A Test that Few Pass …

Sounds like many new managers are having a hard time. But this is nothing new. From Ponzi Regulation: 

“A chat between two men in April 1999 demonstrates the dynamic. They met at a small office in Midtown Manhattan. One was a middle-aged businessman with money to invest. The other was a young hedge fund manager in need of capital. They talked for about an hour. The older man asked questions and the young man replied, using documents to illustrate his points….

The businessman was well practiced in interviewing …. Had he wished, he could have visited a large number of candidates in that very building and listened to their pitches, for this was a hedge fund nursery full of upcoming managers. …..

The managers …. were in effect taking a two-part test that only a few pass. If they raise enough capital, they can play the market. If they play it right repeatedly, they become exceedingly rich. If they get it wrong, the business won’t survive… Most newcomers fail one or both parts of the test. …..

The man who pitched his services to the businessman was only in his twenties but he was a veteran in the daunting struggle to attract investors. When he first appeared on the scene several years ago, he had been an unpromising contender. But against all odds ….

Ponzi Regulation, Ch. 4. The Art of Persuasion



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