Thursday, September 20, 2007

Moral Fiber

I saw a really promising article about hedge fund managers and real estate in The New York Times yesterday, and I thought, "Goody! Now we can see how the hedgies are adjusting to the new market realities."

I settled in with my coffee and roll for a nice helping of Sturm und Drang, a great wailing and gnashing of teeth, and a clash of Titans as the Irresistible Force of Hedge Fund Ego smashed against the Immovable Object of New York Real Estate. Instead, I got Woody Allen and Alan Alda bickering over the script of The Four Seasons.
So the pressure begins to build, and eventually, said Andy Kessler, a former hedge fund manager, “you stop spending.” Why? Fear, mostly.

“You worry about redemptions,” Mr. Kessler said, “you worry about margin calls, and you worry about working for free. Down 7 percent may be no big deal, but when your investors say, ‘Get me out,’ you have to sell everything.”

After years of eye-popping returns, sudden losses can be wrenching. Aware of the psychological impact that high-pressure trading can have, several funds have retained psychologists to counsel stressed managers.

“It has been a very challenging period for these people,” said Jonathan F. Katz, a psychologist who works with large hedge funds. “I have seen people shaken, their confidence eroded. They are upset and depressed.”

"Upset and depressed?" You're effin' kidding me, right?

Unfortunately not. The article continues:

Such distress can result in what some call a social contagion, as hedge fund executives let their woes at work affect their personal lives. Investors have said that their golf scores soar, that they lose their appetites and wake up in the middle of the night in a cold sweat.

To be sure, many investors are cool headed enough to not let inevitable setbacks derail them. But others find it hard to keep their sense of self insulated from losses.

“Some people are debilitated by it,” said Ari Kiev, a psychiatrist who works principally for SAC Capital, the hedge fund founded by Steven A. Cohen. “You can’t sleep; you can’t eat; you have catastrophic thoughts about losing your house.”

A prominent hedge fund investor, who like the other executives who discussed their anxieties asked not to be identified, spoke of a crisis of confidence. “It’s an intellectual destabilization,” he said. “All of a sudden, your funds are down 5 percent and the S.& P. is down 1 percent. Once you were master of the universe, but the market makes you humble.”

What?! These assholes suffer a 4% relative underperformance over one month and all of a sudden they're feeling humbled? The next thing you know we'll be reading about how they're suffering from hives and erectile dysfunction. Sheesh.

* * *

I don't know about you, Dear Readers, but I like to have my heroes and villains a little larger than life, with hair on their chest and balls a size or two too large for their britches. (You too, girls.) I don't want to read about some pussy who can't even maintain the conviction of his own Napoleon complex when he suffers a couple of slings and arrows. Where's the ranting and raving, the breaking of crockery? Instead, we get a gelded Tony Soprano with his thumb up his ass.

It occurred to me as I read on that this is what has bothered me most about all the column inches offered up by hedge fund apologists in the media these past years. Instead of J.P. Morgan thrashing a photographer with the temerity to photograph his ugly great schnozz, we get a pudgy, fleece-wearing Steve Cohen whinging about how all the money-making opportunities have disappeared and giving photo ops at his local Greenwich sandwich stand. Instead of Andrew Carnegie and Henry Frick crushing a steelworker's strike with hired thugs, we get Daniel Loeb picking lopsided fights with deer-in-the-headlights corporate managers who can't get out of their own way, much less his. Butterballs instead of titans; playground bullies in place of forces of nature. For cripes sake, I'd take even Dennis Kozlowski over James Simons any day. Simons may be smarter than Stephen Hawking and Albert Einstein combined, but the man's personality makes soggy melba toast look downright scintillating.

Where's the brio? Where's the chutzpah? Where's the moxie?

Who knows? There may be some interesting personalities out there in hedge fund land, but I can't for the life of me remember reading about them. Ken and Anne Griffin slobbering over each other's "passion" in Portfolio magazine? Puh-leeze. These people need a serious personality makeover.

Get some grace. Get some style. Get some class. It's not like you can't afford it.

If you need an example of how not to behave, just reread the NYT article. Word to the wise: don't send your bejewelled crack whore girlfriend to check out a $48 million Southampton estate so she can ask whether JetSkis are allowed on Lake Agawam. Putz. And if you're really suffering from severe depression and performance anxiety, don't take a full page confessional ad out in the Times. Go buy yourself a really nice English shotgun and go out in style, à la Ernest Hemingway.

This one should do nicely. It's efficient, and your heirs will appreciate that you left them a really fine piece of hardware.

You do want to leave a legacy, don't you?

© 2007 The Epicurean Dealmaker. All rights reserved.