Need $135 Million? Just Start a Hedge Fund

We find on fintag.com that we too can get into the hedge fund business:

"HEDGE FUNDS FOR MORONS," begins the article, which is a reposting of the article "A how-to of hedge funds," from FinancialTimes.com.

"'Nowadays there are two kinds of people in the financial world - those who want to run a hedge fund, and those who want to invest in one,' argues Hannah Terhune over at Capital Management Law.

"'Today, pretty much anyone with $15k or thereabouts can start a hedge fund,' says Hannah. 'What money cannot buy is talent, courage and entrepreneurial drive.'"

This $15,000 figure must be an error, fintag comments. You'll spend that much in a couple of consultations with lawyers. Maybe $150,000 could get you started.

"'The how-to guide includes advice:

1. Key items needed to start a hedge fund ('money, a lawyer, a prime (or introducing) broker, office space (or a home office), and eventually, an accountant')
2. Time-line ('The legal process of setting up a hedge fund usually can be completed within 60-90 days')
3. Where best to set up an offshore hedge fund (Cayman Islands or the Bahamas)
4. Who can invest in your hedge fund (generally limited to very high new worth individuals or plans with funds in excess of $5 [million])
5. 'Incubator' hedge funds (A way of testing the waters - 'setting up an incubator hedge fund allows a hedge fund manager to develop a track record which will assist in attracting investors later in time)'"

Oh, if only we had had this helpful information two years ago. We could have begun a hedge fund based on our Anti-Liquidity Variable Evolutionary Model Portfolio Theory.

Which is to say, we could have taken in $1 billion...made a single call to place the money in gold bullion...and then taken a two-year vacation in the tropics.

Let's see, first we get 2% of the capital each year...so that's $20 million each year, or $40 million for the two year period. Plus, we get 20% of the gain. Gold rose about 47%...that's a profit of $475 million...times 20%...well...that's a cool $95 million for us. $95 million plus $40 million equals $135 million. See how sweet this hedge fund business is?

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