Diary of a Very Bad Year Quotes

“I had no background, or I had a very exiguous background in finance. The guy who hired me always talked about hiring good intellectual athletes, people who were sort of mentally agile in an all-around way, and that the specifics of finance you could learn, which I think is true. But at the time, I mean, no hedge fund was really flooded with applicants, and that allowed him to let his mind range a little bit and consider different kinds of candidates. Today we have a recruiting group, and what do they do? They throw résumés at you, and it’s, like, one business school guy, one finance major after another, kids who, from the time they were twelve years old, were watching Jim Cramer and dreaming of working in a hedge fund. And I think in reality that probably they’re less likely to make good investors than people with sort of more interesting backgrounds. n+1: Why? HFM: Because I think that in the end the way that you make a ton of money is calling paradigm shifts, and people who are real finance types, maybe they can work really well within the paradigm of a particular kind of market or a particular set of rules of the game—and you can make money doing that—but the people who make huge money, the George Soroses and Julian Robertsons of the world, they’re the people who can step back and see when the paradigm is going to shift, and I think that comes from having a broader experience, a little bit of a different approach to how you think about things.”
― Keith Gessen, Diary of a Very Bad Year: Confessions of an Anonymous Hedge Fund Manager

“HFM: Well, what does it mean to have an enormous mound of cash sitting around? I mean, is it like in the executive suite, it’s like the pool that Scrooge McDuck has, with gold coins, and he swims around in that, and when money is needed he takes gold coins out of the pool and uses them to pay for things? I mean, what is a pile of money? A pile of money is, for example, a deposit at a bank. Okay, well, what is a deposit at a bank? The bank’s supposed to lend that out to somebody. So a cash balance is…one company’s cash balance eventually works its way to be credit, it’s credit to somebody else. The point is that, you say a company or a person has cash sitting around, what does that mean? It means that they have consuming power, that they’ve moved consuming power intertemporally. It means that they’ve produced more than they’ve consumed in the past, so they have a right to consume more than they’re producing at some point in the future. So that just means that some party has a claim on another party. It can’t be that all of us as an economy, that we all have lots of claims on future consumption and none of us have any debt. Otherwise you would have an economy that’s entirely demonetized, it would be entirely equity, you know, we would just have claims on capital goods or on ownership of companies. You know, if you want to have money that’s not just dead pieces of paper that will be worth nothing if everybody tries to spend it at once—really my money, through an extended chain of financial relationships, is somebody else’s debt, it’s a credit to somebody else.”
― Keith Gessen, Diary of a Very Bad Year: Confessions of an Anonymous Hedge Fund Manager