Private Equity? Over! Hedge Funds? Over!

Whoa, the NY Times called a double market-top today on both private equity (okay, that was over a while ago), and hedge funds. Not that either are going away, of course — both are large and permanent fixtures in the new financial landscape — but the era of young know-nothings vaulting into seven-figure salaries at hedge/PE firms is done.

How do I know? Read this bells a-ringing, klaxon-siren sounding, industry death knell of an opening to a Times story today:

Hedge Funds and Private Equity Alter Career Calculus
Published: September 16, 2007

MOST people who knew Gabriel Hammond at Johns Hopkins in the late 1990s could have predicted he would rise quickly on Wall Street. As a freshman, he traded stocks from his dorm room, making a $1,000 bet on Caterpillar. Soon after, he abandoned his childhood dream of becoming a lawyer and, upon graduation, joined Goldman Sachs as a stock analyst.

Three years into his new job, Mr. Hammond noticed something. Very few of his young co-workers were taking a hiatus from Wall Street to go to business school, long considered an essential rung on the way to the top of the corporate ladder.

So he, too, decided to forgo an M.B.A.. Instead, he raised $5 million and started his own hedge fund, Alerian Capital Management, in 2004. The fund now manages $300 million out of offices in New York and Dallas, and Mr. Hammond, 28, enjoys seven-figure payouts.

…. [Most interviewees] spoke as if a money-clock were ticking: many said they wanted to make as much money as fast as they could so that they could live in style later in life while doing less lucrative things like running a charity, working for the government, spending time with their families, or inventing new technologies. Some, of course, plan to stay in finance their entire careers, and they, too, are very focused on earning fat bonuses fast.

Cue a cutting Michael Lewis book, please.


  1. On an editorial side note, the author quotes Art Hogan referring to the CFA program as “Certified Financial Advisor”. The rest of us call it the Chartered Financial Analyst program. Ouch. It’s also not a “degree”. Double ouch.

  2. He’s also got the stereo-typical “ugly extra” of someone at the far end of Gecko’s conference table.
    Triple bonus.

  3. There’s not *supposed* to be a bell at the top. I guess when that finally becomes axiomatic there *must* be a bell at the top.
    Good call.

  4. You’re just jealous they’re not writing these articles about VCs anymore.