In our get rich quick world, hedge fund boys have been getting rich the quickest. How they spend their cash influences whole lower stratospheres of vacuous consumption. Up until the credit crunch hedge fund boys prefferd to splash their cash ordering cocktails for thousands of pounds per glass at wanky bars with names like Umbaba. 'Umbaba, Umbaba, that's how it goes,' they sing shoulder to shoulder pissed out their minds, a la Oliver Twist.
If professional watchers of the super rich, such as me, are to be believed, these lords of havoc drive the tastiest motors, eat at the fastest restaurants, swim in the wettest pools and stalk London, New York and Beijing like knights of the bastards table. The Sunday Telegraph estimated that in 2006, around 200 to 300 UK hedge fund managers carved up $4.2 billion of pure profit between them. In 2005, according to the US Institutional Investor Magazine, the top 25 hedge fund managers earned on average $251 million EACH! The amount of money the world’s hedge funders handle could be easily as much as £1.5 trillion.
So how do they do it? Well its tricky. Even people who understand economics do not understand hedge-funds. These often secretive, privately owned investment companies are massive - if they were a country they would be the 8th richest on the planet. But it would be a country that you could not visit or even see: hedge funds, of which there are reckoned to be about 10,000 in the world, mostly based in the US, 'fly under the radar' (CNN), and are very difficult to regulate - mainly because regulators don't have the faintest ideas about what's been going on; even though up to the credit crunch hedge funds may have been responsible for over half the daily turnover of shares on the London Stock Market alone. After looking into the matter, the FSA, Britain’s regulatory body, said: 'Chuff this for a game of soldiers'. You see its very much like 'Deal or no Deal': people claim to know what is going on, and superficially there would appear to be some logic, but actually they are making it up as they go along.
I've looked into it and have to say that it sounds a lot like internet gambling for the super rich. Not that Jersey would preclude them setting up here even though ironically the Island politicians say they would never allow a casino. Investors must place a minimum of say a million dollars into a fund; at enormous risk, the fund managers take these tax haven stashes and place stakes on anything and everything - FTSE100 companies, commodities, options, stocks in developing countries, spotty socks in Marks & Spencer’s even, anything that might shoot up in price or, get this, can be made to...Often they will take the tax haven dosh and borrow against it (as if it was their own - tut tut), that is borrowing money in order to gamble it; which is exactly the sort of responsible activity that should remain unregulated. Not. When the hedge funders lose their shirts (one Japanese fund lost $300 million in a week), it’s okay because they've got lots more shirts. But often, other losers - like say Columbia or Egypt (both of which saw their stock markets slump after hedge funders parked their mobile casinos in them) - don’t have any more shirts. Which makes riding with these hedge fund cowboys quite a bare knuckle ride, with no shirt and no factor 50.
In 2006, 'the hedgehogs' came into the light with 'Hedgestock', a festival at Knebworth that mixed bands and utterly incomprehensible business seminars with ridiculous titles like 'Incubator Alligator - sowing the seeds, but do they stay for success? '. The event even had its own jingle, which in true corporate style was utterly cringe worthy. To the tune of 'Sex Bomb', it went: 'Hedgestock, Hedgestock, Groovy Hedgestock, a little bit of business and a whole lot of rock...' And you Trust and Company Administrators thought Glastonbury had gone a bit corporate! Ooooh get you!
Contrary to the initial feelings of disappointment, the fact that this event was headlined by 'The Who' was actually quite fitting. In their pomp, The Who would enter a town, take over a hotel, drive a roller into the pool, stick bombs down the toilets, smash up the furniture, freebase coke, gorge themselves on hookers and nail every piece of furniture to the ceiling. Then when things looked like getting a bit sticky, they'd move on leaving others to clear up the mess. For 'hotels', merely read 'emerging economies'. Perhaps replacing 'I'm a boy' with 'I'm a hedge fund boy'.
Anyway, these festivals, which are also victory parades over the assimilation of counter-culture, could really take off when the recession is behind us. We should maybe think about hosting one in Jersey in order to attract new business to the Island. We could have one aimed especially at Stockbrockers called 'Stockstock' or even better one for Analysts called 'Analstock'. Bet you my bottom dollar Phil Ozouf would give a grant to allow that to happen. No Jodi Marsh this time though ay! We all learn from our mistakes. Dont we?
