A dire prophecy has come from someone whose words bear listening to. Steven Cohen has predicted in a Wall Street Journal interview, “We’re entering a new environment. The days of big returns are gone.” As he sees it, the trouble is what has been spoken about for some time now: Too many hedge funds are spoiling the industry. “There will be a real decline [in the stock market] that may devastate hedge funds that have crowded into the same stocks” - including the ones he’s favored and have helped him make his billions. “It’s hard to find ideas that aren’t picked over, and harder to get real returns and differentiate yourself,” Cohen lamented. For his part, according to The WSJ, Cohen is “making bigger bets and holding the stocks longer,” which could spell trouble. “I worry that if everyone were to sell, could we get out?” Cohen told the paper. Worry he does indeed. Last week, The WSJ reports, his firm, SAC Capital Advisors, lost about $150 million, representing 1.5% of its assets, on one particularly bad day. But while the old Cohen would have gobbled up sinking stock - a technique, which reportedly inspired other hedge fund wannabes to follow his example - the multibillionaire HF manager uses the drop to prove his point that times have indeed a-changed.
