If my account, valued at $80,000,000 is #49…that means there are 48 other portfolios with values in excess of my own. That’s a lot of cash floating around with nowhere to go. There is no incentive to keep that type of cash liquid; so, the only alternative is investment. Investment of that magnitude helps…I repeat…helps…drive an already overpriced market even higher.

Don’t get me wrong: I am all for an expanding economy. But, the kind of prices we’re seeing for the Fall and Holiday Seasons…and summer’s not even over…indicate we’ve got an overheated economy. Again, what does that have to do with the funds?

Well, the funds provide a place for high-end investors to stash some cash without further overheating the HSX economy. Even the few currently operating are not adequate for that function; but, they do help. Additionally, there are times as a player where there’s no safe security, or the player has no idea where the best bargain is. But, to have that money sit inactive means slipping a few…or several…notches in player ranking. Funds provide a pretty safe haven for the indecisive player.

Funds, by their very nature, cannot affect the expansion or shrinkage of the HSX economy. The fact HSX adjusts the fan site funds hourly, and the individual fund daily, keeps them at their true values…virtually eliminating any inflationary pressure they might provide. Additionally, all fund managers make mistakes on occasion, which provides a nice downward correction…taking money from the inflated economy.

I’ve also heard folks attack the funds because they don’t require players to think for themselves. Horse patooey! I say this without reservation: NO PLAYER WHO INVESTS SOLELY IN FUNDS WILL CONSISTENTLY FIND THEMSELVES ON THE LEADERBOARD!! Such a player may be there one or two months…probably less…but, they will eventually have to figure out how to spend their own money. If they don’t have the basics of the game down, they’ll disappear from sight. Besides that, the players most likely to race to the top of the leaderboards are those most willing to take risks the size of Cleveland. Real satisfaction with one’s own play is what keeps the player playing. Such satisfaction cannot be realized by playing based on another’s decisions. As a result, no consistently well performing player will base their entire strategy on the decisons of others. So, to me, this is a non-argument.

If anything, we don’t have enough funds. As in the r/l market, we can easily allow for several more funds. Currently, not counting the waste of the poorly conceived index funds, there are twelve funds…seven individual and five fan site funds. As long as they are prohibited from the incestuous and self-defeating practice of owning each other, the economy could easily host another eighteen. Each should have its own purpose…it’s own philosophy…and each would provide a place to invest capital without overheating the HSX economy.

Just my opinion…

First off, HSX issues these funds willy nilly without rhyme or reason. There is little to no logic involved in who/what merits a fund (I’ve told Anthony he should ask for a “gossip” fund but I think Miss Info probably nixed that one because of their little spats in the past *g*). Looking down the list of 22, count em 22, funds we see a hodgepodge of “personal trader” funds, studio funds, fan site funds and “theme” funds.

Also there are very few parameters set regarding the funds. By this I mean essentially these funds could keep going and going like the Energizer bunny with no set target delist amount. It used to be $500 but no such information was given to us regarding our fan site fund so who knows! In any event, $500 is way too high of a target delist price anyway. At those prices new traders cannot afford to put any money into these funds.

My next complaint is that only sketchy information is provided on the fund page as to what the objective of that fund is. Now in my real life mutual funds my husband and I research very carefully who what where etc. and if I saw a prospectus that was only a paragraph long well I don’t have to tell you what I would do. I want as much information as possible before I place my hard earned money in someone else’s hands to manage for me. Personally, I would like to be able to see the fund managers personal portfolio to examine how they trade their own account and what their trading style is.

Moving on in my diatribe against funds we discover that not all funds are created equal. What does that mean you ask? Well, take the studio funds for instance. Take a look at their ports and you will see that these funds merely hold minimal amounts of all film stocks currently being developed by that studio. (hence the “index” name) But, to stick these index funds in with the rest of the funds is a bit deceiving to the average/newbie trader. These are not moneymaking funds and anyone who buys them is insane.

Now we take a look at what I call “theme” funds. These are funds that purchase stocks/bonds that fall under their self-titled guidelines. Notice again, that these are not really money making funds (albeit better than the studio funds). It is up to the fund manager to decide if something falls within that guideline or not. There is no explanation of whether or not the fund manager may venture outside of that guideline or must strictly adhere to it. I see one theme fund that seems to stay very much within the boundaries and another that appears to buy mainly within the guidelines but if a good deal comes along they buy it anyway. Again, this concerns me a great deal.

This is one of my biggest complaints about the funds; too much money into an already overinflated economy. Basically, the only place a fund can go is up. Now some may take quite a bit longer to move up but almost every fund out there (not including the index funds) has made cash. Therefore everytime a fund IPOs you would be an idiot not to buy into it. Already there is very little opportunity for cash to flow out of the HSX economy and to keep adding opportunities for traders to make oodles of cash with little to no risk of losing it seems a bit on the idiotic side. The more money traders have the more opportunities there will be for an “oopsie” type of crash we saw last week or a monthly interest rate change. We cannot control how well a movie will do at the box office but we CAN control no-brainer money making opportunities like funds.

I have always felt that funds are merely HSX’s way of keeping key traders interested in the game. In the past I have called them vanity funds because I feel they are designed to appeal to the fund managers ego. After doing my share to try and keep the HSBR fund afloat I feel even stronger that this is entirely true. While pulling my shift so to speak I agonized when the port went down and gave myself a pat on the back when I made a good decision. I mean the fear is if your fund tanks then everyone will think you are a bozo but if the fund excels then you have adoring traders worshipping at the alter of your ego. I can now see why most people would love to manage one.

But is this a good thing? We already have a loose type of heirarchy among traders with some people being perceived as better than the rest either because they are a columnist, on top of the leaderboard or a frequent poster on TT. And what has this gotten us? A happy and cohesive community? Not usually. My memory is clogged with words like “elitist columnist” and the like. I can’t wait to see what fund managers are called if they are “elevated” to an “exalted” status. (sarcasm there)