“PHILOSOPSHY”
October 6, 2012 8:49 AM Subscribe
Kevin Roose of Nymag.com posted about a brand new North Carolinian hedge fund that seemed less than impressive. The fund then started to use a sarcastic quote from Kevin's post as a kind of ringing endorsement on their website. Uh oh.
Really? If I were a reviewer that would annoy the shit out of me, StickyCarpet.
posted by Think_Long at 9:10 AM on October 6, 2012 [3 favorites]
posted by Think_Long at 9:10 AM on October 6, 2012 [3 favorites]
You know what annoyed her more? The letter to the editor I had printed the next week detailing all of the factual errors in her review. Tellingly, she did not use her right to append a reply.
posted by StickyCarpet at 9:12 AM on October 6, 2012 [2 favorites]
posted by StickyCarpet at 9:12 AM on October 6, 2012 [2 favorites]
These markets, they’ve never been witnessed before. And because of our experience, we started observing these markets so young. Age serves a very strong, uh, what’s the word ... a very strong, uh, source of credibility. And I think these markets ... I’m sorry — I’m completely blanking. I think our age is very much considered, but it’s simply ... uh, I’m sorry, I’m completely blanking right now. Is it okay if I give you back to ZachI have some excellent history books I could lend to these innovative people.
posted by the man of twists and turns at 9:15 AM on October 6, 2012 [6 favorites]
Whoa, hold on sheeple, these are Job Creators in training!
posted by sfts2 at 9:17 AM on October 6, 2012 [11 favorites]
posted by sfts2 at 9:17 AM on October 6, 2012 [11 favorites]
I love the "artists rendition" of the kids doing a fist bump. Nevertheless...
We laugh. But really these kids are NO LESS INFORMED AND MAY IN MANY INSTANCES BE BETTER INFORMED than the so-called big boys, when it comes to world events. What the "big boys" know and these kids don't, are much, much more sophisticated ways at parting the investor from his money - centuries of legalized grift designed primarily to shift blame.
I shit you not. We chuckle at the hubris of the college kid hedge fund, but these kids are probably a much safer bet than to put your money into a company that is probably betting against you. They may actually be young enough to think they can actually make money by investing it, you know, like the stories they've heard. When they are a little older and wiser, they'll realize it's all about how to steal.
posted by Xoebe at 9:17 AM on October 6, 2012 [15 favorites]
We laugh. But really these kids are NO LESS INFORMED AND MAY IN MANY INSTANCES BE BETTER INFORMED than the so-called big boys, when it comes to world events. What the "big boys" know and these kids don't, are much, much more sophisticated ways at parting the investor from his money - centuries of legalized grift designed primarily to shift blame.
I shit you not. We chuckle at the hubris of the college kid hedge fund, but these kids are probably a much safer bet than to put your money into a company that is probably betting against you. They may actually be young enough to think they can actually make money by investing it, you know, like the stories they've heard. When they are a little older and wiser, they'll realize it's all about how to steal.
posted by Xoebe at 9:17 AM on October 6, 2012 [15 favorites]
If I were a reviewer that would annoy the shit out of me, StickyCarpet.
It happens a lot. You would get used to it. And in time, start poking fun at the lengths to which publicists will go to find a pull-quote out of a shit review.
Most audience members are skeptical of the pull-quotes on the posters anyway, so no real harm.
posted by EmpressCallipygos at 9:18 AM on October 6, 2012 [1 favorite]
It happens a lot. You would get used to it. And in time, start poking fun at the lengths to which publicists will go to find a pull-quote out of a shit review.
Most audience members are skeptical of the pull-quotes on the posters anyway, so no real harm.
posted by EmpressCallipygos at 9:18 AM on October 6, 2012 [1 favorite]
"We believe there is upside investment opportunity through a strategy founded on understanding international developments and their global impact . . ."
Adorbs.
Securities law gives grown men nightmares. I don't envy their finding out what they must have done wrong already. (I have no idea, personally, but I'm going to guess it's a lot.)
posted by Countess Elena at 9:20 AM on October 6, 2012 [5 favorites]
Adorbs.
Securities law gives grown men nightmares. I don't envy their finding out what they must have done wrong already. (I have no idea, personally, but I'm going to guess it's a lot.)
posted by Countess Elena at 9:20 AM on October 6, 2012 [5 favorites]
"...Sandwich!"
-Rolling Stone
posted by "Elbows" O'Donoghue at 9:22 AM on October 6, 2012 [36 favorites]
-Rolling Stone
posted by "Elbows" O'Donoghue at 9:22 AM on October 6, 2012 [36 favorites]
I don't envy their finding out what they must have done wrong already.
For starters just agreeing to that interview about them, rather than about a particular topic pretty much runs afoul of SEC marketing rules (though to be fair the JOBS act might protect them?) You can't actually speak to anyone about your fund until you know they are a "qualified investor."
They may actually be young enough to think they can actually make money by investing it, you know, like the stories they've heard. When they are a little older and wiser, they'll realize it's all about how to steal.
I'd be inclined to agree with you if their marketing materials didn't exist completely of cliche-y gobbledy-gook.
posted by JPD at 9:34 AM on October 6, 2012 [1 favorite]
For starters just agreeing to that interview about them, rather than about a particular topic pretty much runs afoul of SEC marketing rules (though to be fair the JOBS act might protect them?) You can't actually speak to anyone about your fund until you know they are a "qualified investor."
They may actually be young enough to think they can actually make money by investing it, you know, like the stories they've heard. When they are a little older and wiser, they'll realize it's all about how to steal.
I'd be inclined to agree with you if their marketing materials didn't exist completely of cliche-y gobbledy-gook.
posted by JPD at 9:34 AM on October 6, 2012 [1 favorite]
Note to self:
Start hedge fund investing only in buzzwords. The market is limitless.
posted by Benny Andajetz at 9:44 AM on October 6, 2012 [1 favorite]
Start hedge fund investing only in buzzwords. The market is limitless.
posted by Benny Andajetz at 9:44 AM on October 6, 2012 [1 favorite]
these kids are NO LESS INFORMED AND MAY IN MANY INSTANCES BE BETTER INFORMED than the so-called big boys, when it comes to world events.
This is simply not true. I work for a mid-sized hedge fund, and I can categorically state that one of the biggest issues we face isn't a lack of information, but the opposite - too many data points that often conflict with each other. We hire consultants, have one-on-one meetings with key policymakers globally, send analysts around the globe on a weekly basis, and speak to analysts at several dozen investment banks and research firms every single day. What do these guys have? A Bloomberg terminal, maybe? Many major banks won't even give you access to their research without a minimum level of assets under management, (often $50mm) and, more importantly, they are legally prohibited from investing in a wide swath of securities without QIB status.
There is one thing that these kids get right - the idea that markets today are very much unlike markets of 5 to 10 years ago, and that the old strategies don't work anymore. A good many hedge funds that were founded around 2002-2003 found it easy to make money in the subsequent five year bull market, especially when using leverage. Since mid-2008, the game has changed dramatically, and a lot of marquee funds have been unable to adapt. That doesn't mean that being a novice helps though; quite the opposite. The best performers are often the ones who have 20+ years of experience and seen multiple market cycles, plus the humility to understand that when a strategy isn't working, you cut it off and go back to basics.
posted by Guernsey Halleck at 9:44 AM on October 6, 2012 [9 favorites]
This is simply not true. I work for a mid-sized hedge fund, and I can categorically state that one of the biggest issues we face isn't a lack of information, but the opposite - too many data points that often conflict with each other. We hire consultants, have one-on-one meetings with key policymakers globally, send analysts around the globe on a weekly basis, and speak to analysts at several dozen investment banks and research firms every single day. What do these guys have? A Bloomberg terminal, maybe? Many major banks won't even give you access to their research without a minimum level of assets under management, (often $50mm) and, more importantly, they are legally prohibited from investing in a wide swath of securities without QIB status.
There is one thing that these kids get right - the idea that markets today are very much unlike markets of 5 to 10 years ago, and that the old strategies don't work anymore. A good many hedge funds that were founded around 2002-2003 found it easy to make money in the subsequent five year bull market, especially when using leverage. Since mid-2008, the game has changed dramatically, and a lot of marquee funds have been unable to adapt. That doesn't mean that being a novice helps though; quite the opposite. The best performers are often the ones who have 20+ years of experience and seen multiple market cycles, plus the humility to understand that when a strategy isn't working, you cut it off and go back to basics.
posted by Guernsey Halleck at 9:44 AM on October 6, 2012 [9 favorites]
What we lack in wordly wisdom and basic competence we more than make up for with some of the fiercest animal spirits outside of a shamanic drug orgy.
posted by Abiezer at 9:48 AM on October 6, 2012 [14 favorites]
posted by Abiezer at 9:48 AM on October 6, 2012 [14 favorites]
“Steve Jobs started Apple in his garage, and we’ve moved up to A TREEHOUSE."
FTFY
posted by Lipstick Thespian at 9:50 AM on October 6, 2012 [4 favorites]
FTFY
posted by Lipstick Thespian at 9:50 AM on October 6, 2012 [4 favorites]
This really made me flash back to a hundred years ago, when I was was earning my Marketing Management degree. I was being steeped in the "science" of Business, and could suddenly see the rationale behind everything. Too bad it was 99% horseshit. The only business rule that works all the time is "give the people what they want."
posted by Benny Andajetz at 9:52 AM on October 6, 2012 [1 favorite]
posted by Benny Andajetz at 9:52 AM on October 6, 2012 [1 favorite]
BUY TRACKER FUNDS WITH LOW FEES AND CONTRIBUTE MONTHLY INTO A PENSION OR TAX SHELL AS EARLY AS YOU CAN, NEVER PAY MORE THAN 0.25% FEES is the best financial advice for most all of the population
posted by Damienmce at 9:53 AM on October 6, 2012 [3 favorites]
posted by Damienmce at 9:53 AM on October 6, 2012 [3 favorites]
I shit you not. We chuckle at the hubris of the college kid hedge fund, but these kids are probably a much safer bet than to put your money into a company that is probably betting against you. They may actually be young enough to think they can actually make money by investing it, you know, like the stories they've heard. When they are a little older and wiser, they'll realize it's all about how to steal.
How do they say it, 'A fool and his money are soon parted.'
It's up to you or I, as savvy investors, to do our own background research on the investment firms before we give them said money. I trust somebody who's had 10 years of successful investment and who can tell me exactly what the fuck they're doing, over some kid who's primary investments come from his 'friends and family.'
If you believe that, I've got some Nigerian investments I'd like to show you.
posted by kurosawa's pal at 9:54 AM on October 6, 2012
How do they say it, 'A fool and his money are soon parted.'
It's up to you or I, as savvy investors, to do our own background research on the investment firms before we give them said money. I trust somebody who's had 10 years of successful investment and who can tell me exactly what the fuck they're doing, over some kid who's primary investments come from his 'friends and family.'
If you believe that, I've got some Nigerian investments I'd like to show you.
posted by kurosawa's pal at 9:54 AM on October 6, 2012
I trust somebody who's had 10 years of successful investment and who can tell me exactly what the fuck they're doing,
Brings up an interesting point- unless they have an extraordinarily high Sharpe - like so high that no one has it - ten years of numbers alone isn't enough to differentiate luck from skill on any sort of reasonable confidence interval. Its actually far far far more important they be able to tell you what they do, why the do it, how they do it, and the single most important part - why it should work.
posted by JPD at 9:58 AM on October 6, 2012 [1 favorite]
Brings up an interesting point- unless they have an extraordinarily high Sharpe - like so high that no one has it - ten years of numbers alone isn't enough to differentiate luck from skill on any sort of reasonable confidence interval. Its actually far far far more important they be able to tell you what they do, why the do it, how they do it, and the single most important part - why it should work.
posted by JPD at 9:58 AM on October 6, 2012 [1 favorite]
What do these guys have? A Bloomberg terminal, maybe?
Pretty long list of guys with great numbers who started out using not much more than a bloomberg, a phone, and a bunch of annual reports.
There's even a very really argument that even talking to potential investments has a negative impact on results (not sure I totally subscribe to that last point)
posted by JPD at 10:02 AM on October 6, 2012
Pretty long list of guys with great numbers who started out using not much more than a bloomberg, a phone, and a bunch of annual reports.
There's even a very really argument that even talking to potential investments has a negative impact on results (not sure I totally subscribe to that last point)
posted by JPD at 10:02 AM on October 6, 2012
Oh. I originally read this as "Kevin Rose of Nymag.com" and then wondered what a co-founder of Digg/Screen Savers alum was doing talking about hedge funds.
Kevin Roose makes more sense.
posted by offalark at 10:13 AM on October 6, 2012
Kevin Roose makes more sense.
posted by offalark at 10:13 AM on October 6, 2012
Pretty long list of guys with great numbers who started out using not much more than a bloomberg, a phone, and a bunch of annual reports.
I don't dispute that, especially for bottoms-up value investors. Global macro, which is what these kids claim as their strategy, is a very different story.
There's even a very really argument that even talking to potential investments has a negative impact on results
Not disputing this either. But if you've done your homework and know the right questions to ask, you can often get good insight. Information is only useful when put into context, and a little knowledge can be a dangerous thing.
posted by Guernsey Halleck at 10:13 AM on October 6, 2012
I don't dispute that, especially for bottoms-up value investors. Global macro, which is what these kids claim as their strategy, is a very different story.
There's even a very really argument that even talking to potential investments has a negative impact on results
Not disputing this either. But if you've done your homework and know the right questions to ask, you can often get good insight. Information is only useful when put into context, and a little knowledge can be a dangerous thing.
posted by Guernsey Halleck at 10:13 AM on October 6, 2012
But if you've done your homework and know the right questions to ask, you can often get good insight. Information is only useful when put into context, and a little knowledge can be a dangerous thing.
Yeah but the insight behind the view isn't about how you use the info (important for sure. I tend to think information is a commodity 99.99% of the time and your framework for using it is what really matters), but that rather those "insights" 1) aren't very insightful 2) lead to overconfidence/decreased sense of uncertainty. Again, not totally sure that's true, but certainly some kernel of truth to it.
posted by JPD at 10:26 AM on October 6, 2012 [1 favorite]
Isn't the real barrier to global macro more a question of capital rather than research? Minimum scale is much greater there as I understand it.
posted by JPD at 10:29 AM on October 6, 2012
posted by JPD at 10:29 AM on October 6, 2012
You know, I don't know a whole lot about UNC-Wilmington except, hey, beach.
It's also the campus that Mike Adams teaches at.
But, no, not a toptier school in the UNC system.
posted by St. Alia of the Bunnies at 10:38 AM on October 6, 2012
It's also the campus that Mike Adams teaches at.
But, no, not a toptier school in the UNC system.
posted by St. Alia of the Bunnies at 10:38 AM on October 6, 2012
I feel like posting this gem from the comments:
teewrecks
"Story time!
Waaaaay back in January 2000, I went to a party for a friend's online-education startup. It was the usual: prizes (case of wine! Lunch with the founder!), oysters on the half shell, open bar. And entertainment: people juggling, dressed all in silver, on stilts. A few months later, the bubble burst.
Fast forward to 2006; my husband and I are invited to a big thing for real-estate speculators. Which we were not, but if you remember that time, precision was not the point. We get there: place is packed, tons of food, open bar ... and people on stilts, handing out noisemakers.
I looked at my husband. "Stilts," I said. We were out of there. Six months later, same thing. Bubble burst, market in freefall, the works.
Now I look at these boys in their little ties, with their very unique (sic) little niche, and all I can think: STILTS."
posted by The Whelk at 10:42 AM on October 6, 2012 [29 favorites]
teewrecks
"Story time!
Waaaaay back in January 2000, I went to a party for a friend's online-education startup. It was the usual: prizes (case of wine! Lunch with the founder!), oysters on the half shell, open bar. And entertainment: people juggling, dressed all in silver, on stilts. A few months later, the bubble burst.
Fast forward to 2006; my husband and I are invited to a big thing for real-estate speculators. Which we were not, but if you remember that time, precision was not the point. We get there: place is packed, tons of food, open bar ... and people on stilts, handing out noisemakers.
I looked at my husband. "Stilts," I said. We were out of there. Six months later, same thing. Bubble burst, market in freefall, the works.
Now I look at these boys in their little ties, with their very unique (sic) little niche, and all I can think: STILTS."
posted by The Whelk at 10:42 AM on October 6, 2012 [29 favorites]
Some of the macro-focused funds I know operate pretty lean, but others have lots of employees and expensive resources. Maybe not a perfect example, but think Soros vs. Bridgewater. I guess it depends on how model-intensive your fund is.
Of course, as you once astutely pointed out to me in a related question, macro funds do pretty much whatever they want anyway.
posted by Guernsey Halleck at 10:43 AM on October 6, 2012
Of course, as you once astutely pointed out to me in a related question, macro funds do pretty much whatever they want anyway.
posted by Guernsey Halleck at 10:43 AM on October 6, 2012
So, you guessed it: "...truly successful..."
Ugh.
posted by wreckingball at 10:48 AM on October 6, 2012
Ugh.
posted by wreckingball at 10:48 AM on October 6, 2012
From the video:
College dean: "So now, you are the three principals of Lumina Investments."
Guy in the middle: Giggles, with an "I know, like, can you believe it?" look on his face.
No.
posted by Houstonian at 10:52 AM on October 6, 2012
College dean: "So now, you are the three principals of Lumina Investments."
Guy in the middle: Giggles, with an "I know, like, can you believe it?" look on his face.
No.
posted by Houstonian at 10:52 AM on October 6, 2012
To be honest, it's great to hear people are striking out into high risk investment territory so young, probably with very little money behind them. Dealing with people who think what you're doing is a joke is the unfortunate reality of starting a business. That being said, I think that it's easy to forget that most people who start businesses do not have a business manager. This looks like it came out of a college business planning lab but I would be surprised if there was anything more than cursory oversight from faculty or staff. If their launch is any indication they seem to safe with some funding (for now) but they are playing in a very crowded field. The number of people who have started variations of this here in the UK, especially around the fund value of luxury goods, a movement that was recently outlawed by the British government (although no one has taken notice except the FT, who continue to carry ads for the practice themselves). I was myself offered to take part in an Italian Wine and Cheese Fund last year. Other people are selling forests, coalfields in England, agricultural land shares in Greece and Portugal (for when the farms go back into action after they leave the EU). It's rather chilling to think there are people gloomy enough to want to invest in this way. It is almost certainly not going to make a lot of money for anyone soon and may not make money at all. People here are all looking for ways to pay less fees, which is how these young men will make money until they can get to the funding mentor who will help them really grow.
posted by parmanparman at 11:12 AM on October 6, 2012
posted by parmanparman at 11:12 AM on October 6, 2012
I just love young men who have nothing to offer the world other than their desire to make money.
It's a shame there aren't more of them.
posted by colie at 11:14 AM on October 6, 2012 [7 favorites]
It's a shame there aren't more of them.
posted by colie at 11:14 AM on October 6, 2012 [7 favorites]
The Atlantic: College Kid Hedge Fund Wants to Play with Your Money.
"Though we applaud the go-getter-ness of these college kids who started their own hedge fund, we don't think we would trust them with our money."posted by ericb at 11:17 AM on October 6, 2012
So the sin here is that they haven't learned to spew bullshit as well as the big boys.
posted by junco at 11:25 AM on October 6, 2012 [2 favorites]
posted by junco at 11:25 AM on October 6, 2012 [2 favorites]
too many data points that often conflict with each other.
IOW, you spend a lot of energy getting data and you don't even know if it's worthwhile.
posted by kenko at 11:37 AM on October 6, 2012
IOW, you spend a lot of energy getting data and you don't even know if it's worthwhile.
posted by kenko at 11:37 AM on October 6, 2012
So the sin here is that they haven't learned to spew bullshit as well as the big boys.
No, the sin is that they are spewing the same bullshit as the big boys, just not as well.
posted by JPD at 11:48 AM on October 6, 2012 [1 favorite]
No, the sin is that they are spewing the same bullshit as the big boys, just not as well.
posted by JPD at 11:48 AM on October 6, 2012 [1 favorite]
Abiezer, that just raises the question of why we're dithering around and not skipping directly to the shamanic drug orgies. Who wouldn't invest in a fund run by Alan Moore and Jack Parsons(' ghost)?
posted by hattifattener at 12:45 PM on October 6, 2012
posted by hattifattener at 12:45 PM on October 6, 2012
IOW, you spend a lot of energy getting data and you don't even know if it's worthwhile.
I think it's more accurate to say that the more data we gather, the more complex the analysis becomes. If the Northeast regional widget sales are low, you might extrapolate and assume national widget sales are going to be disappointing. But then you call the West Coast distributor and find out sales are booming. Now you need to spend some time to understand why these two sources of information are so different, and what that implies for the company as a whole. Maybe you can't draw any conclusions in the end, but I wouldn't say it isn't a worthwhile exercise.
posted by Guernsey Halleck at 12:58 PM on October 6, 2012
I think it's more accurate to say that the more data we gather, the more complex the analysis becomes. If the Northeast regional widget sales are low, you might extrapolate and assume national widget sales are going to be disappointing. But then you call the West Coast distributor and find out sales are booming. Now you need to spend some time to understand why these two sources of information are so different, and what that implies for the company as a whole. Maybe you can't draw any conclusions in the end, but I wouldn't say it isn't a worthwhile exercise.
posted by Guernsey Halleck at 12:58 PM on October 6, 2012
I shit you not. We chuckle at the hubris of the college kid hedge fund, but these kids are probably a much safer bet than to put your money into a company that is probably betting against you. They may actually be young enough to think they can actually make money by investing it, you know, like the stories they've heard. When they are a little older and wiser, they'll realize it's all about how to steal.Safer bet? I seriously doubt it. Unlike, say, a mutual fund which only invests in stocks that will probably go up on average with the rest of the market, a hedge fund can invest in all kinds of derivatives, options, and so on. That means they can lose their money really, really fast if they're not careful, even if the market overall is going up.
The other thing is that they're not going to have access to the advanced high frequency trading systems that bigger investment companies use to squeeze all the profit out of anything within milliseconds.
Anyway, obviously these kids may or may not have the skills needed. There's really know way to know. But investing in a hedge fund can definitely be riskier than 'normal' investing in the stock market if the people running it don't know what they're doing.
posted by delmoi at 12:59 PM on October 6, 2012
The large firms like having a bunch of young men who are willing to take risks with other peoples' money in hopes of outsized rewards. (You hear about it when things go really bad, not so much when things are going well.)
These guys are simply cutting out the middleman.
posted by IndigoJones at 1:03 PM on October 6, 2012
These guys are simply cutting out the middleman.
posted by IndigoJones at 1:03 PM on October 6, 2012
You've met Appalachian State already. Now you're getting to know the other side of the state. The business schools at UNC-Wilmington and ECU are dueling train wrecks.
posted by 3.2.3 at 1:03 PM on October 6, 2012
posted by 3.2.3 at 1:03 PM on October 6, 2012
Pretty long list of guys with great numbers who started out using not much more than a bloomberg, a phone, and a bunch of annual reports.
Just a hunch but I'm betting the guy who said this:
posted by scalefree at 7:18 PM on October 6, 2012 [1 favorite]
Just a hunch but I'm betting the guy who said this:
These markets, they’ve never been witnessed before. And because of our experience, we started observing these markets so young. Age serves a very strong, uh, what’s the word ... a very strong, uh, source of credibility. And I think these markets ... I’m sorry — I’m completely blanking. I think our age is very much considered, but it’s simply ... uh, I’m sorry, I’m completely blanking right now. Is it okay if I give you back to Zachis not joining that list anytime soon. Just a hunch.
posted by scalefree at 7:18 PM on October 6, 2012 [1 favorite]
Hah! The original quote from The Atlantic,
"... we don't think we would trust them with our money."
can be (so easily!) excerpted to read:
"...we would trust them with our money."
posted by exphysicist345 at 10:11 PM on October 6, 2012
"... we don't think we would trust them with our money."
can be (so easily!) excerpted to read:
"...we would trust them with our money."
posted by exphysicist345 at 10:11 PM on October 6, 2012
Just for the record, Steve Jobs didn't start Apple in his garage.
posted by Outlawyr at 4:59 PM on October 7, 2012
posted by Outlawyr at 4:59 PM on October 7, 2012
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So, you guessed it: "...truly successful..." Elisabeth Zimmer, The Village Voice.
posted by StickyCarpet at 9:02 AM on October 6, 2012 [18 favorites]