How to Profit From Panic-Selling

By Karim Rahemtulla

April 1, 2021

Last week, a large family office fund collapsed. A family office is not dissimilar to a hedge fund.

It manages money for wealthy families, usually using the same types of strategies employed by hedge funds. These can include private hedge transactions with large banks, quantitative trading, long-short strategies and other exotic instruments that are created just for the fund.

When you have a lot of capital, billions to invest, a lot of banks are willing to be the counterparty.

But when things go wrong, they can go very wrong. The crux of most of these exotic strategies lies in the use of margin. For those of you unfamiliar with margin, it’s when you put up some money and borrow the rest to “juice” your returns.

When the strategy is going your way, your returns can be magnified by a factor of one or two. That’s incentive!

Banks are the place to go to be able to borrow large quantities of cash…

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