Well, a hedge fund manager explains in unique, hedge fund managerial style; which is to say, you might as well take a hit of acid, down a few fingers (say, nine) of tequila, and put on an audiotape of the Math Olympics while watching an old 16mm reel of The Candidate simultaneous with a laserdisc copy of How to Get Ahead in Advertising. It’s Fear and Loathing in East Hampton, baby, so fasten your seatbelts; it’s going to be a bumpy ride.

Well, for those of you with money, anyway. I, on the other hand, haven’t lost a cent! Ha, ha, ha! Where did I put that Janis Joplin album…?

So here, without further ado, is the simple, straightforward explanation of the global economic brainfart that just wiped out a significant, if small, percentage of the money of really, really obscenely stinkin’ rich people. Warm up your teensy, tinesy violins.

Hedge-Fund Guy Atones for
His Subprime Bond Sins
By Mark Gilbert

Aug. 16 (Bloomberg) — Dear investor, we’d like to take this opportunity to update you on the recent performance of our hedge fund, Short-Term Capital Mismanagement LLP.

As you know, market selection for the entire fund is guided by a proprietary investing tool we like to call “a dartboard.” Once the asset classes are decided, individual security selections are generated by digitizing our unique hexagonal cuboid models.

Unfortunately, it transpires that our hexagonal cuboids are not as unique as we thought. Hundreds of other hedge funds possess identical dice. The technical term for this is a “crowded trade.” You may also see it referred to as “climbing on a bandwagon already headed for the wall.”

As our alpha generation collapses, our beta has turned negative, our delta hedging has gone toxic and, trust me, you do not want to hear about our gamma. We can’t even find our epsilons in the dark with both hands…

and so on, at length. I think their bonus is calculated by the wordcount.

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