
- meet a minimum pension/401k benefit requirement.
- meet a minimum general benefit requirement for maternity leave, sick days, vacation days
- th jobs must be through the company directly and not throw a third party.
...etc.
Or else you make these deals and they add a bunch of minimum wage temp jobs or independent contractor jobs.
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