The majority of the financial fortunes existing today were created by riding the wave of the greatest credit expansion in history. The cost of borrowing fell for roughly 30 years and inflation caused asset prices to go up dramatically. It was easy money for a long time but the smartest money on the street has realized we have reached the end of this gravy train.
Stanley Druckenmiller, one of the most successful hedge fund managers on the street, was one of the first to see the writing on the wall. Roughly two years ago in August 2010, Druckenmiller decided to close up shop and retire after facing his first down year in his 30-year career.
Recently, several other prominent hedge fund managers have followed suit.
- George Soros, who was Druckenmiller’s mentor, closed his Quantum Fund to non-family money for the first time in nearly 40 years.
- Steve Cohen, the billionaire founder of SAC Capital, also closed his fund to new money (from both new and existing investors).
- James Lyle, a protégé of Tiger Global’s Julian Robertson, announced the closure of his $750 million Millgate Funds and return of investor capital last May.
- Louis M. Bacon (founder of Moore Capital), announced he was returning funds to investors. In a letter to investors, Bacon said he’d return $2 billion – about one-quarter of his fund. Bacon cited 18 months of “disappointing” investment returns… His flagship fund was down 3.2% in the second quarter. “I found myself trying to make money in a much less liquid environment, with less instruments to trade – it’s very frustrating,” he said.
These top managers realize the rules are changing. The easy money policies and the massive stock market gains that followed are a thing of the past. The “smart money” is cashing out and telling you to seek out alternatives.
Purchasing portfolios of non-performing credit card debt is the perfect way to ride the “NEW WAVE” of the coming credit crisis. Massive fortunes will be created.
Do Good and Make Money!