It Is Time To Become A Hedge Fund Manager

  • metta

    Posts: 39078

    Apr 02, 2011 8:26 AM GMT
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    Even Funds That Lagged Paid Richly



    http://www.nytimes.com/2011/04/01/business/01hedge.html?_r=2
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    Apr 02, 2011 4:17 PM GMT
    metta8 saidicon_wink.gif


    Even Funds That Lagged Paid Richly



    http://www.nytimes.com/2011/04/01/business/01hedge.html?_r=2


    I think a society where the best and brightest can only do well by shuffling bits of paper on Wall Street instead of creating real things is in trouble.
  • BoostToChase

    Posts: 103

    Apr 02, 2011 4:28 PM GMT
    tomk7 said
    metta8 saidicon_wink.gif


    Even Funds That Lagged Paid Richly



    http://www.nytimes.com/2011/04/01/business/01hedge.html?_r=2


    I think a society where the best and brightest can only do well by shuffling bits of paper on Wall Street instead of creating real things is in trouble.


    I agree. Even more to the point: societies that rely on shifting the paper bits in spite of healthy business practices only contributes to this negative feedback cycle.

    I read this article recently, and I think it gives a healthy perspective on how a business should respect every stakeholder involved in the making of a product, from the employee to the customer.
    http://www.salon.com/news/politics/war_room/2011/03/29/failure_of_shareholder_capitalism/

    Employees are not entitled to a job by any means of the imagination. However, they are a key contributor to the process of making a good product. Treat the employee well, and they will take more pride in the making of a good product/service. Treat the employee like crap, and they won't give a crap about a company's service or product.

    I was born in the mid 80s, so I don't have much perspective on "old" business practices. But it seems like the corporations from the 30s-70s cared a lot more than today's electronic exchanges.
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    Apr 02, 2011 4:57 PM GMT
    BoostToChase saidI was born in the mid 80s, so I don't have much perspective on "old" business practices. But it seems like the corporations from the 30s-70s cared a lot more than today's electronic exchanges.


    You'd be wrong here. If you brought some of these workers to see some of the most dynamic and growing companies today, they'd think companies like Microsoft, Google, Apple were crazy for treating workers as well as they do.

    I think hedge fund/general fund managers do perform important tasks and their compensation reflects the leverage and intersect of the economy - and they make capital allocation more efficient (ie good businesses and ideas get rewarded while bad ones don't). As an employee you take on very little risk beyond what the next paycheck might be whereas investors are stuck with both the returns and losses. Hedgefunds are curious target however given that the people invested in these things are generally very wealthy individuals or institutions - so it's not as if they don't know what they're doing - and if hedgefunds are "taking" from anyone it's these very wealthy individuals/institutions who may have a preference for safety over benchmark performance for instance.

    Even in finance, more broadly speaking, it's a curious thing. Good ideas are funded more often at better valuations in venture capital for those who create the ideas. Which is to say there's a supply and demand from the perspective of an investor - for good ideas. Just as there's a supply and demand with price being what determines the level of each, of labor and money.
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    Apr 02, 2011 5:35 PM GMT
    riddler78 said
    BoostToChase said As an employee you take on very little risk beyond what the next paycheck might be whereas investors are stuck with both the returns and losses.


    To most if it's a job worth having you risk losing it if you don't perform.

    If you chose to work for a company that begins to perform badly you also take on risk.

    Either of the situations has financial implications for actual paycheck as well as bonuses and stock option programs.

    I consider that being stuck with both returns ans losses. In reality you chose to invest your future at these places and there is risk.

    This is another telling article about the wall street machine:

    http://news.yahoo.com/s/time/20110329/us_time/09171206122000
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    Apr 02, 2011 5:52 PM GMT
    Yes, if you can't beat them join them.

    But to be serious hedge funder's the best and brightest in the country? I don't know why a lot of people think that...

    I'm not trying to discredit them or say they're not bright because they certainly are. Earning a degree from an ivy league university and going into finance is nothing to belittle. But while hedge funders are great at what they do they're probably not the best and the brightest in terms of society. Of course then there's different types of intelligence.

    If they didn't become hedge funders they would probably still go into some other area of finance or business as that is how they think- business minded and financially oriented.

    They serve their purpose in the grand scheme of society and serve the economy. Now regulating them is an entirely different discussion.
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    Apr 02, 2011 5:56 PM GMT
    I think it's fairly clear that hedge fund management fees are only worth paying in a few cases. As soon as enough people realize this (cf the rise and rise of market trackers) the selection pressure will weed out the chaff.

    Having met a fair few of them in the City of London, I'm fairly convinced they're not the brightest in the world. But some of them are pretty bright.
  • BoostToChase

    Posts: 103

    Apr 02, 2011 6:04 PM GMT
    tomk7 said

    http://news.yahoo.com/s/time/20110329/us_time/09171206122000


    It makes sense that new businesses drive nearly all job creation. First, it is relatively simple. Second, big established firms tend to move towards higher efficiency. Thus, presumably, cutting jobs.