A lot of people in the hedge fund and real estate industries feel that the future is bleak for investors, speculators and bettors. If you talk to them, you’ll hear about how the “golden” years of making money are gone and how the government will continue to bring on regulations.
For an entrepreneur, it’s important to make an attempt at drowning out the noise and really focusing in on opportunity. I see massive opportunities in hedge funds and real estate investing in the coming years.
First off, the space is a lot less crowded. For example, in a June 16 Bloomberg article, Hedge Fund Research reports that of 9,500 funds in existence around this time last year, 1,200 have closed. So for every investment, there are now less people looking at it. That inherently creates opportunity.
Secondly, and perhaps more importantly, we must look at the players remaining. The average hedge fund lost 19% in 2008, which is the worst year on record since the dataset began tracking in 1990. So of the remaining players, they are now increasingly risk averse. The name of the game is to survive. That’s healthy and appropriate. But it also means that such a recent memory of a near fatal experience can impede the investing decisions of people who made it through the blood shed of 2008.
Thirdly, we must look at history. Investors and market speculators have existed in some form or another since the ancient days of Aristotle in Greece. There have always been bubbles and crashes. Booms and busts. Today is no different. There will be more bubbles in our lifetime. And there will be more crashes as well. Many things come into existence through booms and trends. It is part of our human nature.
And so, I have no doubt in my mind that the future looks very bright for investors. New markets will come. The players will change, but the golden rule will always be the same: buy low, sell high.
