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Mix-Ansicht- the top 10 reasons why you shouldn't want to run other peoples' money. - Der letzte Grund, 24.05.2001, 13:28
the top 10 reasons why you shouldn't want to run other peoples' money.
ยท 1. Everyone who gives you money is your boss. You will be graded mercilessly and you will be second-guessed endlessly, unless you establish upfront that you will not take any guff from your partners. Good luck doing that. I tried; sometimes I succeeded and sometimes I failed.
ยท 2. If you take a vacation, you are a loser. You are letting your partners down and you are running the risk of missing a big move. I felt that vacation was so irresponsible at the end of my hedge fund career that my family routinely scheduled them without me. I could never justify not being at the office.
ยท 3. If you have a bad year (that is, if you lose money), you are a bum. You could be a bum even if you are down 20% before the year is over. You can't pay your people at the end of the year, so they leave. Your partners will give up on you in no time flat. I don't care if you made them hundreds of millions of dollars; they will fire you in a heartbeat. By fax, no less!
ยท 4. You are never not working. There is always a market open somewhere and there are always positions that you are long about which you must worry. I remember listening to the news over a weekend about a dozen years ago. There had been a coup in the country where one of my core companies had a plant that made rutile, an additive for white paint. I spent all Sunday worrying that the plant had been trashed and when I got in on Monday, I gratefully found out it hadn't. However, I only found out because the company used that one positive ("The plant is still up and running!") as an offset for a disastrous miss in earnings. The company later went bankrupt. You carry your positions around like a steamer trunk on your back. And if you don't, you shouldn't be in the game.
ยท 5. You can't be nice during the day. I genuinely believe that paranoids make the best money managers, because the majority of the time people really and truly are trying to pick your pockets. Brokers, traders, hypesters, newsletter folks, analysts -- you name it, they all have an agenda to get your money.
The job turned me into a raving maniac at times. And that's not even the bad part. The bad part was that it became almost impossible for me to revert to my old self, which is actually a jovial, somewhat good-natured soul. The commute home was never long enough for me to be able switch back to someone who didn't operate offensively to protect myself.
ยท 6. Someone's always going to do better than you. If you are competitive like I am, and you can't stand being beaten, this is the world's worst job. There is always someone out there who had 100% of his fund in McAfee (MCAF:Nasdaq - news) or someone who had 50% of his fund in some takeover name. You lead a Liberty Valence existence, and there is always a better, faster gun out there.
I kept a journal for many years and, when I look back to 1983, when I shot the lights out in performance, there was an article about some guy at Fidelity who did better than me. I was crestfallen, just crushed. When he later blew up his fund, I wasn't even mollified because by then there was someone else doing better.
ยท 7. The clock starts at zero every year. Every year, the previous year's performance means nothing. You have to start all over again. When I would get my run from Goldman Sachs each morning (a margin run showing my positions) there would be a little number on the right hand corner of the page that showed how much I was up for the year. One of the reasons I eventually quit was that I could not bear to see that number start at zero for one more January.
ยท 8. It is a young person's game. You have to be new and open to ideas all of the time. You have to travel and see companies. You have to come to work early and work late. You have to be willing to put in 15 to 16 hours a day, especially during earnings season. That got progressively harder for me as I got older.
ยท 9. You can't really do it yourself anymore. You need an infrastructure to handle both the trading side and the accounting side. It is very hard to run money alone, even though the responsibility ultimately will fall on your shoulders. And you have to be able to pay your employees huge money. Good people are routinely raided. Bad people kill you.
10. In the end, it can be soulless and -- while financially lucrative -- it can grate on you that all you are doing is making rich people richer. This last point, in the end, weighed so heavily on me in my last years as a hedge fund manager that I would become embarrassed to explain to my kids what I did. I wasn't creating anything. I wasn't helping anybody who needed help. I was just making people move higher on the Forbes 400 list.
(Cramer)
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