Firas Durri

I was dumbstruck by this odd question posed during last week’s Democratic debate:

Brian Williams: Senator [Edwards], I have a follow-up for you on modern-day America. You’ve been a counsel to hedge funds. Do hedge funds make America any better in any way?
[...]
Brian Williams: Senator Clinton, you represent the state of New York, just mentioned. How is America a better place because of all these burgeoning hedge funds?

I beg your pardon—hedge funds? These people are vying for the presidency, and you’re asking about an asset category?

Next: Obama’s opinion of lithium-ion batteries! Clinton’s take on boxers vs. briefs! (Oh, wait.)

Well, it turns out that balking at hedge funds is apparently à la mode. Condé Nast’s Portfolio magazine leads its premiere May issue with The Pirate Pose, in which Tom Wolfe sketches NYC financier types as—surprise!—greedy jerks.

Daniel Gross takes a good whack at Wolfe’s lame stereotypes:

He tells us that in their desperate search for cachet and recognition, the new masters of the universe behave like barbarians: the obnoxious Greenwich Little League dad; the guys who talk like they’re extras in 300 (“we don’t eat what we don’t kill”); the guy who takes personal calls in a meeting; the “twinkie wives” who pay surrogates to bear their children because they don’t want to mess up their bodies with pregnancy.

And because being ploddingly predictable is all the rage, here’s Democratic candidate Mike Gravel on the Colbert Report (May 2):

Colbert: You’re talking about Barack Obama and Hillary Clinton and John Edwards. They got the long green.
Gravel: They—long green? It’s these hedge fund guys. They got more money than sin. They’re making a billion dollars a year!

Nevermind that the average contribution to Obama’s campaign was $250. “It’s these hedge funds guys!”

Notes the NYT’s Andrew Sorkin:

Writing about hedge funds is becoming a cottage industry of its own these days. Alpha’s rankings follow Trader Monthly’s publication of the top-paid hedge fund managers earlier this month, which counted five managers as hitting or surpassing the $1 billion mark. Also in April, New York magazine ran a multipart cover story on hedge funds, which included its own set of rankings. And last week, the debut issue of Portfolio magazine included a nearly 7,500-word piece on hedge fund managers by Tom Wolfe.

Look:

• If you think hedge fund behaviour adds unacceptable risks to the equity market, you need to make a public policy argument for more regulation and disclosure (this is exactly what many lawmakers, especially in Europe, are doing.)
• If you think the management fees are too high, all you’re saying is that hedge funds are a bad investment. Nothing terribly new there.
• If you don’t like that people are getting rich managing hedge funds, then your ire is misplaced: you need to criticise wealth concentration in general (ie. advocate taxation.)

Hating on hedge funds just because the managers make a lot of money is not clear thinking.