Wake up: the party’s over
One of the strangest things about this crash so far has been the inability of so many of us to accept that the party’s over. The hype around ‘star trader’ Greg Coffey, now about to take up a position at Moore Capital, is a case in point. He resigned from hedge fund giant GLG back in April to gasps all round. Why? Because the value of the emerging-markets funds he ran were said to have risen 51% in 2007 and 60% in 2006. That, said most papers, made him not just a very rich man, but something of a genius. I couldn’t really see it at the time. Not only was he using huge leverage in 2006 and 2007, but emerging markets were soaring anyway. His record would be more surprising surely if he hadn’t made 50%-60% a year during 2006 and 2007? It is worth noting that 2008 didn’t go so well for him. According to Thisismoney.co.uk, he was down 5.5% in March and another 9% by the time the news of his resignation from GLG hit the press. Coffey may well be, as the papers constantly say, “super bright”, but is it reasonable to expect investors in the funds he will now be running to make 50% a year? Or is it delusional? Quite.
Still, there are even more bizarre examples of financial delusion knocking around in the housing market.
• Read the full editor’s letter here: Wake up: the party’s over