Hot Money Managers Like the ‘Tiger Cubs’ Got Walloped When the Market Mood Changed
Concentrated bets on tech darlings worked until they didn’t.
Markets are going through what may be the biggest mood shift we’ve seen since the financial crisis. This year the S&P 500 has tumbled 16%. Meanwhile the tech-focused Nasdaq-100 has plunged almost 27%. And unlike the short, sharp market decline in the early days of the pandemic, this one isn’t a response to an economic shock. Investors seem to be seriously rethinking what they want to pay for assets.
That means many strategies that worked—for years and years—are being upended. “Buying the dip is not being rewarded today,” says John Holton, assistant vice president of Wilshire Advisors, which helps wealthy individuals and institutions invest in hedge funds. “Now volatility is persistent and the equity market drawdown is more consistent.” It’s a tough time for all investors, but even some stars of the hedge fund world are having trouble adapting.