Financial Analysis : Hedge Funds

1017 Words Jan 13th, 2016 5 Pages
In 2006, a hedge fund manager by the name of John Paulson realized the housing market and the value of subprime mortgages were grossly inflated but would be headed for a major fall. In the summer of 2007, the markets began to collapse, bringing Paulson early profits. By year 's end, John Paulson had pulled off the greatest trade in financial history, earning more than $15 billion for his firm. John Paulson in 2010 had invested funds in gold share classes. This fund did not present itself as well as the firm had planned for it to. His net worth had dropped as much as $700 million (Zuckerman). This situation can be avoided if individuals would invest their time

and money in other investment strategies such as an index fund. Index Funds are a superior form of investments over hedge funds in a various amount of aspects. Setup sentence:
Hedge Funds are alternative investments using pooled funds that may use a number of different strategies in order to earn alpha. Index Funds are mutual funds with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor 's 500 Index (S&P 500) (Investopedia).
Mutual Funds, A collection of stocks and bonds. When you purchase a mutual fund, your money is pooled with other investors. Together everyone pays a manager who makes the decisions for the portfolio. Both Hedge Funds and Index Funds are ideas of mutual funds. These individual funds both but separately manage others assets as one which…

More about Financial Analysis : Hedge Funds

Open Document