One of the founding fathers of modern economic theory and an early contributor to The Banker, John Maynard Keynes, once said: “The market can stay irrational longer than you can stay solvent.” This maxim must have crossed the minds of at least a few of the fund managers that were waiting for the subprime sector to crash and were sustaining expensive short positions in anticipation of the crisis.
Hedge funds are traditionally secretive and information on their performance is quite scarce, whether things go well or not. But data that made it to the public domain shows just how successful some of their strategies have been.
