Howard Lederer on Poker and Hedge Funds
Lederer: The highest compensated hedge fund managers, and I think number 1 was Paulson. I think he might be the brother of Hank Paulson. And he had made his money, I think it was like, some scary, 3 point something billion, which is his compensation last year from fees and bonus, and they have just sort of said in the article, well, he made a lot of money betting against credit. I’m sure betting is the [IB] and various other, you know, collateral [lies], debt obligations, but I was thinking, you know, for him to make that kind of money, he was making huge bets against these things, and there were people, and maybe some of them were banks, but I’m sure that there were, you know, hedge funds that were on the other side of those trades, and so, you know, and you essentially had, you know, I’m sure for a good portion of these trades that he made that he won on, there was someone exactly on the other side of that trade, but, wait a second, the public’s paying 20 plus 2 fees to be a part of that bet. I mean, that’s just a massive negative expectation game for the investor in the hedge funds, and, you know, particularly when you talk about sort of macro directional trading, you know, I certainly have my doubts about the value of paying 20 plus 2 to big hedge fund managers that are making his bets that way.
The Poker Professor draws similarities between winning at poker and hedging investments.
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Research by neuroscientists at MIT's Picower Institute for Learning and Memory helps explain how the brain regulates arousal.
The big day has come: You are taking your road test to get your driver's license. As you start your mom's car with a stern-faced evaluator in the passenger seat, you know you'll need to be alert but not so excited that you make mistakes. Even if you are simultaneously sleep-deprived and full of nervous energy, you need your brain to moderate your level of arousal so that you do your best.
A disturbing interview given by a KGB defector in 1984 describes America of today and outlines four stages of mass brainwashing used by the KGB.
- Bezmenov described this process as "a great brainwashing" which has four basic stages.
- The first stage is called "demoralization" which takes from 15 to 20 years to achieve.
- According to the former KGB agent, that is the minimum number of years it takes to re-educate one generation of students that is normally exposed to the ideology of its country.
When these companies compete, in the current system, the people lose.
- When a company reaches the top of the ladder, they typically kick it away so that others cannot climb up on it. The aim? So that another company can't compete.
- When this phenomenon happens in the pharmaceutical world, companies quickly apply for broad protection of their patents, which can last up to 20 years, and fence off research areas for others. The result of this? They stay at the top of the ladder, at the cost of everyday people benefitting from increased competition.
- Since companies have worked out how to legally game the system, Amin argues we need to get rid of this "one size fits all" system, which treats product innovation the same as product invention. Companies should still receive an incentive for coming up with new products, he says, but not 20 years if the product is the result of "tweaking" an existing one.
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