More Media Crap About Hedge Funds

Good God.  The MSM's ongoing antipathy towards hedge funds is ... ongoing.

Every few months or so, the highly underpaid geniuses in the media business feel the need to tell you that the people in the hedge fund business are highly overpaid mediocrities.  Reductive Freudian penis imagery is quite useful in this regard.

OK, we get it.  A predominantly white-male group is scamming the public and garnering unto themselves undue influence and power that is both unearned and pernicious.

(Incidentally, I could say the same about the media.  It's mostly a bunch of weaselly white guys too.  They talk a big game about 'speaking truth to power' yadayadayada, but it's mostly a sham, they're just propaganda artists with bylines.  Same dichotomy - big honkin' Johnson in terms of their view of themselves versus flaccid Irishness in reality...Ezra Klein, I talking about YOU!)

Anyway, it never stops.  Here is the latest from The Journolist Crew at Bloomberg View.  There are all the usual things wrong with this as the umpteen previous version of this EXACT SAME article, which have been addressed over and over.  But the fatal flaw is right there, blaring in the title.

"Hedge Funds Won't Make You Rich"

I'm not sure who makes that claim.  In fact, when I started my hedge fund many years ago, my principal financial backer took me aside and gave me, in his words, the one piece of advice I'd need to run my hedge fund.  "Remember," he said, "you are not in the get rich business, you are in the stay rich business."  In other words, the type of clients I'd have were more interested in preservation of capital than return on capital. There may be some that quibble, but in over a decade I have found that those with staying power and a rock-solid reputation in this industry hue to that view of their role.  I have NEVER heard of a hedge fund marketing pitch by anyone other than a scamming scheister that says, "you will get rich investing in my fund."  So, we are talking about a straw man here.

Then there is the classic lefty argument for things that they don't like and can't come to terms with - the players don't understand their own interests.  This is the Thomas Frank/What's Wrong with Kansas argument.  We have to ignore the fact that people choose over and over again a certain alternative, because, well, they're stupid.  Even though ALOT of very rich and putatively savvy people and institutions invest alot of money in hedge funds, they clearly don't understand what is in their best interests and must be wrong.  Ugh.  Just Ugh.

UPDATE:  Here is an intelligent rebuttal by Matt Levine of Bloomberg News that says many of the same things that I said, citing a recent Citibank survey of the hedge fund industry.