Hedge funds anticipate a recession

US-based hedge funds are making more conservative bets on stock prices than they have in a decade. Funds like Bridgewater and BlackRock have increasingly taken short positions on billions of dollars in assets.

Why should we care?
This news confirms that, while the White House and Treasury believe a recession isn’t inevitable, major influential players strongly believe otherwise. Other fund managers and even retail investors may follow suit, leading to even lower confidence in the market as well as more shorted stocks. This pessimism stems in no small part from hedge funds’ abysmal performance over the past year. Many funds fell victim to the sudden sell-off in tech stocks—most notably Tiger Global, which lost more than half its value in the first five months of the year. “When you are losing money every day you need to get out of harm’s way and live to play another day,” said Tiger Williams of Williams Trading. Whether these funds can regain portfolio value by shorting is yet to be determined.