Dr. Rama Rao



Financial Physics

financial physics

Read this in-depth Study of the
Hedge Fund Industry

Hedge fund book


Praise for the book

"A provocative study that makes one think about the future structure of the hedge fund industry. A timely study released as major deals are coming to light."

Lois Peltz, Managing Editor-MAR/HEDGE

"Exceptionally solid work, clear reasoning and well documented. Conclusions are both logical and insightful."

Hunt Taylor, Executive Director- Tass Management, Inc.

"This report addresses the rising tide of wealth in the U.S. and the bright future for alternative asset managers going into the next century. It also suggests we may begin to see a consolidation among alternative asset managers similar to what has been occurring in the traditional asset management industry over the last decade."

H. Bruce McEver, President-Berkshire Capital Corp.

"I read the report with admiration and recognition. It presents a very credible vision of the future of the hedge fund industry."

Arthur J. Samberg, Chairman & CEO- Dawson-Samberg Capital Management, Inc.

"This is a wonderful report on the hedge fund industry and the evolution concept is well articulated. We believe one day it will be considered imprudent not to hedge. Interestingly, Harvard, Yale, Stanford and Duke Universities already subscribe to that philosophy."

E. Lee Hennessee-Hennessee Hedge Fund Advisory Group

"This report puts a unique perspective on the hedge fund industry, and shares insight that was not previously available anywhere."

Peter W. Testaverde Jr., Partner Financial Services Group- Goldstein Golub Kessler & Co.

As seen March 26, 1999 in

Long Island Business News


It takes one mouse click and a few million dollars

Pssst. . .Hey buddy, got a million dollars to spare?

Well, maybe you don't, but there are plenty of people out there who do, and the Internet is going to make it easier to encourage them to invest that million dollars (or more, obviously) in a hedge fund.

At least that is the belief of Dr. Rama Rao, CEO and president of RR Capital Management (rrcm.com), an investment management company based in Bohemia.

"The Internet is the most cost effective medium for doing business and allows you to change the rules of the game," Rao explained during a recent interview. "Doing business on the Internet is like driving on an expressway At first the speed may be disconcerting, but the people who do not make an effort to get used to driving that fast are doomed to take the local streets for the rest of their lives."

He added, 'The benefits of doing business at the speed of the Internet outweigh the dangers of the occasional crash."

Even though Rao's hedge fund requires a minimum investment of $1 million and is obviously designed primarily for sophisticated persons and entities that qualify as "accredited investors," Rao sees his company applying the same Internet-inspired business practices that have led to the success of sites such as Amazon.com.

"Hedge funds go only to highly networked individuals, organizations and corporations (who are) sophisticated in wealth and knowledge. Only those who understand the risk get to partake of the reward," Rao explained. "Yet more than 80 percent (of those who qualify) have home computers. As a result of their being able to do research on the Internet, there is a big difference in the customer knowledge base."

Rao sees this increased knowledge base raising the collective comfort level of prospective investors and inspiring a migration of Baby Boomers from mutual funds to hedge funds because the individual has so much more information available through the Internet.

"Assets in hedge funds are growing exponentially," Rao said. "They've grown from $20 billion in 1992 to $200 billion in 1998, and it's expected to be a trillion dollar industry in 10 years."

Where is that growth going to come from? According to Rao, "There are two million highly networked individuals and only two percent of that market has been penetrated. The Internet can facilitate deeper penetration a friendly, non-threatening way.

The total individual net worth of this network is $10 trillion, and they have invested less that $200 billion in hedge funds."

Rao knows from growth. Before founding RRCM, he was chairman and CEO of Excel Technology, a technology-based company on Long Island that grew over a five year period in the early 1990s from one employee in one location with 1,000 square feet of space to five locations worldwide with 300 employees, going from $100,000 in annual revenues to $50 million. Rao believes that one must be an entrepreneur to create wealth and an investor to preserve and grow that wealth.

As with any other Web site, Rao's ability to drive potential leads - and in his case qualified leads - to his site is going to play a crucial role in determining the success of his endeavor. Right now, the industry is trying to figure out the best way to go about doing this, and there is no shortage of opinions as to what works and what does not.

The current buzz in certain circles, for instance, is that banner advertising is waning, yet the latest report from internetnews.com said online advertising expenditures are expected to reach $7.1 billion by 2002, with the big gains driven by increases in PC penetration and Web usage. The new research report comes from Simba Information in Stamford, Conn. and is entitled "Web Advertising 1998-99: Market Analysis & Forecast."

"Growth rates will peak in 1999, when Web advertising expenditures hit $5.5 billion," a 161.9 percent increase over $2.1 billion in 1998, according to Simba's projections. "The biggest reason Web advertising continues to explode is that the emerging demographics of the Web look more like those of the rest of the world," said Tim Mullaney, the report's author.

Finally, when my younger brother returned from two years in Germany courtesy of the United States Army, he headed not for home nor for the bright lights in the big city Rather, he hightailed it to Coney Island because he believed Coney Island represented everything fun about America.

You don't have to go to Germany for two years to develop such an affinity for Coney Island. Just visit coneyislandusa.com and all the visual excitement of Coney Island itself will be yours without the hassle of driving to Brooklyn or the joy of sitting in a puddle of spilled soda. While at the site, be sure to check out Baby Dee, The Human Hermaphrodite - Half Man, Half Woman. Half fun!

Michael Watt is the managing director of Longlsland.com, a regional search engine for Long Island. He may be reached at mwatt@longisland.com or directly at 516-543-1000.