WWL>Topics>>Think Tank 1010am, Hedge Fund Managers Salary

Think Tank 1010am, Hedge Fund Managers Salary

May 12, 2016|

How much is too much?  How about hedge fund managers making almost $5million dollars a day while losing clients’ money. It’s just capitalism right? This hours guest: David Lesmond Associate Professor of Finance @ Tulane University Bart Naylor a financial policy advocate for Public Citizen

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Automatically Generated Transcript (may not be 100% accurate)

Well for change goofing bode good news zoom intending to twelve noon. A lot of organizations. In the city in the state in this content for. Try to help young men and that she just don't have the opportunity. That a lot of young people do. Almost no organizations. For young women. But Perry is one that Lincoln big difference it's called a beautiful foundation. On board members. Talk to the executive director and things on the rails come about them up on permanent. Perhaps and they are teaching them. Financial. Expertise. And how are bound to chart. How to breed the stock exchange. To meet some thing that should be done in schools all over this country. We've got a bunch of financial. Deliverance including my generation. Stroke closely how all the using that and portrait of the injured doing. 11 o'clock. In the ten years bill on the show. This is these scariest thing I have ever seen. There is a movement around the world. Ribbon bar. Groups of people in the individual. It's cold. Sects torsion. What they're doing. Software. Technology. Has become so census data. Dale or taking over the family computer. Using the camera on the computer. The audio capabilities. And attracting watch you or typing into. Your entire Pam. And they sit there for days and weeks and moderates. And they collect all of this in Britain and information. And then they black men and the way they black men who you. I think you won't find very interesting and terrifying. Or something we've we've talked about over the years should move when it comes some and it comes to the old rich. How much is too much whom we've talked about. Everything from bankers. To athletes. Unit and and Daniel Cantu. Salary for the chief executive. Forbes big big banks. Morgan chase. Goldman Sachs. Those executives mig 25 million in 23 million in 2002 during. But how does headline. Hedge fund manager. Small number of boots over a number. Made four point seven million dollars bird day. Last year. In the top toward five hedge fund managers each. Average day average. 517. Million. And is always boom with get their subjects at bro becoming complicated we go to via experts. I get my emotional. Opinions but we like to get people. The back of opinion with the expertise and thankfully grew up on. Of professors David Letterman pro mod too I didn't professor of finance. A professor thank you with the Tom appreciate it very much. So acute Boeing free cup captains went boom we feed these salary. It is capitalism. Should we say this isn't fair this sudden ride all are this assembly the system. Well. The question is well pose but it's the beer or requires. A lot of explaining. Well we would often assume that what you're being paid for it is we've term they're after you after. You're you're getting your marginal commercial product for from for which are returning back. And it's a manager of fund is returning to an investor or her investors. A return which is outstripping the market. Then you're paying for performance. And as a result it's a person makes ten million or hundred million or one point two billion dollars a year. That's far dipped a performance matches. The cost in this particular respect the expenses and the community that 20% of of of profits. So I have no problem with that at all however. On the up and court that you have managers of hedge funds and mutual funds which. Garner huge huge salary. But they don't return. To the investors an adequate rate they beat the market or even matches it to a large extent. And look at different steps. In in the New York Times article it mentioned citadel. And the supposedly exorbitant salary that was learned by its by its chief and as officers. Considered at the end well for the past. Fifteen or twenty year much like Warren Buffett has done well. Don't know what it would look at Warren Buffett say you don't deserve the 65 million dollars and it's accumulated. In your Wall Street know. Because Warren Buffett's cult figure you're committed to many people. Bill Gates at the same but. But they mutual fund manager or hedge fund man because the work done on Wall Street. They're charged under different light. No all of which has. Doesn't justify all the salaries. Because they were our eleven finals and hedge fund. And I would venture to say and my researchers researcher shall that left an hundred of those. Actually beat the market on a consistent basis. So that means that under 101900. Hedged on that can't beat them market. And yet date Kerr. He keeps some money. In terms of salary. So I will fully justify. Salaries earned by the hedge fund matters for themselves to do well. But I do condemn those hedge fund managers. That deal to outperform the market and as a result they do too much money. And this is and this goes back to Warren Buffett's famous that the protege. Warren Buffett who capacity manager argues that all the investors should be passively. Invested. Had a bet with protege which is day hedge fund manager and then ten million dollar that the that was simple. In test in 2008. Will pick you up eight or ten years later. In both The Who does better. Warren Buffett the investment banker or fidelity. Recipe index fund. And protege could pick five hedge. That would do better than the absentee and and cease stand at this point in time Warren Buffett as head by about two. 80%. Live Lynn Terry richter cobol court action will come. Even for the hedge funds that do not make the returns. That in ventures. Expected to. Old so the market did you funeral like it if you lose money. You get out of that hedge fund and the on the outside. The of the one critique I see that I am and stories about. Use these for the fund managers and and the wealthy used in this country. Often or tact listed no more than 15%. Should that point change. Is that something. That really could be born into and saying not to come right back double double BO brigades celebrity AM Mon 053. At the we're thinking about what I had a is maybe you a growing current route through over headphones headline and say. Headphones managers made poor to have or four point seven million dollars per day. We have professor David Lippman would that the Specter of and they moved to England birds that. Professor. A war Roland. Proud Hugh what I think is things simple dependents. Of these salaries. These benefits regardless. Totally in part brawl. If somebody says to me look somebody making 517. Million dollars average a year on year. That's just too much mark respond to always it is okay how much is too much. In our system. There is too much are you there is not too much is that. Well it. In our system. It. Economically we wish better and what we're return. But system's fairness and and broken business take over the political landscape as to how much is too. And as a result you'll you'll have politicians and and and the populace will still argue that. That we'll homily making this much and they make that election that much as much. It in my right who's that who's gonna say it. Almost a. Well I believe in market decides and that would be like. Lou they pay them. What they think we're fit when they don't earn that money they've pulled their money the from the funds and the fund collapse. For that inaudible claps on the phone was. Was the Hillary Clinton's the problem. Committed that that creek outcome meant lost 90% of the investor money in the shutting down. So investors spoke with their feet and if investors are losing them money in the investors are paying them money. Then the the deep populist as a whole doesn't lose any money in particular regard the investors have lost money since they're paying that. Now the other point is in turn your second question. The tax rate well how much taxes enough because they're being tacked on their 20%. Gain on the profits. And at any rate of 15%. Instead of ordinary income at it almost 40%. And and here you have Oprah. How much tax that's fair and you know the the argument that that are raised by many people that well if you're earning. A billion dollars annually paying 15% of it and operating. 200 pills and over the last minute paying 39 under 40% of that well that doesn't seem right to make. All the an argument that that that has to be. Our. Decade about with with its people. The population as a whole in terms of what's here. And fairness is that difficult often and you know I think that before this program what is legal may that be fair and. And you should change. That between priests and let's let's say. That. Public provision you and says look. We bureau of its fair enough but I'm doing importing is paying anything you'd make a mess and they condensed. That that is our porch and not there. Then you get it changed the law or right because of what they're doing is illegal. And in that case put. Give it to the same question though which you would have would would would your argument be different if the person that we're talking but didn't make up billion dollars. Or perhaps it made. Thirty million dollars. And and then people would maybe get hurt him it would be a little different. Or change the holding of the person that you are arguing about and take its football player or or an actor. Or. Are some of that ilk so much of the argument that's being that's being bad about here is a populist sentiment. That would argue for fairness and equality and justice. And these are issues that are that are difficult team to appear. Now that the government do better. It's a tactic that 39%. And sixteen. Well maybe but you know every action has an unintended consequence. So fight tax at a higher rate do more foreign shut down is more allocated capital being restricted to the market. As a result of growth in the overall economy suffer. That the very real question as well. So we in the United States do very well at directing capital to the most appropriate to. Meters are requires of the capital so we allocate blow through the markets. This does not happen centralized planning economy like deal Soviet Union where you've had government that would dictate. Where money would be willing to war president the in Venezuela. So the year he'd be the ability that we have to direct capital is 880 reasonable. Does that mean it couldn't be better and that's the real question canopy better and their confidence root issue you're racing can we do better and disregard. Now. We have 1539. Wouldn't 23 year 25% rate be more. Equitable or fear and as a result when it's less than the consequences. Reduced rural. It that would if that would recover its site tactic to higher rate. Well that's a question that that that some simulation analysis probably could answer better. But hey I understand the the concern that people has. I'd pay taxes and it certainly in the group of people paying less than that they could discretion I would like that as well. But but do you use it all comes down to one thing. Kurds and that question on the show from a wall and okay I'm with you understand. And didn't tax too much too. I think these guys but it jumped on the serpents. Looks like it's unclear but it somebody says okay girl and watched the fair tax rate. In the I gold. Beaten them a good point 8%. Somebody who's gonna say why do you get to decide. And what expertise. Do you use the out. And the answer that bit and threw nobody. Is able to decide what it is and be where I act. And even live week. Raised their rates are going to be people that say it's still not high enough. If they're routed to the same bridge would you. It's like Q does say it could've been pinned our economy. Professor. They queue up for helping me prove once you do and then. Hide today use is a part of one of her system. And if we don't like could the question of how much is too much have to be answered and it's seldom hear that they are cured and you have a great day. It. Are encumbered Arab actual have been you know permanent policy and good for you public citizen. Organization. So save this wouldn't be a good thing. Do do you know. How much. Is too much Debra yeah. Where did things get better and assume I catching headlines. Like this. Hedge fund managers. These managers made four point seven million dollars per day last year. Average revenue for the topped wounded by a head on managers. 517. Million dollars. Number of billionaires. Including war and bumper. The bribes the industry's. These structure. As unbelievable. And their performance this year what they god for the investors. As kind of struck. A win aboard they'll win the better armed groups and handle it women who policy advocate for public citizen. Barb thank you were calling and it's good. It is or it embodies some birds and blood what do you make of this. I didn't say. Paid too much money they sit. It's so there's breakdown in the system that people are not really been working a bit basically making four billion dollars today. But isn't there. Isn't the problem how much is too much. They're a good question and at some point. And I think we're looking too much somebody's been paid their two. Now is that the current record. Set by John Paulson. You can rightly asks so what should that he. Wow. I'm not going to be able to answer that question but at the very least. It shouldn't be tax subsidized than I tend not to tax rate. Networking person. Young bill of 15%. To. Somber in figuring. I think 200000. Strong were in that era is communal almost 40%. In that one of the critiques. But I adjusted. To approve propelled Giroux opponents and Emmett says there and in the net unfair. And he said well too thought somebody's got to decide what is fair laws like the of the fortune. And human you talked to a column as you get in to. Well load does that affect the economy. Parole or con is that part of the system. Do we not have the schism we're used Sabra. Upon US or investors. You don't make a return that's expected. Just like. Purdue's Hillary Clinton song laws they had formed just collapsed. Blows. It in Bristol like it they leave. What what about that responds to that tax. Well that's part of the that in zero sum game so all of these eye popping. Gains you know but to retrieve billion dollars a year in in the game. There somebody out there that has the collectively walks to a but at least at that explains some of that. And you can say well. Good for him to bat the other guy that they're not part. Where some of these hard spun are investing in the real economy and there are the wings are basically. Without you that it's not aid. To the worker so apple McDonald's worker who's been paid minimum wage and actually it's producing PayPal that wind up in the profits of the firm. They get it. It goes back to your question so what should that be and and I would say it's it's a moral question what what our society sink. Should be this year what workers get as opposed to the capital especially ones that are little article. The Olympia of this screwed we've we've had the debris here. Every time somebody like Drew Brees who revered here. But every good boy and Super Bowl people get exercise. As a ruse 2030 million dollars salary. MR responds always is. Why don't you get angry about his salary of the owner and again. If we go with how much is too much nobody ever has an answer for me and and one of my thoughts and tell me where I'm wrong. These hedge fund managers. In the in many cases. Have a ringing. Have a inborn. Ability. To handle riffs. That returns. Gigantic sum for investors. Isn't that just like and that lead. Where you god the supply and demand. They have is supplies of re rare. Bringing power speed power mottled pollen were breed plugged follower. That gets paid a lot of money. By those that make a lot of money from that guy and make an accident that. And and to the extent that Drew Brees is is paid what he is or other sports figures. Presumably. We are collectively. Willing to chip in our our money that is that paycheck and what you need to be here. The price of admission that. That the arena in oral. Four yet the fact that I'm buying that cap one credit card which is announced. Jennifer Garner ad that I the supper when these things commercial break the plane went through great group sort of football. So you know. The money is coming at such trauma because we're choosing to forgive the sum up. That makes cents on. You can't go scratched the circuit and look at some of the truck appealed to the NFL and other sports leagues have. That prevent the so called free market where I happen to be a real sport not so you can put me in front of the television watching. Community college volleyball and I'm gonna be excited so one cents. Our industry has caused me to be somewhat captured by the NFL what by summit between the truly hi. I'm. Salaries where I would be pleased swaption some very good athletes. In an arena whether or not being paid these outrageous or it's extraordinary so. Our live and take a break here will come and run backward did bathing. Hedge fund pay eighty so live via headline says some managers from Lincoln. Fourth point seven million dollars per day. In the top two wounded five. Hedge fund managers. Average pay average and you know overture got to have on the upside. To average. 517. Million dollars isn't there. Is it our system. Governor a video. Angered about a headphone managers some of them making poor to have million dollars per day last year. Average salary of 517. Billion. Warren Buffett says that is unbelievable. And and catastrophic. That our league is is that Warren Buffett migs about a million and a half or how war. Even when he's sleeping and the differences. He's returning. Good return for people that are in the money. And millionaire via headphones today you or I'm there collapsing or knob returning the money that people want. We're talking to Bardner real were financial policy advocate for public citizen. And again wouldn't wind people look at this. You know user and ways of changing one born and live ball and until we were brought along. We're being more intrusive in the big banks try and it got god ranked regulations. And and actively. Trying to get back to where they were read tooth and an eight year. But they certainly are. They'll all. Problem. Starts where FDIC insurance taxpayer backed insurance. Making. Almost unlimited amount of credit available to the banks cheaply and abundantly. And it'd naturally their interest to the banker wanna gamble to make. That extra. Money is supposed to put it out in thirty year mortgages and they except we. Doug. That repeal of any restrictions on what they did with our deposit money it was so. You know finalized late night I was so very. Here later that they thought about the financial crunch and yes they want to get back into the gambling arena and one way to do that is to cut. You can but kept it forms which are the 2010 contract bolster informed consumer protection act. That that does the threat. Also addressed something intense on because they were part of that you are in the crash which apple John hall and are on. And the rain from Goldman Sachs to package a bunch of mortgages now I'm going to default. So that he could. He could throw short. It was profit from their demise and but in other words it almost was an incentive. To make bad mortgages which in turn inflated the housing crisis. So that some guy in the can can profit again that the extent of it at the present on the other side that that kind of perversion should not be right. He would never prosecuted. He even Goldman Sachs took a stab at golden track but there was this little that's going on paid 320. Are the Rampage suspect that we may be taking a position. In the conflict with our customers and Kelly that was cart blog let them go ahead of our. It's about the consumers that the conflict that in fact work who hate John Paulson has been winning in the year. Board and fortunately out of time distance and a very important subject. Love to get your back and later date and really Gordon detailed thank over the top. Our bones and remind everybody. Do Allard strong intrusiveness and and certainly bend intrusive and wetland. There's going to be when ends or who warm and banked a panel Saturday 1 PM. At five probes gallery which is part of Oca. It's called inside the art style and Q wouldn't dream in the scope from Gordon wetlands are tour. Talked tough old truck Peter. And its. Third and rule or to work and it's gonna have 100 artists activists scientists. All working and tried to explain wetlands conservation. Make sure you go there. Are at war or a more important jumped and imports from Phnom we have win a couple of bear record and president cedars and professors. Open and talking about what many people feel hedge foreign operators making too much money on when Matt and helps this simple question how much. Is too much. Not one could puncture. Our system doesn't need regularly at home had to get aid in the market. Bears. All right incumbent right but actually what ifs but now. I am for the 1000 dollar in age from one jazzy carriage come. The quote word its own or use thing not. Tax hands and tell me ages and ports. Our lives in India. And is in no. Jeanne as in goal. Being down 27288170. To 81. Next text. Even Coke board aboard the top of the hour news to opium. Tried different types would individual play and to actually to bridge to apply please don't touch and Ross.