In a similar vein to my post earlier this month entitled "Remember when Hedge Funds hedged?" satirist Andy Borowitz has penned a how-to guide to starting your own fund.
The Huffington Post: They Key to Happiness
Owning a hedge fund has changed all that. My workdays, which used to stretch out before me like a desert of meaninglessness and ennui, now brim with fulfillment and joy. As a hedge fund owner, I am truly, insanely happy, from the moment I wake up to the moment my head hits my 1200 thread-count pillow in an absinthe-drenched haze. And as for the other things I wanted to do before I die, I pay other people to do them for me now.
Like all good business plans, he even gives advice on your exit strategy:
One final thing: as magical as it is to own your own hedge fund, at some point you may feel the need to let go, to move on. More specifically, you may need to leave the country under cover of darkness. But speaking as someone who has done just that, it's not as tricky as it sounds. What will you need? Just three things:
1) a single-engine plane
2) 20 million dollars in small bills
3) a face transplant
Well done! I'm really feeling good about the marketability of my cunning plan to arbitrage the divergence between the market returns of horse races, microcap fraud, and Columbian supermodels. Besides, once the fund is up and running, I can wear a cool t-shirt to the bar that says "I wish I was your derivative, so I could lie tangential to your yield curve!"*
The Huffington Post: They Key to Happiness
Owning a hedge fund has changed all that. My workdays, which used to stretch out before me like a desert of meaninglessness and ennui, now brim with fulfillment and joy. As a hedge fund owner, I am truly, insanely happy, from the moment I wake up to the moment my head hits my 1200 thread-count pillow in an absinthe-drenched haze. And as for the other things I wanted to do before I die, I pay other people to do them for me now.
Like all good business plans, he even gives advice on your exit strategy:
One final thing: as magical as it is to own your own hedge fund, at some point you may feel the need to let go, to move on. More specifically, you may need to leave the country under cover of darkness. But speaking as someone who has done just that, it's not as tricky as it sounds. What will you need? Just three things:
1) a single-engine plane
2) 20 million dollars in small bills
3) a face transplant
Well done! I'm really feeling good about the marketability of my cunning plan to arbitrage the divergence between the market returns of horse races, microcap fraud, and Columbian supermodels. Besides, once the fund is up and running, I can wear a cool t-shirt to the bar that says "I wish I was your derivative, so I could lie tangential to your yield curve!"*
*I totally stole that from somewhere else, and no, I'm not sorry.
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1 comment:
Lee, as you well know, when everyone is getting their real estate license - its time for the pros to dump on the chumps.
I am willing to venture that the same will happen in the world of hedge funds which is largely unregulated. Every twit with an MBA who has logged 100 hour weeks slogging out scut work at Goldman or Citi dreams of having his or her own fund. Collecting 2% off the top and 20% of the gain...I am getting all squishy myself thinking about it.
Soon, the pros will dump on the chumps in this industry and the chumps along with their 2nd and 3rd tier client base will get creamed.
Not only will the chumps get creamed, they will get insurmountably hammered due to their level of leverage. And thus begins the fall of the house of cards.
When I was a simple student at the University of Chicago Graduate School of Business (GSB '00 - gratuitious ego pump - sorry) we studied the preliminaries of the Long Term Capital Mgmt (LTCM) fiasco. Let's face it, when Myron Scholes (Noble Laurete 1997 - Economics) gets taken for a ride because his models made assumptions that didn't hold - imagine what will happen to the dice throwing me too crowd (today's 2nd and 3rd tier hedge fund managers).
It will get ugly, it is a matter of when.
Besides all that debt heaped on those buyout targets will make things interesting in its own right.
There are few things more unforgiving than leveraged margin calls.
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