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Hedge fund made 1,000% return on subprime, news just out today, they made 20Bill, how they do that?


he decision to use derivatives to short, or bet against, low-quality US home loans taken by a select group of hedge funds last year appears to have become the most profitable single trade of all time, making well over $20bn in total so far this year. I want to konw what kind of derivatives product they use and how excatly they do it?

http://www.isegoria.net/2007/11/1000-hed...

I don't know if this was the same hedge fund, but take a look at this article:

http://articles.moneycentral.msn.com/Com...

It gives a pretty good explanation of how they did this.

Danger, Will Robinson, Danger!!!

The investment is very risky and speculative. With the way the loan market is going, and the fact that some hedge funds have disappeared, the odds favor losing your money.

They made a big, concentrated bet, and clearly added leverage (=borrowed money) to the picture. D

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