Blogs hedge funds?

Hedge funds expand the opportunity set for diversification. Blogs widen the spectrum of analysis. Traditional media mostly covers mainstream news and conventional "wisdom" whereas blogs supply the long tail of ideas and opinions. Quality blogs provide value from their differences in coverage and thought-leadership that would otherwise be inaccessible. Media content was usually quite narrow but blogs and other social media have broadened the data set for everyone. Sadly hedge funds aren't available to all investors.

There is a dichotomy in the media concerning blogs AND hedge funds. Fortune magazine saw the light on hedge funds over 40 years ago while Forbes doesn't get it even today and remains stuck in the dinosaur world of long only. Time magazine declared that web 2.0 and other user generated content were "persons" of the year but an editor at the Wall Street Journal thinks you are an imbecile and I am a fool for having anything to do with blogs.

While both produced successful linkbait it is also abundantly clear that some in the media don't "get" blogs. If Joseph Rago's diatribe had appeared anywhere else I would have dismissed it as a troll but that such nonsense made it into the Journal is illuminating. Op-eds are meant to be opinionated by definition but even rants should have some basis in fact.

There is a common perception that a blog refers only to where you inform your fascinated readers what you had for breakfast that morning. Or, even worse, that blogs are for discussing that dire, irrelevant and uninteresting subject called politics. But both these widely recognized blog "purposes" are far from the only objectives or the most constructive. Dismissing ALL blogs, like ALL hedge funds, is misguided.

One of the many benefits of the internet is the rise of the PROFESSIONAL blog, where a specialist in a particular field writes about their expertise. In almost every domain there are now excellent blogs. Techies started blogging about technology issues several years ago but now every conceivable subject has excellent, insightful blogs. In the financial space there are good general investment blogs, good trading blogs, good private equity blogs, good venture capital blogs, good personal finance blogs and, yes, good hedge fund blogs.

I write this Hedge Fund Blog for several reasons. Firstly I got tired of reading all the wrong and misinformed populist nonsense written about hedge funds and felt I could, in some small way, attempt to redress the issue. Secondly, having spent a lot of time living and investing in Asia this blog was a good way to reach people elsewhere. Techie friends told me a blogger should post at least once, if not, several times a day. There was never any chance I would be able to do that and I prefer to try for quality over quantity anyway.

Blogs are NOT a major threat to traditional media. There is always going to be a place for full-time journalists and mainstream news coverage both offline AND online. I sometimes write investment articles for financial magazines and I approach those in a completely different manner than when I type out the "careless informality" of a blog post. The press has little to worry about; blogs and other user generated content won't severely impact existing news sources IF they adapt to AND embrace the new medium. Blogs simply extend mainstream news delivery and distribution by supplying the fat-tails of content and opinion. In statistical terms blogs add skew and kurtosis to the mean and variance of the "normal" media.