After a few glorious years Hedge Funds were shaken by a series of events that are likely to threaten many of retained earnings . The inability to project the present into the future ( predicted ), which is the most human of our gene pool , is so glaring that, even such boring and sedentary institutions as The Bank of Japan and the Swiss National Bank, are capable of surprise . Nassim Taleb is quite right when he says that we have been paying high salaries to charlatans (finance executives ) without skills. However we must recognize in the charlatans of Hedge Funds, the ability to tell the most intriguing range of stories, tales and epics possible to the global financial industry to excite the “illusion of understanding” of global investors.
Historically the Hedge Fund appeared first as fiction and then as reality. It was in Paris in 1929, the year of Crack, when public , with great success, a novel David Golder , which was the imagined biography of the first known hedge fund manager . Unintentionally , the author , Irene Némirovsky , produced possibly the first Hedge Funds Management fiction , inspired by the life of her father the Russian banker Leon Némirovsky . The real financial world had to wait twenty long years for hedge funds no fictionalized born in 1949 in the United States victors of the Second World War , with the help of Alfred Winslow Jones.
The character of Golder/Nemirovsky offers all the attributes of a manager of alternative investments ; His own investment firm, The Golmar , publicly traded and gathered a select group of elite investors in Europe and America which fundamentally believed in the investing opportunities/smell of David Golder . His personal charisma as investor attracted huge borrowings in pursuit of any investment risk. This risky personal style is the opposite of an “ordained Catholic parent ” , on the contrary , the more valuable biographical features, Golder / Némirovsky was self-imposed obligation, to succeed at any cost. Something really rare in the gene pool of the human species , which is indolent and accommodating to the circumstances in which individual existence unfolds naturally .
Sixty years after David Golder, in 1992, reality took revenge with George Soros winning more than one billion dollars in a financial gamble that led to the departure of sterling from the European Monetary System . QUANTUM ( Soros ) overcame a GOLMAR ( Golder ) with a cartoon whose argument was simple : find a trend whose premise is false , and bet your money against it.
Such versatile theatre actors as Soros and Golder, share the need to analyze realities , which others see as definitive, under the optics of provisional . But the Golder / Némirovsky strategy tested the boundaries of the capitalist economic system, which Michael Mann called interstices of the system . No human society , even the Stalinist dictatorship of the USSR , has been organized enough to prevent interstitial emergency. This was understood by David Golder in 1929, when he opted for an audacious operation consisting of flooding, against all odds, Europe and America with Russian oil . Today , more than eighty years after that fiction , Russia is the second largest exporter of oil, and Vladimir Putin (no democrat)has in his clumsy hands all the power Golder / Némirovsky imagined .
The reality we all call “ objective reality ” is but a social consensus and this is also true in the economic and financial world. The paradigms of financial markets are just that , temporary realities , temporary consensus. The risk does not exist independently of our minds and our culture, waiting for someone to measure it . Humans have invented the concept of risk to cope with the complexities of life. Instruments such as the VaR (Value at Risk) or volatility, part of the range of “mathematized stupidity ” ( Nassim Taleb ) usually accompany enjoyable cartoons called Hedge Funds.
I do not agree with Daniel Kahneman when he says that only take risks for our blindness and ignorance at the chance . We assume risks in a systematic way provided that we postpone our instant gratification for deferred gratification. if we change future satisfaction in exchange for suffering and sacrifice in the present, we changed certain of this by no certainty of the future.
Being hated or discriminated against by the mere fact that one is , is a great misfortune as an individual. But, paradoxically , for the human race and civilization , contributions from individuals are disproportionately disliked. The dislike inevitably leads to not sharing the consensus which is the social reality of the moment and to seek alternative ways of satisfaction, to offset the harsh reality of the present. Often these alternative routes are about deferred gratification, probably one of the most important catalysts of civilization throughout history.
Soros / Schwartz and Golder / Némirovsky are two survivors of Auschwitz. George because his father, Theodor Schwartz , had the skill to hide the Jewish identity of his family. David was saved thanks to the literary genius of a 26 year old girl, daughter of parents determined to succeed at any price. Neither his conversion to Catholicism nor his self- hatred prevented Irene Nemirovsky from dying in in Auschwitz. But before She saved David Golder, and who saves one life saves the entire universe .