Posted on 10/21/2008 9:50:06 AM PDT by Orange1998
The boss of a successful US hedge fund has quit the industry with an extraordinary farewell letter dismissing his rivals as over-privileged "idiots" and thanking "stupid" traders for making him rich. Andrew Lahde's $80m Los Angeles-based firm Lahde Capital Management in Los Angeles made a huge return last year by betting against subprime mortgages.
Yesterday the 37-year-old told his clients that he had hated the business and had only been in it for the money. And after declaring he would no longer manage money for other people, because he had enough of his own, Lahde said that instead he intended to repair his stress-damaged health; he made it clear he would not miss the financial world. "The low-hanging fruit, ie idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking," he wrote. "These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government," he said. "All of this behaviour 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."
Lahde became one of the biggest names in the investment industry when one of his funds produced a return of 866% last year, largely by forecasting the US home loans industry would collapse. In his farewell letter, which concluded with an appeal for the legalisation of marijuana, Lahde said he was happy with his rewards and did not envy those who had made even more money. "I will let others try to amass nine, 10 or 11 figure net worths. Meanwhile, their lives suck," he wrote,
excerpt
(Excerpt) Read more at guardian.co.uk ...
Someone took advantage of other people making very well informed yet stupid financial decisions?
If he died nothing illegal how can you fault this guy. He played their game, came out way ahead and bailed out before his fortune crashed. Sounds like he did it just about right.
A truly brilliant man. He’s earned his pile and he’s right about those in the Ivy League. It looks good on paper, but paper doesn’t decide how hard you work after getting it on there.
Milken got off light. He is still well off (google says $2.1B in 2007), has written books, he's doing much better than the folks doing their work by the rules who lost their jobs because of his 'errors'. He was on Martha recently touting his cookbook, making the rounds at parties in the Hamptons. Sigh. Every time we see some arse like Milken or Lahde, we have to remember that not only have they gotten rich at the expense of others (wealth that some of them manage to hang onto at least in part), but they've cost law abiding co-workers their livelihood.
Beach Bum from Hawaii ping?
I find more greed in the Baby Boomer generation, of which I am one, and their offspring than the materialism that we accused our parents of back in the 60's.
There is one and only one reason why this guy is quitting; the new regulations that require hedge funds to register and disclose their short positions.
If this fellow had continued, he would have to register and disclose his positions. Those Ivy Leaguers he so cleverly duped would righteously savage him once they saw where he stood on a trade.
As it stands now he got away with it.
And when you hear of other hedge funds shutting down, then you willl know it is for the same reason. However, most will likely be smart and blame it on the economy or other market changing conditions, etc.
But watch for many hedge funds to start up new funds with greater ‘lock-up’ windows. A lock-up window is a timeframe whereby an investor cannot seek a redemption of their funds. The new SEC rules created a loophole that if a hedge fund’s lock-up window is greater than 2 years, they need not register.
This lock-up period will force small startup hedge funds to register and allow the larger players to remain unregistered. So for example Goldman Sachs and any number of their hedge funds will tell their investors “Stay with us, the Big Players, where your money will be safe and your return will be large. But you need only sign that your money is with us for at least 2 years. Sure you can find a fly-by-night hedge fund that promises to return your capital at any time, but why would you take such a risk? “
They look like idiots now. But he likely conned them.
If you think YOU or I are not susceptible to being fooled and made to look like idiots, then you live in a bunker or have no money or no money interactions except in the most safest and low returning investments or savings.
Give the victims he defrauded a break. He lied to them, they trusted him. But now they will never know unless they can show explicitly that he was using them to buy what he was shorting.
And recognize too that he knew exactly where they were financially. He knew where they would experience a margin call and where he could cause them to be liquidated. He betrayed their trust.
But these statements in the press may be used against him if his investors can band together to file suit. He was stupid to make these statements. Crooks are often stupid, letting their criminal egos carry them along an allusion of invincibility.
“With any luck this scumbag will use his ill-gotten gains to buy the dope he wants legislation for and kill himself by smoking it. His contempt for people, especially those who have earned their money honestly, (just to have him steal it) shows his low class and envy. I sure hope that he does get thrown in jail.”
Sorry but I believe you’re confused. He ‘stole’ no money from honest, hardworking people. He traded in the financial pits against other traders. The “financial advisors” who told their clients to invest their money in subprime-backed investments were the idiots (or crooks, depending on your viewpoint).
There is nothing illegal or immoral about shorting stock. It improves the market’s efficiency.
(Also I think you’re a little confused about the concept of “contempt” - it generally has nothing to do with envy. How do you feel about NObama for instance? heh)
If so, then they really were idiots. It seems to me that one of the biggest issues with the whole mess we're in now, is that the folks whose transactions caused it, probably didn't actually understood the financial instruments they were using; nor did they understand the consequences of what would happen when something didn't go according to plan.
I'd say that "idiot" is a rather kind way to characterize folks whose lack of understanding has resulted in the market problems we've seen over the past year.
This is the root problem of the stock markets. They have ceased to be business and have become legalized gambling. As for this guy, you reap what you sow.
You think that was planned by Paulson and gang?
My bank account is with WAMU (Washington Mutual). Am I an idiot for not understanding their precarious condition before their takeover?
There are certain things in our society that we all have faith in. For example, food. If I buy food that is toxic, am I an idiot? If I allow a surgeon to operate on me and he/she has a license forgery framed on the clinic wall, am I an idiot?
Where is the line that separates idiots from victims? And how do you know these people were not truly victims of a con man?
There is no information on those that lost their investments other than he convinced them to take the other side of his trade, meaning he lied to them. To me that is not sufficient to conclude they were idiots. If anything it tells me they were victims.
I don't know ... were you in charge of WAMU's investment strategies?
If so, then yes, you are to blame.
If not, then you're not to blame; but whatever idiot was in charge of WAMU's investment strategies is just as big an idiot as Mr. Lahde makes him out to be.
I think Paulson does not get to that level of details. His level is to pick and choose winners and losers.
The level that separates ‘small’ from ‘big’ and insulates ‘big’ inside players is at the SEC. The SEC organization as I understand it is in many respects a labyrinth of small manons overseen by persons with a revolving door to Wall St. firms. So there is an influence that tilts to those with more gold so to speak.
And we know the ‘Golden Rule’ among the greedy. ‘Those with the Gold make the rules’.
So to answer your question, if the ‘gang’ means the underlings that do their master’s (Wall St. influence) bidding, then yes the gang likely did it to put the small guys under the microscope. Because now those small guys and their positions will be known.
It’s like sitting at a card table and having all those that ***can’t meet the call*** having to fold or show their hand.
I can’t see why the SEC did not require everyone to show their positions, including the big players. But it follows their organizational culture. The markets want to make the big dogs feel special. History of SEC regulation development shows they are complicit. You need only read about SEC investigator Gary Aguirre to understand this is not conspiracy drivel.
Thanks for the info.
IN CHARGE?
I am not following your logic, maybe because there is a lack of logic. I am not trying to berate you but you changed the subject. Let's get you back on track. If you think I am out of line then show clearly where in the following:
There are two categories of persons that were possibly hurt by this hedge fund trader. The first are those persons that this hedge fund trader managed accounts for. The second is all others that he communicated with and gave bad info to.
The investors that this hedge fund trader managed accounts for, those investors WERE NOT IN CHARGE OF THEIR OWN INVESTMENT STRATEGIES.
The persons that this hedge fund trader gave bad information to may indeed have been duped and naive in following his advice.
But there are laws against spreading bad information, against pumping and dumping in concert with disseminating or having someone disseminate bad and distorted information.
In either case, this hedge trader has admitted to duping investors. He is therefore exposed to lawsuits and possibly criminal liability.
All criminals think their victims are idiots.
A legitimate hedge fund firm does not have to resort to deceit. One that comes to mind has done extensive research on points at which programmed trading kicks in, and they benefit from those programmed positions.
Wall St. is about obtaining superior legal information to minimize risk and maximize reward. If a culture of deceit (which always exists) is allowed to grow out of control, then the market is no longer about risk management, but about unfair practices.
An example that everyone can understand is shoplifting. Shoplifting will always exist but it must be held to a small percentage. Otherwise if it is not controlled, many more will do it, and those that don't will pay a higher price for their purchases.
This hedge fund manager served poison to some investors. I say they are victims and he is a con man. He needs to be punished and the victims need to have justice.
The difference is that Milken broke the law. This guy merely beat the system set up by the crooks and elitists on Wall St.
I trade so I have an idea of what he did and I do it every day, except on the much smaller scale.
There are financial vehicles that get driven too high or low based on fear or greed. He merely took advantage and cashed in. It is not easy to cash in, many never do it and are only wealthy on paper...as in many are 40% poorer now after not allocating their 401Ks properly.
Well, true, and we don't know that Lahje broke any laws. I wonder if he broke any 'rules', but that is purely speculative.
There are financial vehicles that get driven too high or low based on fear or greed. He merely took advantage and cashed in.
Well said. He really worked it, and on a large scale. In a way he was paid for his risk. He has taken the Gekko approach to a new level.
I agree. What did he do wrong to deserve the contempt shown in this thread?
Uh, no, actually, I did not change the subject at all. You may have misread Mr. Lahde's statement in the first place.
Mr. Lahde was speaking of "these people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government."
Those are the idiots in question, because they're the "people stupid enough to take the other side of [Ladhe's] trades."
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