Saturday, October 18, 2008

Hedge Fund Founder Retires

Andrew Lahde ran a hedge fund that had returns of 800% last year. He
just quit and published on-line this letter. A look into a mind that
is truly greater than mine.

"Today I write not to gloat. Given the pain that nearly everyone is
experiencing, that would be entirely inappropriate. Nor am I writing
to make further predictions, as most of my forecasts in previous
letters have unfolded or are in the process of unfolding. Instead, I
am writing to say goodbye.

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.

There are far too many people for me to sincerely thank for my
success. However, I do not want to sound like a Hollywood actor
accepting an award. The money was reward enough. Furthermore, the
endless list those deserving thanks know who they are.

I will no longer manage money for other people or institutions. I have
enough of my own wealth to manage. Some people, who think they have
arrived at a reasonable estimate of my net worth, might be surprised
that I would call it quits with such a small war chest. That is fine;
I am content with my rewards. Moreover, I will let others try to amass
nine, ten or eleven figure net worths. Meanwhile, their lives suck.
Appointments back to back, booked solid for the next three months,
they look forward to their two week vacation in January during which
they will likely be glued to their Blackberries or other such devices.
What is the point? They will all be forgotten in fifty years anyway.
Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I
do not understand the legacy thing. Nearly everyone will be forgotten.
Give up on leaving your mark. Throw the Blackberry away and enjoy

So this is it. With all due respect, I am dropping out. Please do not
expect any type of reply to emails or voicemails within normal time
frames or at all. Andy Springer and his company will be handling the
dissolution of the fund. And don't worry about my employees, they were
always employed by Mr. Springer's company and only one (who has been
well-rewarded) will lose his job.

I have no interest in any deals in which anyone would like me to
participate. I truly do not have a strong opinion about any market
right now, other than to say that things will continue to get worse
for some time, probably years. I am content sitting on the sidelines
and waiting. After all, sitting and waiting is how we made money from
the subprime debacle. I now have time to repair my health, which was
destroyed by the stress I layered onto myself over the past two years,
as well as my entire life -- where I had to compete for spaces in
universities and graduate schools, jobs and assets under management --
with those who had all the advantages (rich parents) that I did not.
May meritocracy be part of a new form of government, which needs to be

On the issue of the U.S. Government, I would like to make a modest
proposal. First, I point out the obvious flaws, whereby legislation
was repeatedly brought forth to Congress over the past eight years,
which would have reigned in the predatory lending practices of now
mostly defunct institutions. These institutions regularly filled the
coffers of both parties in return for voting down all of this
legislation designed to protect the common citizen. This is an
outrage, yet no one seems to know or care about it. Since Thomas
Jefferson and Adam Smith passed, I would argue that there has been a
dearth of worthy philosophers in this country, at least ones focused
on improving government.

Capitalism worked for two hundred years, but times change, and systems
become corrupt. George Soros, a man of staggering wealth, has stated
that he would like to be remembered as a philosopher. My suggestion is
that this great man start and sponsor a forum for great minds to come
together to create a new system of government that truly represents
the common man's interest, while at the same time creating rewards
great enough to attract the best and brightest minds to serve in
government roles without having to rely on corruption to further their
interests or lifestyles. This forum could be similar to the one used
to create the operating system, Linux, which competes with Microsoft's
near monopoly. I believe there is an answer, but for now the system is
clearly broken.

From Portfolio: Who Got Screwed in the Wall St. Bailout?
Lastly, while I still have an audience, I would like to bring
attention to an alternative food and energy source. You won't see it
included in BP's, "Feel good. We are working on sustainable
solutions," television commercials, nor is it mentioned in ADM's
similar commercials. But hemp has been used for at least 5,000 years
for cloth and food, as well as just about everything that is produced
from petroleum products. Hemp is not marijuana and vice versa. Hemp is
the male plant and it grows like a weed, hence the slang term. The
original American flag was made of hemp fiber and our Constitution was
printed on paper made of hemp. It was used as recently as World War II
by the U.S. Government, and then promptly made illegal after the war
was won. At a time when rhetoric is flying about becoming more self-
sufficient in terms of energy, why is it illegal to grow this plant in
this country?

Ah, the female. The evil female plant -- marijuana. It gets you high,
it makes you laugh, it does not produce a hangover. Unlike alcohol, it
does not result in bar fights or wife beating. So, why is this
innocuous plant illegal? Is it a gateway drug? No, that would be
alcohol, which is so heavily advertised in this country. My only
conclusion as to why it is illegal, is that Corporate America, which
owns Congress, would rather sell you Paxil, Zoloft, Xanax and other
additive drugs, than allow you to grow a plant in your home without
some of the profits going into their coffers. This policy is
ludicrous. It has surely contributed to our dependency on foreign
energy sources. Our policies have other countries literally laughing
at our stupidity, most notably Canada, as well as several European
nations (both Eastern and Western). You would not know this by paying
attention to U.S. media sources though, as they tend not to elaborate
on who is laughing at the United States this week. Please people,
let's stop the rhetoric and start thinking about how we can truly
become self-sufficient.

With that I say good-bye and good luck.

All the best,

Andrew Lahde