The pitfalls of macro management: Sudden reversals in trends
Managers of so-called macro hedge funds have lagged behind market benchmarks like the Standard & Poor's 500-stock index after being caught off guard by reversals in stock, bond and commodity prices. Macro funds, so named because they bet on broad economic trends, fare better when prices move up or down for a sustained period, which has not been the case in 2006, with investor opinions divided about the strength of the U.S. economy.
"When an economy is in transition, the markets are often choppy," said David Gerstenhaber, founder of Argonaut Management, a hedge fund manager in New York.
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