There are pockets of risk you should definitely avoid. Two of the most dangerous are private equity and hedge funds. Despite their salesmen's smooth PowerPoint presentations, many of these creatures have no clear-cut strategies of where to place the huge dollar flows they are receiving. They charge large fees for the privilege of accepting your money and often lock investors in for two to three years. If something goes wrong, then you have no way out.
Private equity works best when it finds very cheap companies--hard to do with so much competition from scores of other such funds. And then they must enlist operating geniuses who can dramatically improve company earnings where previous management failed. Next, they ladle on more risk by increasing the target company's debt in the hope that earnings will balloon in the next few years. A heck of a tall order.
Buy GE, NOC, AMGN
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Private equity works best when it finds very cheap companies--hard to do with so much competition from scores of other such funds. And then they must enlist operating geniuses who can dramatically improve company earnings where previous management failed. Next, they ladle on more risk by increasing the target company's debt in the hope that earnings will balloon in the next few years. A heck of a tall order.
Buy GE, NOC, AMGN
Read the complete column
Also check out:
