That was not the case with Mr. Druckenmiller, according to his letter. In his first two paragraphs, he used the words “friends” and “pleasure” twice each, and then “love,” “wonderful,” “gratitude,” “trust,” “joy,” “satisfaction,” “luckier,” “marveled,” “reward,” “rewarded” and “rewarding.”
“Then,” said the hedge fund manager, who would only speak anonymously, “there’s the guy who’s doing great, but says, ‘I don’t love what I do anymore because I’ve gotten bigger.’” In fact, Mr. Druckenmiller wrote that he left George Soros’ fund a decade ago because of how hard it was to perform well with gigantic sums of capital, and he said that again became an issue. Its stress took a toll. “I have had to recognize that competing in the markets over such a long time frame imposes heavy personal costs,” he said. “While the joy of winning for clients is immense, for me the disappointment of each interim drawdown over the years has taken a cumulative toll that I cannot continue to sustain.”
“Then there’s the guy,” the hedge fund manager continued, “who says he’s quitting, when, in fact, his investors are putting him out of business.” He paused to search for the phrase. “If they’re trying to drive you out of town, get in front of the parade.”
There are more obvious reasons, too. In May, Arthur Samberg’s Pequot Capital Management, once one of the biggest hedge funds in the world, closed because of an insider trading investigation. Funds are shuttered after good times, too: “Nearly everyone will be forgotten,” Andrew Lahde wrote in October 2008, after a year of 870 percent returns. “Give up on leaving your mark. Throw the BlackBerry away and enjoy life.”
Just like that autumn, this summer has been a season of nerves. Everyone, even the billionaires, seems vulnerable. “Money manager Philip Falcone is effectively mortgaging a significant chunk of his multibillion-dollar hedge funds’ assets in an effort to raise financing for an ambitious plan to construct a high-speed wireless network,” Reuters said earlier this month. On the other end of the spectrum, even old-time stock pickers are leaving. This week, 73-year-old Lou Simpson, who’s managed the $4 billion investment portfolio at Warren Buffett’s Geico for years, announced his retirement.
Back in 2000, one of the ur-hedge fund managers, Paul Tudor Jones, was asked about retirement. “I have a son that just turned 3, and I would unequivocally continue to trade until he went to college,” he said. “At that point, I think I’d probably be airborne hunting and fishing all over the globe every day in my life.” One assumes his son should be headed to school by 2015. Does his father only have a few years of work left? “He’s not going anywhere,” a spokesperson said. “No intentions to stop.”
mabelson@observer.com
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