[Conor Friedersdorf]
Soon I'll run out of links to the best financial stories I've ever read, since I don't read financial stories very often, but another gem is this piece by Michael Lewis, who is the kind of crazy genius that can make anything seem interesting -- even the career of a middle-aged investment consultant.
Here is a sexy excerpt:
Then he caught a break. He met a girl who liked him. The girl went and told a friend about him. That friend was the business manager for the Rolling Stones. One thing led to another, and the Rolling Stones handed him $13 million to invest.
The argument in the piece is that you shouldn't ever give $13 million -- or even $1,300 -- to anyone to invest in the stock market for you, because the whole profession is a dishonest racket where arrogant con men get paid ridiculous sums to perform work that is of no value to their clients or society.
There is another Michael Lewis piece that I can't find online -- anyone have a link? -- about how hot his wife is and what it is like to be married to someone that beautiful. He loves her a lot.
He really is ridiculously talented. The article you mentioned is about his ex-wife, Kate Bohner. I don't think it is online anywhere.
"where arrogant con men get paid ridiculous sums to perform work that is of no value to their clients or society."
If the work were of no value, there wouldn't be ridiculous sums involved. Getting affluent people to invest their cash in intangibles isn't easy; that's why brokers and RIAs who are successful at doing it are paid so well. This process is of raising capital is of plenty of value to society; without this capital, capitalism wouldn't function. The capital from IPOs and secondary offerings sold by brokers goes to companies that use the money to hire more employees, build factories, expand, etc. The money raised when brokers sell municipal bonds pays for our hospitals and bridges. The stocks sold in the after market don't raise capital for industry, but without a liquid after market there would be no primary market for IPOs and secondary offerings.
It's interesting though that you missed the big whopping contradiction at the heart of Lewis's piece. It's all about the folly of beating the market -- and then the happy ending is about how the broker finds the fund company Dimensional Fund Advisers, whose funds consistently beat the market.
My brother-in-law is one of those arrogant con men who gets paid ridiculous sums to perform work that is of no value to their clients or society. That description of him is pretty much exactly right.
He has no special magic investment fairy dust. His long-term performance is no better than the market, and much worse once you subtract those fees. Why do people keep using him? I have no idea but I suspect at least part of it is irrational behavior on the part of investors who want to believe con men who tell them they'll beat the market. They listen to jackasses like Jim Cramer and think investing is a cross between a trip to the casino and watching an NFL pregame show.
As for me? All of my retirement savings go into index funds with no fees and they've done quite nicely.
Both The Blind Side and Moneyball are considered must-reading for 21st century sports fans. Witty, intelligent, and very interesting writer.
If the work were of no value, there wouldn't be ridiculous sums involved. Getting affluent people to invest their cash in intangibles isn't easy;
God, this is such baloney. The ridiculous sums have nothing to do with the value and everything to do with the fact that the clients *have* ridiculous sums, thus making the fact that you're paying the broker so much seem trivial. And getting affluent people to invest in intangibles is, in fact, ridiculously easy. As easy as getting them to buy their wives big chunks of rock. You just get the first million of them to do it and spread rumors about how rich it made certain people, and then it's over.