Saturday, September 15, 2007

What's Missing in This Picture?

September 16, 2007
Age of Riches

Bye, Bye B-School

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.

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What's missing is any understanding of or exposure to the down-side.

The new ranks of traders and high-octane number crunchers on Wall Street are also a breed apart from celebrated long-term investors like Warren E. Buffett and investment banking gurus like Felix G. Rohatyn. What sets the new crowd apart is the need for speed and a thirst for instant riches.
What's missing is an understanding of anything other than the hype of being 'a breed apart.' In 1928, greed, speed and instant riches set the stage for 1929.


* For more in-depth articles by Jim on Business and Economy, check out Opinion-Columns.com