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The Way of the World
RBSF San Fancisco, CA
Nobody pays $100,000 at $1,000 [per hour] just to chat with an expert about information that's already public. Of course, they're fishing for insider information, and finding it--the $100,000 paid by SAC resulted in a $250 million profit, or 2,500 times its investment. Gerson's revenues are $300 million per year--it has been paid over a billion dollars in the last five years, and there are many other firms like this. At a multiple of 2,500 this would amount to trillions of dollars of profit by insider trading, which is money stolen from ordinary investors.
Hedge funds's performance this year is trailing S&P 500, after trouncing it every year for the past 20 years. Everyone is wondering at the deep reason behind this--the answer is likely much simpler. The titans running hedge funds are not smarter than anyone else; but this year they've been scared to act on insider information following the well publicized Gupta and Rajratnam convictions.