Andrew Lahde: The Hedge Fund Manager With a 1000% Return

To the pantheon including subprime shorter John Paulson and Amaranth vanquisher John Arnold we should probably now add Santa Monica hedge fund manager Andrew Lahde. Lahde almost certainly hasn't reached the billion-dollar-a-year club, but he does now officially oversee a fund – the poetically named US Residential Real Estate Hedge V Class A – which is up 1000% year-to-date.
Lahde's still very bearish on both housing (he has a new fund to short commercial real estate) and on the economy more generally (he's predicting a deep recession). But it seems he thinks the bloodletting in residential real-estate might be over: he's returning money to his investors, telling them “the risk/return characteristics are far less attractive than in the past”.
In a way, given the sheer number of hedge funds out there, and the increasing amounts of leverage they employ, it's a little surprising there aren't more funds which return 1000% in a year – and it's actually quite reassuring that such things are still rare. To have one enormously successful year, like Lahde or Paulson or Lahde, can make a man dynastically wealthy. But it doesn't make him an investing great like Buffett or Swensen or Lynch. Remember that during the housing bubble people were regularly making 1000% returns on their own money by buying and flipping condos with little or no money down. In a way it's only just that now a few hedge fund managers are making equally large returns by making bets in the opposite direction.

S&P Futures Limit Down

The overnight market made a 5% move down causing the market to go
to a "Limit Down" situation. Today will undoubtedly be an
important day in the global markets.

TED - Spread

Who gave the Wall Street bull those blue balls?

Fox Business - Jim Cramer

Dow Jones 1900-2008

VIX Index Tops 80 for First Time

The benchmark index for U.S. stock options exceeded 80 for the first time in its 18-year history, driven higher by equities extending the biggest slide since 1987 on concern the economy will continue deteriorating. Europe's volatility benchmarks also jumped to records.

The VIX, as the Chicago Board Options Exchange Volatility Index is known, rose a third day, adding 9.6 percent to 75.92 at 12:50 p.m. in New York after climbing as high as 81.17. The index measures the cost of using options as insurance against declines in the Standard & Poor's 500 Index, which fell 0.6 percent. The stock benchmark earlier slid as much as 4.6 percent, extending a 9 percent plunge yesterday.

There's no historical context for the VIX at 80, said Dean Curnutt, president of Macro Risk Advisors LLC, a New York- based firm that advises institutional investors on derivatives strategy. ``Investors are scrambling for protection and it's driving up the price of options.''
The VXO Volatility Index, a predecessor to the VIX that reflects the price of options on the S&P 100, climbed 23 percent to 84.30. It jumped to 103.41 on Oct. 10. The old VIX set an intraday record of 172.79 a day after the October 1987 stock- market crash.