The Rich Get Richer...without using any skills whatsoever
My company's office building is in an affluent area. A number of small hedge funds have offices there as well. I have a tremendous amount of respect for most of them...the quant funds that develop their own formulas in an attempt to beat the market or the smart stock pickets, even the intuitive traders.
There is one hedge fund that represents everything that's wrong with this industry. The boss there intentionally smokes cigars in no smoking sections of the building and tears around the parking lot in Lamborghinis and other exotic cars. From what I can tell very little work ever actually gets done in their office. They are constantly screwing around, literally injecting each other with steroids (I'm not kidding). The people there do not seem to have any discernible skills.
You may ask then, how do they make money? I can tell you in one word...connections. Here's an example of how they make money. The bead honcho at the fund was bragging to a group of people the other day about how he can't wait for the General Motors IPO. He's not a big fan of the company, oh no. He knows people who will enable him to get a huge chunk of shares of the company in the offering that is scheduled to launch this fall. He then plans to quickly flip those shares in a matter of minutes to foolish (with a small f) retail investors who bid up the initial price in their frenzy to hop in for a huge profit.
It blew my mind that a fund like this has access to shares in what essentially is a government-sponsored IPO before the general public. That's just not right. Uncle Sam uses our tax dollars to save GM and then somehow leaches like this are able to bid up the prices that the very same taxpayers who saved the company have to pay to invest in the company.
I have a tremendous amount of respect for most hedge funds. Many of them are filled with impressive individuals who use skill to pick stocks that will outperform the market. It's leaches like this that have no skill and add no economic value whatsoever that give the industry a bad name.
That's the end of my rant.