Project for Philosophical Evaluations of the Economy |
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American Idol and the Hedge Fund Industry
Dialog with the Alter Ego about kamikaze investments, first drafted on Feb. 19, published on Feb. 24, 2010
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Question by Alter Ego of Noah denkt™ (AE): Some time ago, you casually mentioned that there might be some
kind of connection between insufficient education and a burgeoning finance industry sector. Could you elaborate
on this again?
Answer by Noah denkt™ (Nd): Sure. What we are referring to here is the fact that our modern societies produce
too many people who haven’t learned anything real but who still want to have a glitzy life all the same. That is why
programs like “American Idol” or “America’s next top model” are so successful. And that is also why too many
people end up in the financial industry where a lot of them have no other choice but to place huge, all eggs in one
basket - type of bets, in order to have at least a faint possibility to achieve tremendous success.*
AE: You are alluding to the hedge fund industry here, correct?
Nd: Correct.
AE: And so, in your opinion, there is not too much difference between a hedge fund operator and an “American
Idol”-participant?
Nd: Not really.
AE: But isn’t true that hedge fund operators can boast of brilliant academic education with the finest institutions in
the country? That hardly compares with the intelligence that your average “American Idol” participant can bring to
bear.
Nd: Of course, it is true that the owner of a hedge fund boutique is somewhat more intelligent than a casting show
participant. That, however, does not take anything away from our initial claim, according to which they are in a
desperate need to find away to survive, since they too have not learned anything real.
AE: What do you consider as real knowledge?
Nd: Well, we would think that being a carpenter, a surgeon, a firefighter, a piano player, a construction engineer
or software programmer suggests that you do have a value adding skill set to offer. We are not sure though
whether a talk show host, a politician, a speculator, a model or a pop music singer can equally claim to be in
possession of such productive capabilities.
AE: Nevertheless, a lot of talk show host, models, politicians and speculators can boast of having considerable
success in the market place. So clearly, their clients must feel as if these idols add substantial value to their lives.
Nd: You are right, there are a lot of very successful players in the market, who have nothing else but soft skills to
offer. The fact of the matter is, however, that there are even more soft skill providers out there, who will never
have even the faintest chance for success. And among those there are some, who are sufficiently intelligent to
understand that the odds that are so overwhelmingly against them, that there only hope for fame is to adopt a
“Hail Mary”-kind of strategy.
AE: But what’s wrong with that? After all, these people made a conscious decision to lead this kind of life. So who
are we to criticize that?
Nd: The truth is that these people made a conscious decision to make the best of the mess that they, for varying
reasons, found themselves in. But isn’t as if they are happy about having gotten into this mess the first place.
AE: Even though, we should be grateful that they have the wherewithal to address their individual situation
appropriately.
Nd: Right, but we should be equally mindful of the fact, that the overall path we are on, which leads so many
people into despair, is quite self-destructive. And if you are honest, you do have to admit that the financial
industry itself has become pretty good example of this self-destructive tendency that our societies have.
AE: How so?
Nd: Well, just witness the ridicules attacks on the Spanish bonds. Don’t you think that some of that is motivated by
a desperate need to find a high-stake bet with which you can potentially make a lot of money? Or think about the
fact that Goldman Sachs actually helped the Greek government to conceal some of its debt to the markets. Or if
that’s not enough, think about the fact that some of the very same people who earlier on cried for government
help, are now attacking these governments for having incurred substantial debt while satisfying their calls for
help. Do you not find that self-destructive?
AE: It’s surely tough, but I am not sure whether it is self-destructive. May be a lot of that can be reigned in by
better government regulation.
Nd: Perhaps. But regulation won’t be enough. What we also need is to teach our kids some real and meaningful
skills that they can make an honest living with. Without that we will be lost.
------------------------------------
Footnote*: Just think about the way Andrew Lahde (Lahde Capital) and David Tepper (Appaloosa Management) made their
fortunes, last year and the year before respectively. They effectively took out these huge, all-in type of investment bets, that we were
mentioning above.
Dialog with the Alter Ego about kamikaze investments, first drafted on Feb. 19, published on Feb. 24, 2010
--------------------------------------------------------------------------------------------------------------------------------
Question by Alter Ego of Noah denkt™ (AE): Some time ago, you casually mentioned that there might be some
kind of connection between insufficient education and a burgeoning finance industry sector. Could you elaborate
on this again?
Answer by Noah denkt™ (Nd): Sure. What we are referring to here is the fact that our modern societies produce
too many people who haven’t learned anything real but who still want to have a glitzy life all the same. That is why
programs like “American Idol” or “America’s next top model” are so successful. And that is also why too many
people end up in the financial industry where a lot of them have no other choice but to place huge, all eggs in one
basket - type of bets, in order to have at least a faint possibility to achieve tremendous success.*
AE: You are alluding to the hedge fund industry here, correct?
Nd: Correct.
AE: And so, in your opinion, there is not too much difference between a hedge fund operator and an “American
Idol”-participant?
Nd: Not really.
AE: But isn’t true that hedge fund operators can boast of brilliant academic education with the finest institutions in
the country? That hardly compares with the intelligence that your average “American Idol” participant can bring to
bear.
Nd: Of course, it is true that the owner of a hedge fund boutique is somewhat more intelligent than a casting show
participant. That, however, does not take anything away from our initial claim, according to which they are in a
desperate need to find away to survive, since they too have not learned anything real.
AE: What do you consider as real knowledge?
Nd: Well, we would think that being a carpenter, a surgeon, a firefighter, a piano player, a construction engineer
or software programmer suggests that you do have a value adding skill set to offer. We are not sure though
whether a talk show host, a politician, a speculator, a model or a pop music singer can equally claim to be in
possession of such productive capabilities.
AE: Nevertheless, a lot of talk show host, models, politicians and speculators can boast of having considerable
success in the market place. So clearly, their clients must feel as if these idols add substantial value to their lives.
Nd: You are right, there are a lot of very successful players in the market, who have nothing else but soft skills to
offer. The fact of the matter is, however, that there are even more soft skill providers out there, who will never
have even the faintest chance for success. And among those there are some, who are sufficiently intelligent to
understand that the odds that are so overwhelmingly against them, that there only hope for fame is to adopt a
“Hail Mary”-kind of strategy.
AE: But what’s wrong with that? After all, these people made a conscious decision to lead this kind of life. So who
are we to criticize that?
Nd: The truth is that these people made a conscious decision to make the best of the mess that they, for varying
reasons, found themselves in. But isn’t as if they are happy about having gotten into this mess the first place.
AE: Even though, we should be grateful that they have the wherewithal to address their individual situation
appropriately.
Nd: Right, but we should be equally mindful of the fact, that the overall path we are on, which leads so many
people into despair, is quite self-destructive. And if you are honest, you do have to admit that the financial
industry itself has become pretty good example of this self-destructive tendency that our societies have.
AE: How so?
Nd: Well, just witness the ridicules attacks on the Spanish bonds. Don’t you think that some of that is motivated by
a desperate need to find a high-stake bet with which you can potentially make a lot of money? Or think about the
fact that Goldman Sachs actually helped the Greek government to conceal some of its debt to the markets. Or if
that’s not enough, think about the fact that some of the very same people who earlier on cried for government
help, are now attacking these governments for having incurred substantial debt while satisfying their calls for
help. Do you not find that self-destructive?
AE: It’s surely tough, but I am not sure whether it is self-destructive. May be a lot of that can be reigned in by
better government regulation.
Nd: Perhaps. But regulation won’t be enough. What we also need is to teach our kids some real and meaningful
skills that they can make an honest living with. Without that we will be lost.
------------------------------------
Footnote*: Just think about the way Andrew Lahde (Lahde Capital) and David Tepper (Appaloosa Management) made their
fortunes, last year and the year before respectively. They effectively took out these huge, all-in type of investment bets, that we were
mentioning above.
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