I just got dissed...

[makloda]

Quote from zdreg:
you simply do no not understand there is an incentive for hedge fund managers to go for home runs with little or no consequences for their misperformance.

Now you explain to me what the difference is between a hedge fund manager leveraging up 20x on toxic debt and hoping he makes out like a bandit so he can bank 20% performance fees and a Fortune 500 CEO that loads up on debt and expands capacity excessively in order to present paper profits for the fiscal year so he earns his $25m in performance bonus.

Tell me why hedge fund managers are being labeled as greedy scammers and Fortune 500 CEO are being excused thanks to "economic headwinds" when their bets go the wrong way?

 

[wutangfinancial]

It seems much of this guy's dismay (and somebody already mentioned his name, I'm not saying which one it is) is with young intellectual capital being directed towards selfish activity, as opposed to say, heart surgery (Canada needs more qualified specialists).

 

[scriabinop23]

Quote from wutangfinancial:

It seems much of this guy's dismay (and somebody already mentioned his name, I'm not saying which one it is) is with young intellectual capital being directed towards selfish activity, as opposed to say, heart surgery (Canada needs more qualified specialists).

Well he's right for that. Just think of all of brilliant physicists' minds that could be solving real problems and instead are working on quant models for Goldman !!

Well... I guess its all how you spin it right? The brilliant physicists that solved the problems that allowed for harnessing nuclear power (that we use today) also served as enablers for the annilations of hundreds of thousands of people in Japan.

... Think how great this world would be if Hitler or Stalin hadn't been 'productive' members of society!!! Imagine if they both had out of control pot habits, enabling them to do nothing with their lives. Or imagine they were compulsive gamblers addicted to their trader workstation account enabling them to do nothing of 'value' with their life!

The point: All depends on what glasses you look through in evaluation.

Furthermore, heart surgery ... One could argue it postpones the inevitable (Death), so is it an effective use of capital (energy, moral, and fiscal)? Just look at the burgeoning problem of out of control health entitlements to the aging of our society. I imagine that wouldn't be the same problem if our society more gracefully *embraced* death rather than fought it tooth and nail.

Just waxing philosophical here. You should've titled this thread appropriately: 'The Meaning and Value of Trading'

 

[Champion]

Quote from wutangfinancial:

I'm starting a boutique hedge fund. Anyhow, my mother told a certain big wig in the fund management industry...we're talking the Warren Buffet of Canada, you can probably figure it out. Anyhow, without even hearing about my fund, he said I'm greedy and have no morals, and that I should work in real industry. He said hedge funds provide nothing.

My fund is small, trades in relatively illiquid securities, and provides real value to an individual's (not an institution) portfolio. This guy is 80, famous, and hates hedge funds.

Any thoughts why he is so critical?

I see myself as making markets more efficient, and helping make friends and family rich.

This story is mostly fantasy. Stay there. Its a good place for you to think and write dogshit.

 

[wutangfinancial]

Quote from Champion:

This story is mostly fantasy. Stay there. Its a good place for you to think and write dogshit.

um, what? I don't even see anything fantasy worth. Starting a small fund with friends and family money...not exactly Renn Tech or DE Shaw buddy.

 

[Euler]

Quote from wutangfinancial:

It seems much of this guy's dismay (and somebody already mentioned his name, I'm not saying which one it is) is with young intellectual capital being directed towards selfish activity, as opposed to say, heart surgery (Canada needs more qualified specialists).

That brings up an interesting question -- why did HE choose to go into investing if he regards it purely as "selfish activity", as seems implied by your post? Is he saying he regrets his career choice?

On the other hand, he (if he really exists and feels that way) may be referring to poor money managers who might otherwise be productive in some other job. In that case, he probably has a point. It seems to me that 2-and-20 is being charged by a VERY large number of funds that should really be mutual funds or even nonexistent, and my impression is that the institutional investment world is starting to pull the plug on such funds.

I think that's also the point of Buffett's recent remarks alluded to in this post, as well as his well-publicized bet against a FOF; I strongly doubt that Buffett is against hedge funds, strictly speaking, as he ran one for much of his life.

http://dealbook.blogs.nytimes.com/2008/06/09/warren-buffetts-hedge-fund-wager/

As far as highly outperforming investors are concerned, I can't see that as unproductive insofar as such investors exist to allocate capital more productively; if the capital were already allocated properly, then such investors wouldn't be able to outperform (absent manipulation, of course, which I think is far rarer and much harder to pull off than many of the board's conspiracy theorists propose).

Nonetheless, the relative, long-term "contribution to society/the world" of a world-class academic heart surgeon versus Warren Buffett/James Simons/Steve Cohen/[your favorite name here] seems highly debatable, as I'm not even sure where I stand on that myself.

 

[Thermactor]

Quote from wutangfinancial:

um, what? I don't even see anything fantasy worth. Starting a small fund with friends and family money...not exactly Renn Tech or DE Shaw buddy.

have you graduated with your degree in finance yet?

what's your track record managing your own money?

 

[TraderZones]

Quote from snowhite:

ET is full off wannabes except for traders like myself who made it. Be careful and trust no won.

Well, you blew your opportunity to look smart with "trust no won." Guess you are also a wannabe...

 

[zdreg]

Quote from makloda:

Now you explain to me what the difference is between a hedge fund manager leveraging up 20x on toxic debt and hoping he makes out like a bandit so he can bank 20% performance fees and a Fortune 500 CEO that loads up on debt and expands capacity excessively in order to present paper profits for the fiscal year so he earns his $25m in performance bonus.

Tell me why hedge fund managers are being labeled as greedy scammers and Fortune 500 CEO are being excused thanks to "economic headwinds" when their bets go the wrong way?

they are both in the same league. it is just easier when the shit hits the fan to recognize the scam created by the hedge fund manager. there is an inherent conflict of interest between the hedge fund managers and the other investors. as for the CEO the interests of the CEO and management are not always aligned with the shareholders.
a plague on both houses.

 

[Cutten]

Quote from zdreg:

not quite. you hear a similar argument
when someone from management sells a substantial amount of stock but he still hold a significant amount. the news will emphasize what he has left. if he sold $40 M it doesn't make a difference that that he has 60m or 80m left. he got his nest egg.

Even if someone has a "nest egg", why would they want to lose 50-90% of their net worth?

A hedge fund manager with 50-90% of his cash in his own fund has *far more* incentive to avoid losses than an investor, who typically has 5% of less of their net worth in the fund.

If the investors lose money, the fund manager loses much more money in % of net worth terms. How is that a misalignment of interests?