The sophistication of the financial marketplace– courtesy of Marc Andreeson’s blog
As a libertarian and believer in markets, I think this collapse from greed gone awry should be punished and punished badly. The current incentives don’t put the fund managers taking these greedy, poker-like bets in enough risk to make them worry about their own skin in the game. If they make millions off of ramping up the risk– their net worth should be at stake along with our pensions and everything else…Currently, they’re rewarded for following the lemmings to juice near-term returns (e.g., Ponzi scheme) and then trying to time the market to just duck going off the cliff.
Pay people for awesome performance– but have them have their ass on the line as well. Why you do more due diligence on your angel investment than your hedge fund manager doesn’t make much sense to me…and allowing people to jump in and out quickly (vs. the locked-in nature of a closed fund) really seems to misalign with long-term performance and the time required to watch a fundamentally-sound contrarian investment ride the cycles into popularity with the requisite returns.
Recent Comments