Top hedge fund managers voice concerns about state of the world economy at conference in New York

News - Funds

Written by Ray Clancy

Wednesday, 02 June 2010 08:25

Some of the world’s most successful hedge fund managers are concerned about the state of the global economy amid a sharp correction in the stock market that shows no discernable signs of turning.

They voiced there concerns at a conference in New York about the euro crumbling, talked about worries over the safety of sovereign debt rising, described Europe as hurtling toward a full blown financial crisis, and described the US markets as taking investors on a roller coaster ride.

They also warned that US lawmakers seem to be creating a hostile environment for business. ‘As I look at the current investment climate I have to tell you I’m worried. What I worry about are the clowns and the climate in Washington, there is no leadership on either side of the aisle,’ declared said Jonathon Jacobson who founded hedge fund firm Highfields Capital.

‘The very foundation of the economy is shifting under our feet,’ said For Daniel Arbess, a partner at Perella Weinberg Partners and the portfolio manager of its Xerion Funds.

Sam Zell, chairman of Equity Group Investments, warned the audience that whoever doesn’t adapt to fast changing conditions may not be here next year. His stern tone prompted some audible gasps as well as snickering in the crowd.

Coming so soon after the 2008 financial crisis, many managers are finding current conditions especially difficult to explain, and more importantly how one adjusts to them.

There was much uncertainty. ‘How should we decide whether these issues are real or just the bogeyman. No one knows,’ said Larry Robbins, chief executive officer of Glenview Capital Management.

With such uncertainty surrounding the future of world markets, Robbins said there are three options for investors who can put assets into cash, buy safer corporate bonds or pick stocks selectively, choosing the ones that will grow no matter what happens to currencies or the economy.