I read this resignation letter that has been sent around lately with mixed feelings. On one hand I admire the accomplishment of someone who walks away with success, as quitting and quitting while ahead are different things altogether.
Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, “What I have learned about the hedge fund business is that I hate it.” I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.
[From FT.com / In depth - Letter: Andrew Lahde, Lahde Capital Management]
But the downside of this is that it reflects precisely what has been wrong with the global economy these recent years, culminating in the collapse of financial markets. We stopped valuing companies on real productivity gains and investment in innovations and instead on the cheap gains that come from swindling others, whether they be other traders or customers with cheap credit.
I was reminded of the movie Wall St. which has some really choice quotes, one in particular sums up my feelings:
“Stop going for the easy buck and start producing something with your life. Create, instead of living off the buying and selling of others.”
In BusinessWeek last week there was an interesting collections of articles that highlighted something significant going on right now. Consumers are feeling a significant amount of pain, many of them for the first time in their lives, and this could end up reshaping how consumer cultures behave. Could reshape but I admit that memories are short and if the financial sector recovers and this recession is mild, well people could go back to the crack pipe of debt funded lifestyles.
More significantly from my standpoint is that we are witnessing a fundamental break in how business looks at the scoreboard. Many companies have had a similar addiction to quick fixes that has resulted in them not being well prepared for the economic environment that we are in today. Furthermore, companies that relied heavily on offshore manufacturing are finding that gains they predicted with confidence they would be enjoying are elusive and hard to measure. A casualty of this economic crisis may be globalization strategies many companies have employed, with resources shifting to investment in the U.S. as a consequence, when investments can be made again.
Whatever the fix ultimately ends up being, it’s clear that consumers and businesses alike cannot keep jumping from on bubble to another. Long term economic prosperity comes as a consequence of creating, not just trading.