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Found this handy little graph to show how the scale of income distribution in the US. It's a really interesting approach, because it doesn't just frame things in terms of the 99%, but shows how, if you look high enough to the top to the mega-earners, even the 0.01% look like pitiful, do-nothing layabouts in comparison. I mean, what's a piddling $10 million income when the average income in the top 25 hedge funds is 100 times that?

Just staggers the mind, really.

It is quite staggering, especially when you consider what hedge fund managers actually do.

Yup.

If you want to make money, learn a trade that lets you constructively produce something of value.

If you want to make LOTS of money, do something that generates little to no real-world value whatsoever, like the investment industry.

I'm glad the graph includes top paid athletes and celebrities to give it perspective to the rest of us.

And worth every penny.

What is a hedge fund Manager?

 hotsauceman1 wrote:
What is a hedge fund Manager?

Someone who manages hedge funds.

 hotsauceman1 wrote:
What is a hedge fund Manager?

Someone who makes money from money for people with money. They may or may not also destroy the economy while doing this.

 djones520 wrote:

 hotsauceman1 wrote:
What is a hedge fund Manager?

Someone who manages hedge funds.

Wait I thought they funding the acquisition and management of shrubbery. No?

 Frazzled wrote:

 djones520 wrote:

 hotsauceman1 wrote:
What is a hedge fund Manager?

Someone who manages hedge funds.

Wait I thought they funding the acquisition and management of shrubbery. No?

No, they fund hedges .

 daedalus wrote:
Yup.

If you want to make money, learn a trade that lets you constructively produce something of value.

If you want to make LOTS of money, do something that generates little to no real-world value whatsoever, like the investment industry.

That's kind of the rub - being around money has always been the best way to get a lot of it for yourself, no matter how much work you actually do.

 Portugal Jones wrote:

 daedalus wrote:
Yup.

If you want to make money, learn a trade that lets you constructively produce something of value.

If you want to make LOTS of money, do something that generates little to no real-world value whatsoever, like the investment industry.

That's kind of the rub - being around money has always been the best way to get a lot of it for yourself, no matter how much work you actually do.

"I'm a man, who took the $300mm his Da gave him and through years of hard work and sweat turned that into $350mm."
-Anchorman II

I've never worked at a hedge fund, but I have worked closely with investment managers of managed accounts, mutual funds, etc. The "breeding" aspect to the industry is real -- while definitely not a rule, many come from the 'right' families and attended the 'right' colleges, etc.

But regarding compensation, I struggle to criticize the idea of rewarding a manager who's outperforming. The money gets obscene in the hedge fund world, but then those managers are also getting handed obscenely large chunks of money to manage. As long as their compensation is set up fairly (i.e. the good managers are being rewarded, the bad ones aren't), it's capitalism at its finest -- outperform your peers and make people a shedload of money, and you'll make a shedload of money yourself. Again, the size of the compensation may be distasteful, but that's tied to the scale at which they're operating.

And personally, I find "real-world value" in investment management every time I see my mutual funds portfolios doing well. That's real-world value for my retirement. *shrug*

I've always said that bankers get paid a lot for the same reason that farmers tend to be covered with mud and cow gak. But actually I'm wrong, it's not because there is a lot of it lying around where they work.

After 30 years of banking scandals it is quite clear that bankers make a lot of money because to a significant extent banks have cheated the general public again and again, and when something has gone wrong for them the general public have been taxed to bail them out.

Example in point: Barclays Bank made an £8.2 billion loss this year, partly due to a large fine for mis-selling insurance on loans.

The bonus pool for higher staff has been set at £2 billion.

Barclays is 80% owned by the UK government (i.e. tax payers).

 Kilkrazy wrote:
I've always said that bankers get paid a lot for the same reason that farmers tend to be covered with mud and cow gak. But actually I'm wrong, it's not because there is a lot of it lying around where they work.

After 30 years of banking scandals it is quite clear that bankers make a lot of money because to a significant extent banks have cheated the general public again and again, and when something has gone wrong for them the general public have been taxed to bail them out.

Example in point: Barclays Bank made an £8.2 billion loss this year, partly due to a large fine for mis-selling insurance on loans.

The bonus pool for higher staff has been set at £2 billion.

Barclays is 80% owned by the UK government (i.e. tax payers).

I'm rolling naked in a pile of $100 bills as we speak. Yea Bankers!

 Kilkrazy wrote:
I've always said that bankers get paid a lot for the same reason that farmers tend to be covered with mud and cow gak. But actually I'm wrong, it's not because there is a lot of it lying around where they work.

After 30 years of banking scandals it is quite clear that bankers make a lot of money because to a significant extent banks have cheated the general public again and again, and when something has gone wrong for them the general public have been taxed to bail them out.

Example in point: Barclays Bank made an £8.2 billion loss this year, partly due to a large fine for mis-selling insurance on loans.

The bonus pool for higher staff has been set at £2 billion.

Barclays is 80% owned by the UK government (i.e. tax payers).

Hedge funds can't really "cheat the general public" like banks though, because they're the opposite of public. They're private investment vehicles. The ultraexclusivity is half the appeal.

The portfolio managers of hedge funds are often also the owners of the firm. They usually have *significant* skin (i.e. their own money) in the game too. So if it's their company, their results, are paid for performance, put their own money at stake, and their clients are happy...I have a hard time arguing against their compensation, even if the number is that stupidly large.

Also, I'm willing to bet that even that top 25 is very top-heavy...that the 20th-ranked manager is probably making a small fraction of $5 billion, even if that number is still just craziness to you and me.

Hedge funds get bailed out.

http://en.wikipedia.org/wiki/Long-Term_Capital_Management

They and the banks are part of the same system of finance that seeks to convince us we can all "trade" our way to prosperity rather than actually do real work building real things and providing real services.

 Kilkrazy wrote:
Hedge funds get bailed out.

http://en.wikipedia.org/wiki/Long-Term_Capital_Management

They and the banks are part of the same system of finance that seeks to convince us we can all "trade" our way to prosperity rather than actually do real work building real things and providing real services.

Here's some fun. Trying existing for a week without a bank. Nothing says "Dark Ages" like a world without banks and credit. We ownz youz buahahahahahah

Also it might be helpful to note banks are completely separate from hedge funds. WE've been burned by them too.

But we stillz ownzz da Worldzzz!

One thing I've never understood is how people can even appreciate their money at that point. Once you've accrued more wealth than you can possibly hope to spend in your lifetime (and more than your children, or their children's children, can hope to do the same), let alone live comfortably, it just exists as an abstract, almost incomprehensible number.

It's the kind of money where 3 generations or more can be set up with trust funds and never work a day and still have a gak ton left for buying an island...

 kronk wrote:
It's the kind of money where 3 generations or more can be set up with trust funds and never work a day and still have a gak ton left for buying an island...

Sounds like a good gig if you can get it.

I'm still waiting for someone to show up and tell us about how much they actually deserve that much money and vaguely imply we're all either too stupid or lazy to do the same.

An island with a bar for chicks to drink free.

A classy bar though. The waitresses have to be college students.

Also, an R2-D2 unit with bourbon dispenser.

 Fafnir wrote:
One thing I've never understood is how people can even appreciate their money at that point. Once you've accrued more wealth than you can possibly hope to spend in your lifetime (and more than your children, or their children's children, can hope to do the same), let alone live comfortably, it just exists as an abstract, almost incomprehensible number.

trust me...

once you hit the point where literally, you cannto spend all the money you have no matter what crazy thing you think of, it doesnt get worse... its gets awesome....


suddenly things like "hey, guys, Im buying an island, putting a bunch of atvs, helicopters, hovercrafts and paintball guns on it" become trivial.

next week its "hey guys, you know what the most dangerous game animal to hunt is?"

and you really do appreciate that, if it were not for your ridiculous amount of cash, someone might care that you are now hunting people for sport.

somthing about drinking cheap beer out of cans made of gold is also appealing,

when that stops working, try giving some of that money back to the community.

personally, I like to throw money at random people in the street after I soak it wet and put it in the freezer.

at first people are all like "wtf, ow that block of ice hurt!"

then they notice a few G's inside it, and yell "thanks!"

gives me a warm fuzzy feeling everytime I make someone bleed out of their head holes and get thanked for it

 easysauce wrote:

personally, I like to throw money at random people in the street after I soak it wet and put it in the freezer.

I do the same thing with random paint ball balls...



What?

And here I complained that celebrities and athletes were overpaid... they still are, but this is another level of crazy.

At least the hedge find people are actually providing a useful service I suppose.

Like none of us have ever done that Kronk fer shame....fer shame....one frozen ball in what..50 rounds

While the money they earn is crazy I'd be interested to know the proper average for the hedge managers (or the median) as for the one they quoted they took the average of 25 people and I would assume the US has more than 25 hedge fund managers in it. I'm sure it will still be very near if not at the top of the scale but I'd be interested to see what it looks like once the anomalies are taken out.

Like today in the news they were doing a break down of the bonuses for Barclays staff that earned over £1million in bonus and there was only 9 in a company that employs thousands of people.

Also it was RBS that made the massive loss and still put aside £2 billion for bonuses. Barlcays was the one where the news still managed to make a negative story out of the Chief Exec declining a bonus after they made something like £5 billion profit.

Is RBS a bank?

 Kilkrazy wrote:
Is RBS a bank?

Only if you can pronounce it while talking with a bunch of marbles in your mouth.