Confessions of hedge fund manager
2016.03.02 오후 4:25
By Michael L. McManus
I am a hedge fund manager andtrader. I am thirty five years old. I havethree homes, one super condo in Mid-Manhattan, a beach home on thecoast of Long Island, and a condo onthe beach in Boca Raton Florida.
I playgolf about 100 days a year, go sailing in my two yachts, go snow skiing in Colorado and Utah, and jet over to Europe for occasional shopping.
Mywife enjoys that part especially. Mykids who are 10 and 12 years old arein the best private schools and theyreside at the schools in New England. We see them at holidays, and believeme, that is enough.
I happened to grow up fairly rich. My dad was a stockbroker, but he was oldfashioned style, just basically sold andbought stocks and bonds at a profitalways. That was his rule.
Some of my classmates were not rich, however. They had a modest background andwere limited in their life experience asa result. When I would go mountainclimbing in Peru in summer, or justsurf in Hawaii, they would work infactories or internships for theirsummers. So limiting.
So, I went to one of the best IvyLeague schools for my bachelor andMBA degrees. Dad had to pull somestrings to get me in, and he made acontribution to the university. Noproblemo! I sailed right through,though I had to cut many classes toget my pilots license so I could pilotDad’s jet to Florida. I took a few offthe radar trips to Columbia, ha-ha, butDad never knew about that. I wasreally lucky during my master’sdegree. I found a grade grubber nerdtype from Nebraska who took some ofthe tests for me. I paid him a smallamount. He wanted more but Ithreatened to expose him so hesettled for what I was willing to pay. Classes were so big, no one knew whowas taking the test!
My professors, especially the financeprofessors, taught me a lot. Theyalways said that if we were smartenough to get in to that university, sowe were smart enough to outsmartmany to become millionaires by theage of 35. Ha, I did it when I was 32. He taught us about derivativemarkets, synthetic bond markets andtertiary tier investments. In his ownresearch, he said he was working on afoolproof way to make huge sums ofmoney while never letting investorsknow we were using their money togross about 20 to 25% profit. If wearranged the books so that they got5% they were happy as a clam andnever knew the whole story. Myprofessor used to laugh and say, “What they don’t know will never hurtthem”. Plus, everyone can’t go to anIvy League business school.
While I was in school I got into twoarguments with my ethics professorand my marketing professor over thissame issue. I debated this in classwith them. I simply said that as longas our marketing classes taught us tobe super competitive and to try tooutsmart the competitor, what wasthe difference in the investment area? Why couldn’t we outsmart theinvestor? Someone has to win andsomeone has to lose. Right? So withall this desire to have stuff like threehomes, boats, cars and jets, it is uswho must win. What good are we toinvestors if we lose more than theygain?
I got a lot of this attitude from myfinance professors. They always had adevilish twinkle in their eye andalways told me not to worry aboutPaul Volker and his criticism of theesoteric and elevating elegance infinancial engineering. Volker was anold man and had not shifted to thenew economic thinking. So I waslucky. My professors drummed into usthat we were the smartest andtherefore we owed it to him, ourmentor, and our school and our familyname to be the smartest of anyone,even, if sorry to say, our customers. After all, we are not in this only tohave to borrow thousands for ourkids’ education, sweat all our lives topay off one mortgage, and sit in hot,stinky trains back and forth to work. No way! We are in this for keeps.
There is an interesting principle thatoperates. When dealing with richcustomers you better be rich yourself,otherwise, no respect. The NFLCommissioner has a gloryadministrative job with big perks andis always entertaining the billionaireclass who own football teams. Whyshould he only make a six figuresalary? It would strip him of any senseof importance. That is why we getpaid really large salaries when wework for hedge funds on Wall Street. And, you should see the Christmasbonuses! The last five years theyaveraged 30-40 % of our annual! Thatis how I bought my first plane.
I pity my classmates who went to workfor banks, ordinary commercial banks,in cities other than the Big Apple. Places like Philly, Boston, evenWashington. Work their butts off, andstill need to borrow for their kids’college education. Most of them willnever go to Bermuda for vacation, letalone for “business” and most have noidea where the Cayman Islands are. And the ones who end up inWashington are less smart yet maketheir money the really dirty way ―campaign contributions.
So, they ask where the root of evil onWall Street comes from? It does notcome from a single office on WallStreet! It emanates from the financialwizard engineers disguised asprofessors on just a few campuseswithin 100 miles of Manhattan. Theytaught me a lot.
Written by an anonymous hedge fundmanager and trader on Wall Street. Ithink I will send a small contributionto my university. It is the politicallycorrect thing to do.
Michael L. McManus is not a hedgefund trader/manager, though knowsand follows the careers of a few. Hewrites exclusively and twice monthlyfor The Korea Times, and serves a fewuniversities in the Seoul area asprofessor and advisor. Comment isvery welcome atmcmismism@aol.com.