Juxtaposition Between Soros' and Lahde's Farewells

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Jul 26, 2011
Few will vaguely recall the infamous hedge fund manager Andrew Lahde of Lahde Capital Management who made 877% betting against the subprime market in 2007. It comes as a slight surprise that Soros chose to join the ranks of other legendary hedge fund managers to manage their own funds, in light of the new regulation.


In addition, fickle investors pose another major hurdle in times of economic uncertainty, and increase the risk of drawdown, reflecting the transitory nature of investor’s capital. Bill Ackman of Pershing Square Capital Management addresses this here.


It is interesting to note that higher volatility in search of higher return was tolerated (as risk management was not very developed) prior to the slew of black swan events in the 1990s.


I will leave the reader to ruminate on Lahde’s wisdom below (copied verbatim).


George Soros: http://www.cnbc.com/id/43892436


Billionaire investor George Soros, whose stock-picking career has spanned nearly four decades, said he will manage money only for himself as new regulations threaten to crimp the hedge fund industry he made famous.


The octogenarian fund manager, known as much for earning $1 billion on a nervy currency bet as for giving away millions to support liberal causes, told investors that he will return roughly $1 billion to outside investors and turn Soros Fund Management into a family office.


Under the new Dodd-Frank Act, hedge funds will be forced to register with financial regulators, giving the Securities and Exchange Commission fresh insight into exactly how these generally secretive portfolios make money. But family offices are treated more leniently under the new regulations.


But there is also a growing number of younger fund managers who are preferring to close up shops to manage only their own money as new regulations threaten to dramatically change the $2 trillion hedge fund industry.


Andrew Lahde: http://www.distressedvolatility.com/2009/08/hedge-fund-manager-andrew-lahdes.html


I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven-figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in 50 years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.


Capitalism worked for 200, but times change, and systems become corrupt. George Soros, a man of staggering wealth, has stated that he would like to be remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man's interest, while at the same time creating rewards great enough to attract the best and brightest minds to serve in government roles without having to rely on corruption to further their interests or lifestyles. This forum could be similar to the one used to create the operating system, Linux, which competes with Microsoft's near monopoly. I believe there is an answer, but for now the system is clearly broken.