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What We Learned from the Crash

Roger Martin on how the financial crisis shaped and strengthened the Rotman School's MBA program

If it's true that lessons are learned best when they hit the pocketbook, then my financial education became complete in early 2009, when I received a dry e-mail, with only a faint whiff of apology, from my hedge fund manager. He announced he was shutting down and sending me back the remnants of my investment.

It made perfect sense for him. The standard hedge fund compensation formula is "two and twenty"—2 percent of assets under management and 20 percent of the upside—and he had just lost, along with a hefty chunk of my original investment, his chance at seeing any upside. It wasn't worth his time to strive to get his investors back up to par in exchange for the piddling 2 percent fee.