Hedge funds face autumn uncertainty

This fall expect fear and loathing on Wall Street. Swashbuckling investors, like hedge funds, usually love to take big investment risks. But now they’re looking timid.

“A lot of our subscribers are large hedge funds and they’re being very conservative,” said Daryl Jones, the head of research for Hedgeye Risk Management. “A lot of cash on the sidelines and/or investing in assets like gold that they think are stable.”

Many of the big guys are facing the same challenges as mom and pop investors: They’re afraid to mess up. David Simon is the CEO of Twin Capital Management, a hedge fund.

“A lot of hedge funds don’t want to lose whatever little they’re up,” Simon said.

Losing money is a very real risk this fall, with the uncertainty of the presidential election and the European crisis. But predictions often fail, says David Merkel. He runs Aleph Investments.

“To the extent that you try to play the prediction game, you run the risk that you will underperform your competitors,” Merkel said.

Another reason big investors are holding back: they’re hoping for more stimulus from the Federal Reserve.

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