How Wall Street & Greenwich Have Changed: Masters of The Universe

Discussion in 'Wall St. News' started by ByLoSellHi, Sep 28, 2008.

  1. Redemptions will start flooding in on September 30th - the first bi-annual 'crack.'


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    http://www.nytimes.com/2008/09/28/opinion/28wolfe.html

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    Greenwich Time

    By TOM WOLFE
    Published: September 27, 2008


    Be aware that your correspondent is merely bringing you the news when he reports how many people have besieged the author of “The Bonfire of the Vanities” over the past week with the question, “Where does this leave the Masters of the Universe now?”

    “This” refers to the current credit panic. The Masters of the Universe is a phrase from that book referring to ambitious young men (there were no women) who, starting with the 1980s, began racking up millions every year — millions! — in performance bonuses at investment banks like Salomon Brothers, Lehman Brothers, Bear Stearns, Merrill Lynch, Morgan Stanley and Goldman Sachs. The first three no longer exist. The fourth is about to be absorbed by Bank of America. The last two are being converted into plain-vanilla Our Town banks with A.T.M.’s in the lobby and, instead of Masters of the Universe, marginally adult female cashiers with wages in the mid-three figures per week, stocked with bags of exploding dye to hand the robbers along with the cash. American investment banking, the entire industry, sank without a trace in the last few days.

    So where does this leave the Masters of the Universe? In Greenwich, Conn., mainly. The hottest, brightest, most ambitious young men began abandoning investment banking in favor of hedge funds six years ago. Your correspondent can describe scenes of raging carotid-aneurytic anger as the young hotshots resigned. Security goons seized them by the elbow and marched them off the floor at six miles an hour. They couldn’t touch anything in or on their desks — not even the framed picture of Mom and Buddy and Sis, propped upright from behind by little cardboard wings covered in synthetic velvet — so furious were their superiors. Their biggest producers and future leaders were walking out on them.

    Greenwich is the center of the Masters’ hedge-fund world, replacing Wall Street. For five years, the heart of Wall Street, the fabled Floor of the New York Stock Exchange, has been gradually emptying out. A hundred years ago, the Floor was a club for gentlemen oligarchs. Only men with social credentials could have one of the insider “seats” on the Floor. By last year, when your correspondent paid his one and only visit to the Floor, one member came up to another and informed him that he, like so many others recently, was leaving the Exchange for good.

    “What will you be doing?”

    “I’m joining the Fire Department.”

    “The Fire Department? In what capacity?”

    “I’ll be a firefighter. The pension plan is awesome.”

    Incidentally, there are no seats on the Floor, none that this correspondent ever saw. The Exchange is already an anachronism, like Broadway. Everything is done by computer today. Hanging out on the Floor of the Exchange is like hanging out at OTB. Broadway and the Exchange are like the first thing you see when you enter Disneyland in California. You find yourself in a turn-of-the-last-century town with a trolley and an apothecary and a barber shop. That’s Broadway and Wall Street today.

    It may dash your hopes for that nice warm feeling called Schadenfreude, but the Masters of the Universe are smarter than the people they left behind at the investment banks. Their hedge funds have blown up here and there, but unlike the investment banks, they are still very much in business. They have hurriedly pulled themselves into defensive positions inside their shells, like turtles. Their Armageddon, if any, will not come for two more days, which is to say, Tuesday, Sept. 30.

    Most hedge funds open up a crack on Sept. 30, Dec. 31, March 31 and June 30 to give investors the chance to “redeem” their investments, meaning take their money out. These moments are called gates, like a series of gates in a prison. The gate is the limit, the fixed percentage of your money, that the fund will allow you to take out at one time. Even with these strict caps on withdrawals, some funds may end up nothing but shells.

    Shed no tears for the Masters of the Universe, however, not that your correspondent actually thought you might. Most of the young Masters already have their own personal nut free and clear. “Nut” is the term for the amount of money you need salted away in weather-proof investments in order to generate enough interest to live comfortably in Greenwich on Round Hill Road, Pecksland Road or Field Point Road in a house built before the First World War in an enchanting European style, preferably made of stone featuring the odd turret, with a minimum of five acres around it and big enough to be called a manor. Every Master of the Universe knows the number.

    Tom Wolfe, the author of “The Bonfire of the Vanities,” is at work on a novel about immigration in Miami.
     
  2. I have never much cared for Tom Wolfe's fiction. But I have always loved his reportage. I am thinking of a wonderful piece he wrote about the demolition derbies in Islip, NY.

    He does well to remind us of the impending hedge fund redemptions.

    The week before last was quite a week, but this week may be the week to rock all weeks.
     
  3. The Bonfire of the Vanities is the greatest work of fiction ever.
     
  4. Tomorrow is going to be very interesting. If the redemptions don't pour in, I'll be shocked.

    I agree about Wolfe's reporting - excellent.
     
  5. bkveen3

    bkveen3

    I was a little confused by what this meant. Are redemptions people putting money in or taking it out. If it is people taking money out is it enough to cause another major sell off?
     
  6. YES
     
  7. bkveen3

    bkveen3

    YES to which question?
     
  8. Redemptions = demands for money from hedgies.

    = outflow of cash from equity market.

    = lower bids
     
  9. bkveen3

    bkveen3

    Thanks man. I wouldn't be surprised if tomorrow was worse than today. All the regular investors came home from work today and probably shit themselves. Most of them will sell tomorrow.
     
  10. Dont you know you have to invest for the long term.

    No one can time the market.

    Never sell, you will always sell at the wrong time.

    Thats what they say.


    I believe.
     
    #10     Sep 30, 2008