To: The Loyal Investors of The Fund
From: The Manager
Like a lot of hedge-fund guys, I’ve recently endured what might be misconstrued as a nervous breakdown.
Before CNBC or the New York Times or some other rag grabs the story and distorts it, I want to tell you about it myself -- and explain not only my disappointing returns but also my prolonged absence. Just so you get it straight.
Anyone who runs several billion dollars of other people’s money, and one hundred million of his own, is likely to have moments of self-doubt. I don’t recall experiencing any myself, but I concede that others have.
My personal crisis was different: a single moment, earlier this year, when I doubted not myself, but the world we inhabit. If I was a different kind of guy or (God forbid) a chick, I might easily have gone all “Eat Pray Love” on you.
Had I succumbed to the feelings of that moment I might have vanished in a puff like Andrew Lahde to devote my remaining days on Earth to the smoking of what is no doubt some very fine weed, or run off like Stanley Druckenmiller to feed the poor and cure some lepers. Like Guy Hands, I could have gone into hiding on a Channel Island; or, like dozens of hedge-fund guys in the past year, I could have just folded, without offering you any explanation.
My crisis struck one morning early this year, as I stared at my Bloomberg screens. Nothing had happened and that was the scary thing. For no reason in particular I was overcome by this eerie conviction that markets would never again be free. They’d become traps, run by politicians and bureaucrats, designed to ensnare the superior man.
What had happened, in a word, was socialism.
The law of the jungle, suspended since the fall of 2008, had been permanently revoked. Park rangers would forever more feed and protect all the animals, even the fat slow ones that deserved to die. In this new environment the apex predator --the lion with the gift for spotting the wounded antelope -- was doomed. My sixth sense for the kill was now irrelevant.
It goes without saying that, to a lion, feelings of doom are especially painful. To my credit, I resisted hiring a shrink, or rethinking my priorities, or searching for any more meaning in my life. Instead, I shot you that note, reminding you that all of you have the same two-year lock-up, then I cut a check to the Russian government for a seat on its new Soyuz TMA-19 rocket.
For those of you who have never had the experience, getting launched into outer space by the Russians sounds weirder and more offbeat than it actually is.
It’s not expensive -- at least not in the context of my net worth -- or even complicated, unless they find out you’ve been shorting Russian stocks. Mainly, you show up wherever some Russian tells you to, and refrain from making unreasonable demands, or offering them too many of your own ideas how to improve their operation.
Anyway, orbit turned out to be the perfect place for a hedge-fund manager to reconsider his place in the universe.
Floating around the capsule providing financial advice to my fellow astronauts and getting to know some of the ladies on board, the disturbing turn of events back on Earth came into sharper focus.
Your constant demands that I explain my strategy to you; the systematic extermination of some truly badass hedge-fund guys; the rumors that Goldman Sachs might shut its prop-trading desk rather than simply evade the new laws; the drumbeat that Wall Street is no longer a land of opportunity; Craigslist shutting down its sex ads -- all news points in the same direction: big-time returns for me in the future.
Rising Lion Prices
The price of being a lion is rising; the weaker lions are slinking away from the jungle. The stronger lion, the lion who survives, will have the jungle to himself. Inside the space capsule I had an epiphany: I am that lion.
Clawing my way along the wall to the capsule’s latrine, I passed a window. For the first time I really looked at the planet we live on -- the planet on which I still think I can generate returns in excess of 18 percent per annum.
In that moment I realized how small it is. No bigger than my wallet, when I held it up to the window. A lot of people, including some of you, have described me as “larger than life,” but no one has ever called me “larger than Earth.” Yet in comparison, from that distance, I was huge.
Then it struck me: so long as I keep my distance from my planet, I will be able to keep myself in the proper perspective. So long as I remain able to visualize my relative size, it doesn’t matter if others seek to shrink me.
The socialists thought they could force me to violate my own nature. I’d found the way to stay true to myself.
Take Me Back
Thus reassured, I told the guys up front to cut the engines and get us back down on the ground, preferably somewhere near midtown Manhattan. I was itching to trade; poised for a few quick kills.
Alas, it took the better part of three months and some serious change to persuade the Russian government to ferry me back earlier than planned. When you are in space it’s sometimes hard to explain the value of your time. But in retrospect this was a lucky break, as it gave me the leisure to begin my memoir of the financial crisis, “Outer Space, Inner Lion.”
Rumor has it that those of you who have given up on me assume you have heard the last of me. Trust me: you haven’t.
(Michael Lewis, most recently author of the best-selling “The Big Short,” is the fictional hedge-fund man and columnist for Bloomberg News. The opinions expressed are his own.)
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