Friday, September 21, 2012

When the Powerful Withdraw

Louis M. Bacon is the head of Moore Capital Management, one of the largest and most influential hedge funds in the world. Recently he announced that he was returning one quarter of his largest fund, about $2 billion, to his investors. The reason he gave to The New York Times was that he had found it difficult to invest given the impossibility of predicting the European situation. He was quoted as saying, "The political involvement is so extreme – we have not seen this since the postwar era. What they are doing is trying to thwart natural market outcomes. It is amazing how important the decision-making of one person, Angela Merkel, has become to world markets."

This renowned hedge fund manager is saying that the politics of the modern world is moving against natural financial forces. This, and the nature of  heavy political involvement itself,  introduce so much unpredictability in the market that  his involvement became impossible.

And what are we poor average people to do?

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