The real buuble.
Four words: Hedge Fund Private Equity.
I hear these too much. I don’t really understand hedge funds and private equity, but more frighteningly I get the impression that some of the people involved don’t either.
My one theory about the rise of Private Equity, is that its a natural reaction against the increase in communication due to things like the Internet, and the reduced arbitrage or spread that it creates as more people have access to information, more quickly.
One way of countering this and the recenty tightened financial regulation in the US is to deal in private companies and investment, where the information is more opaque.
James Simons, hedge fund manager, earned $1.7 billion last year…. (kottke.org)