Andrew Lahde's goodbye letter
October 17, 2008 3:44 PM Subscribe
Retiring hedge fund manager Andrew Lahde: "All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America."
This guy is my hero.
posted by mullingitover at 3:56 PM on October 17, 2008
posted by mullingitover at 3:56 PM on October 17, 2008
420 SHORT SUBPRIMES EVERY DAY
posted by boo_radley at 3:59 PM on October 17, 2008 [5 favorites]
posted by boo_radley at 3:59 PM on October 17, 2008 [5 favorites]
He seems to be under some delusion that he was the only guy who thought the mortgage market was a debacle in the making. The only thing special about him was that he got lucky as to when he put his massively levered short positions on. He was either going to be a hero or a zero. Lots of people as smart or smarter then him ended up zeros because they thought the market was on a precipice in 2005 instead of 2007.
You don't post an up 1000% year without a shitton of leverage either - especially when your position is a short.
So yeah, just more hubris from a hedgie.
BTW he obviously is smart but I just wish he said "Yeah I got crazy lucky and now I'm out of here"
Def entertained by the last paragraph.
posted by JPD at 4:03 PM on October 17, 2008 [2 favorites]
You don't post an up 1000% year without a shitton of leverage either - especially when your position is a short.
So yeah, just more hubris from a hedgie.
BTW he obviously is smart but I just wish he said "Yeah I got crazy lucky and now I'm out of here"
Def entertained by the last paragraph.
posted by JPD at 4:03 PM on October 17, 2008 [2 favorites]
Thanks, finite. I'm quite sure I'll be re-reading that again this weekend. Excellent post.
posted by belvidere at 4:08 PM on October 17, 2008
posted by belvidere at 4:08 PM on October 17, 2008
What an asshole. Off with his head.
posted by Blazecock Pileon at 4:25 PM on October 17, 2008
posted by Blazecock Pileon at 4:25 PM on October 17, 2008
I love it when people open up and show who they really are, for even a moment. This guy likes smoking weed and making money. I can't hate him too much.
posted by landock at 4:33 PM on October 17, 2008
posted by landock at 4:33 PM on October 17, 2008
landock writes "I love it when people open up and show who they really are, for even a moment. This guy likes smoking weed and making money. I can't hate him too much."
It sounds more like he cares about having a good life, and money was merely a means to that end. He's eschewing the perennial desire to 'make your mark,' reminding all these hubris-filled workaholics that they won't even be footnotes in the history books. When I say he's my hero, it's because I'd do the same thing in his shoes. You only get one life, and many people are stuck on going through the motions of pursuing money even when they don't need it.
posted by mullingitover at 4:42 PM on October 17, 2008
It sounds more like he cares about having a good life, and money was merely a means to that end. He's eschewing the perennial desire to 'make your mark,' reminding all these hubris-filled workaholics that they won't even be footnotes in the history books. When I say he's my hero, it's because I'd do the same thing in his shoes. You only get one life, and many people are stuck on going through the motions of pursuing money even when they don't need it.
posted by mullingitover at 4:42 PM on October 17, 2008
JPD's spot on. He's been in the news a bit because he's a loudmouth. The FT blog had posted his returns. Do you notice anything looking at them? You should -- he didn't start the large fund until the end of 2006, and it didn't start performing until 2007.
This was a one-time-trade of a fund. He cites counterparty risk as a reason for getting out of the game, but I bet you dollars to donuts that his prime broker put limits on his leverage. Without leverage his upside is limited, and there may be downside should housing start to recover. It may be better for his reputation to just get out of the game now, and start a new fund with different focus. It's not like he had a ton of investors.
posted by FuManchu at 4:44 PM on October 17, 2008
This was a one-time-trade of a fund. He cites counterparty risk as a reason for getting out of the game, but I bet you dollars to donuts that his prime broker put limits on his leverage. Without leverage his upside is limited, and there may be downside should housing start to recover. It may be better for his reputation to just get out of the game now, and start a new fund with different focus. It's not like he had a ton of investors.
posted by FuManchu at 4:44 PM on October 17, 2008
right, or just drop out altogether since I missed that part in the link
posted by FuManchu at 4:47 PM on October 17, 2008
posted by FuManchu at 4:47 PM on October 17, 2008
Pretty interesting rant, there. I'm inclined to agree (at least in part) with most everything he says, but I can't ignore that he's fired off this little polemic right before shuttering his business and presumably withdrawing from public life altogether. He talks a big game, but it seems like he's decided to leave the heavy lifting to others. I'm curious what are his plans, if any, regarding his possible advocacy of these issues? Or what other reasons he might have to close shop. Right now I see it like this:
"Well, I'm tired of this shit, I'm out. I know I know, I'm amazing, but I should be able to squeak by for at least a little while with 8 figures. Plus, most of you are awful, I don't know if you knew that. For that matter, this/that/the other thing are total crap as well. I'm above it all now though, and the air is better up here. So good luck with all that... Soros should be able to handle most of it. By the way, did you know how amazing hemp is? Or that marijuana is safer than alcohol and prescription drugs?! Food for thought; at least for you it is. I've feasted already and now I think I'll head to the wine cellar to find a nice port. Anyway, if you want to contact me, don't bother. Ta, suckers!"
posted by kurtroehl at 4:56 PM on October 17, 2008
"Well, I'm tired of this shit, I'm out. I know I know, I'm amazing, but I should be able to squeak by for at least a little while with 8 figures. Plus, most of you are awful, I don't know if you knew that. For that matter, this/that/the other thing are total crap as well. I'm above it all now though, and the air is better up here. So good luck with all that... Soros should be able to handle most of it. By the way, did you know how amazing hemp is? Or that marijuana is safer than alcohol and prescription drugs?! Food for thought; at least for you it is. I've feasted already and now I think I'll head to the wine cellar to find a nice port. Anyway, if you want to contact me, don't bother. Ta, suckers!"
posted by kurtroehl at 4:56 PM on October 17, 2008
What an asshole. Off with his head.
What makes him an asshole? Is this part of the delusional idea that shorts are somehow causing our problems? In fact, the opposite is true. If it wasn't for the shorts, the problems would have gotten a lot worse before crashing.
posted by delmoi at 5:00 PM on October 17, 2008
What makes him an asshole? Is this part of the delusional idea that shorts are somehow causing our problems? In fact, the opposite is true. If it wasn't for the shorts, the problems would have gotten a lot worse before crashing.
posted by delmoi at 5:00 PM on October 17, 2008
it seems like he's decided to leave the heavy lifting to others.
Well, they do say that the Lahde helps those who help themselves.
I'm just gonna go ahead and apologize for that right now.
posted by JaredSeth at 5:03 PM on October 17, 2008
Well, they do say that the Lahde helps those who help themselves.
I'm just gonna go ahead and apologize for that right now.
posted by JaredSeth at 5:03 PM on October 17, 2008
My only conclusion as to why [growing marijuana and/or hemp] is illegal, is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other additive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers.Marijuana prohibition was initiated for precisely that reason--corporations like Dow wanting to push their new synthetic processes for plastic, and concerned that the cheapness and versatility of hemp would hinder their growth in that market. Of course, the subsequent entrenchment of the war on drugs, the DEA, and other bureaucratic money sinks made the established status quo all the easier to retain.
Regardless of whether this guy essentially profited from others' misery, it's refreshing to see someone in his position who yet sees the true value of money; it's very rare that you'll find an individual so driven to make money, who also has the ability to then say, "Okay, 20 million. I'm out. Time to go do something that's actually fulfilling to me."
I truly believe that the fact that there aren't more people who have this sense of the value of money is why the world is predominantly run by ass holes.
posted by Brak at 5:13 PM on October 17, 2008 [2 favorites]
...legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it.
Spitzer knew:
The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.
In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.
But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.”
posted by Fuzzy Monster at 5:52 PM on October 17, 2008 [8 favorites]
Spitzer knew:
The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.
In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.
But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.”
posted by Fuzzy Monster at 5:52 PM on October 17, 2008 [8 favorites]
Pretty darn effective trolling, designed to provoke an emotive reaction (I hate you s.o.b and so on). Who in his right mind would have wasted time irritating plebs and clients, let alone pretend to have some guilty coscience, after fixing all of his financial problems forever? That smells like he has got to make believe he's soluble, whereas he has but words to offer.
posted by elpapacito at 6:10 PM on October 17, 2008
posted by elpapacito at 6:10 PM on October 17, 2008
You know, my eyes work pretty great, but whats with the small lettering?
Thanks for the post for which I will be sharing with others.
posted by captainsohler at 6:25 PM on October 17, 2008
Thanks for the post for which I will be sharing with others.
posted by captainsohler at 6:25 PM on October 17, 2008
"So long, and thanks for all the fish."
posted by seanmpuckett at 6:26 PM on October 17, 2008 [1 favorite]
posted by seanmpuckett at 6:26 PM on October 17, 2008 [1 favorite]
I like how terrible a writer he is. You really don't have to be a genius to get rich managing hedge funds, do you?
posted by mek at 6:27 PM on October 17, 2008
posted by mek at 6:27 PM on October 17, 2008
Sorry for the eyestrain, Captain. It was a lot of info-- I was just trying to take up less real estate here in this thread.
posted by Fuzzy Monster at 6:29 PM on October 17, 2008
posted by Fuzzy Monster at 6:29 PM on October 17, 2008
He seems to be under some delusion that he was the only guy who thought the mortgage market was a debacle in the making. The only thing special about him was that he got lucky as to when he put his massively levered short positions on. He was either going to be a hero or a zero. Lots of people as smart or smarter then him ended up zeros because they thought the market was on a precipice in 2005 instead of 2007.
This is exactly what makes this letter disgust me. People like Warren Buffett who fled the derivatives market entirely are the smart and responsible businessmen who deserve our respect. This guy is just yet another sociopath in a business full of them, that happened to be luckier than the people he bet against. If you're going to villify hedge fund managers, you at least gotta be consistent.
posted by mek at 6:34 PM on October 17, 2008
This is exactly what makes this letter disgust me. People like Warren Buffett who fled the derivatives market entirely are the smart and responsible businessmen who deserve our respect. This guy is just yet another sociopath in a business full of them, that happened to be luckier than the people he bet against. If you're going to villify hedge fund managers, you at least gotta be consistent.
posted by mek at 6:34 PM on October 17, 2008
This note was pretty funny. It doesn't really teach us anything other than the guy is a loudmouth jerk. There are thousands of guys like this running hedge funds, and I imagine most of them are loudmouth jerks. Hope they like each other's company.
posted by Nelson at 6:45 PM on October 17, 2008
posted by Nelson at 6:45 PM on October 17, 2008
I like how terrible a writer he is. You really don't have to be a genius to get rich managing hedge funds, do you?
Actually, I was pretty impressed on that count, considering. I figured it would be a bland, dictated tone, all as-told-to the ghostwriter before he fucked off to the golf course. At least he seems to have typed it with his own ten fingers.
posted by Countess Elena at 6:45 PM on October 17, 2008
Actually, I was pretty impressed on that count, considering. I figured it would be a bland, dictated tone, all as-told-to the ghostwriter before he fucked off to the golf course. At least he seems to have typed it with his own ten fingers.
posted by Countess Elena at 6:45 PM on October 17, 2008
I still don't understand the hating on short sellers. Just like making money on a stock going up, you can make money on the stock going down. It's a zero sum game either way. I wouldn't call it "making money on other people's misery", in any fashion.
For me (I work in the industry) I feel like vilifying short sellers is just like people getting upset when someone won't buy a house these days for it's 2005 list price - as if there was some sort of obligation for people to always make money on a deal? Sometimes you lose. that's the way it works.
This guy made a very good gamble on when the subprime stuff would pull everything else down, and certainly others tried to do the same and got wiped out because their timing was off. Speculation isn't a crime. Would you be upset if he had lost everything?
I was pleased to read that he's doing a smart thing and walking away while he's up, something that most gamblers don't know how to do. Good on him.
And of course we all know he's going to be spending all his upcoming years at his luxury flat in Amsterdam, toking his brains out. (that was easily the funniest ending for that kind of letter I've ever read, bar none.)
posted by EricGjerde at 9:28 PM on October 17, 2008 [1 favorite]
For me (I work in the industry) I feel like vilifying short sellers is just like people getting upset when someone won't buy a house these days for it's 2005 list price - as if there was some sort of obligation for people to always make money on a deal? Sometimes you lose. that's the way it works.
This guy made a very good gamble on when the subprime stuff would pull everything else down, and certainly others tried to do the same and got wiped out because their timing was off. Speculation isn't a crime. Would you be upset if he had lost everything?
I was pleased to read that he's doing a smart thing and walking away while he's up, something that most gamblers don't know how to do. Good on him.
And of course we all know he's going to be spending all his upcoming years at his luxury flat in Amsterdam, toking his brains out. (that was easily the funniest ending for that kind of letter I've ever read, bar none.)
posted by EricGjerde at 9:28 PM on October 17, 2008 [1 favorite]
Yeah, the guy is basically a prick, but that's kind of the territory that a Type-A person who would be in his position treads in. Somehow I'm supposed to respect him since he's leaving the business now that he's earned his own. Where I completely lose respect for him is that he supposedly knew how horrible the situation was for all those years, and rather than do something about it, he tucked in his greed and fed at the table while a whole lot of ordinary people are getting taken. The aristocracy he's railing against will hardly get hurt in the end.
However, I do agree with him that as a society in America (I can't speak for other countries here), we have gone away from a meritocracy. At so many levels people aren't judged by their abilities, but by their qualifications. There's a huge battle to get the right pieces of paper since that's what will ultimately lead to success rather than actually producing. It's a system that feeds on itself since people who only value qualifications can only judge people by them, and have no idea what people can actually do.
Having said that, I do have some hope since the man who is apparently leading in the polls for president doesn't come from the aristocracy like the current president, or the Republican candidate do. Sure Obama has the right paper, but he seems to have earned it rather than been a legacy. He also seems to have learned from it as well rather than squandered it. I can only hope that it's a sign of a coming wave of change in attitude in this country.
Finally, the dude's totally spot on with the hemp and marijuana thing. All he needs now are some tasty waves, and a cool buzz, and he's fine...
posted by Eekacat at 9:45 PM on October 17, 2008
However, I do agree with him that as a society in America (I can't speak for other countries here), we have gone away from a meritocracy. At so many levels people aren't judged by their abilities, but by their qualifications. There's a huge battle to get the right pieces of paper since that's what will ultimately lead to success rather than actually producing. It's a system that feeds on itself since people who only value qualifications can only judge people by them, and have no idea what people can actually do.
Having said that, I do have some hope since the man who is apparently leading in the polls for president doesn't come from the aristocracy like the current president, or the Republican candidate do. Sure Obama has the right paper, but he seems to have earned it rather than been a legacy. He also seems to have learned from it as well rather than squandered it. I can only hope that it's a sign of a coming wave of change in attitude in this country.
Finally, the dude's totally spot on with the hemp and marijuana thing. All he needs now are some tasty waves, and a cool buzz, and he's fine...
posted by Eekacat at 9:45 PM on October 17, 2008
Well I was the first guy to say "What a douche" in this thread and let me be clear - I don't have a problem with short sellers, in fact in another life I was one. What I have an issue with is that this guy thinks his tremendous profits were a result of skill, when actually it was luck more then anything else.
The hardest part of short selling isn't figuring out what to short, its when to short it. This guy did the easy part and there is no evidence that his success at the hard part was anything more then luck. I was really really bad at the hard part.
posted by JPD at 10:07 PM on October 17, 2008
The hardest part of short selling isn't figuring out what to short, its when to short it. This guy did the easy part and there is no evidence that his success at the hard part was anything more then luck. I was really really bad at the hard part.
posted by JPD at 10:07 PM on October 17, 2008
He seems like he hasn't read a lot of philosophy either. I guess he'll have time now, and the moral authority that comes from having gotten lucky in the market backing him up when he tries to force his new discoveries on us like a celebrity urging us to vote in a youtube video.
posted by mecran01 at 10:13 PM on October 17, 2008
posted by mecran01 at 10:13 PM on October 17, 2008
I dunno, he doesn't seem like a loudmouth to me. He isn't claiming a particular amount of skill either - quite the opposite, he is clearly stating he was picking low hanging fruit, dealing with morons, under rules that were legislated by other morons, who were bought off by the large amounts of money coming in.
Seems to me he has a pretty accurate assessment of the way things work, and what's been going on.
As far as being lucky, every goddamn executive type who ever made it, made it on luck. Face it, they all work hard, all the time. Some get the good deals, others get the shaft.
And as for him being a minor player in a small hedge fund in an obscure corner of the market. Hey, it's not *my* retirement letter you all are commenting on.
posted by Xoebe at 10:17 PM on October 17, 2008
Seems to me he has a pretty accurate assessment of the way things work, and what's been going on.
As far as being lucky, every goddamn executive type who ever made it, made it on luck. Face it, they all work hard, all the time. Some get the good deals, others get the shaft.
And as for him being a minor player in a small hedge fund in an obscure corner of the market. Hey, it's not *my* retirement letter you all are commenting on.
posted by Xoebe at 10:17 PM on October 17, 2008
i.e. So long and thanks for all the fish.
posted by markkraft at 10:32 PM on October 17, 2008 [1 favorite]
posted by markkraft at 10:32 PM on October 17, 2008 [1 favorite]
I suspect he recognizes that it was a lot of good luck, and is smart enough to quit while the quitting is good. Why gamble it all when you can retire very comfortably? The guy is on the right track.
posted by five fresh fish at 11:22 PM on October 17, 2008 [1 favorite]
posted by five fresh fish at 11:22 PM on October 17, 2008 [1 favorite]
five fresh fish: Soros got as rich as he is by gambling his whole fortune a couple of times (e.g. against the British pound in 1992), and is now in a position to (and does) do good with it.
Not that Lahde isn't on the right track, obviously he's doing what's right for him; there are multiple tracks, some of which lead to a greater good for more.
posted by LanTao at 4:09 PM on October 18, 2008
Not that Lahde isn't on the right track, obviously he's doing what's right for him; there are multiple tracks, some of which lead to a greater good for more.
posted by LanTao at 4:09 PM on October 18, 2008
I should stake my not-a-fortune against the US dollar in 2009. Wouldn't make me a Soros in the end, but it might net me a couple year's salary.
posted by five fresh fish at 5:23 PM on October 18, 2008
posted by five fresh fish at 5:23 PM on October 18, 2008
I'm not sure about that fff, the market normally does better under democrats, presumably because they appoint competent people and worry about all levels of the economy.
Lahde has taken the best small fry approach, notice your 15min of fame and bolster the causes you care about intelligently. His cause choices were banning adjustable rate mortgages and legalizing marijuana, which are both very noble causes. I imagine he recognizes his luck that the market couldn't stay irrational longer than he could stay solvent. But you must recognize his market positions as fundamentally correct.
Andrew Lahde : If you want to help more, you need not shorten your life becoming insanely rich like Soros. Why not merely volunteer for managing the assets of some charities you care about? You need not attempt stressful stuff, nor even beat the market. But you could save some deserving endowment from expensive management costs and limit their bad market decisions.
posted by jeffburdges at 5:41 PM on October 18, 2008
Lahde has taken the best small fry approach, notice your 15min of fame and bolster the causes you care about intelligently. His cause choices were banning adjustable rate mortgages and legalizing marijuana, which are both very noble causes. I imagine he recognizes his luck that the market couldn't stay irrational longer than he could stay solvent. But you must recognize his market positions as fundamentally correct.
Andrew Lahde : If you want to help more, you need not shorten your life becoming insanely rich like Soros. Why not merely volunteer for managing the assets of some charities you care about? You need not attempt stressful stuff, nor even beat the market. But you could save some deserving endowment from expensive management costs and limit their bad market decisions.
posted by jeffburdges at 5:41 PM on October 18, 2008
I should stake my not-a-fortune against the US dollar in 2009. Wouldn't make me a Soros in the end, but it might net me a couple year's salary.
Unless you guess wrong, in which case you are flat broke.
posted by Nelson at 6:43 PM on October 18, 2008
Unless you guess wrong, in which case you are flat broke.
posted by Nelson at 6:43 PM on October 18, 2008
legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there has been a dearth of worthy philosophers in this country, at least ones focused on improving government.
i know right? if only people like Ralph Nader and Noam Chompsky had focused on improving government all this time!
posted by shmegegge at 9:32 AM on October 20, 2008
i know right? if only people like Ralph Nader and Noam Chompsky had focused on improving government all this time!
posted by shmegegge at 9:32 AM on October 20, 2008
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posted by Frank Grimes at 3:55 PM on October 17, 2008 [1 favorite]