A Professional Investor’s Take on the Naivete of American Compass

As a professional money manager working in public markets, I love watching how we are portrayed in popular culture. Sometimes we are the card-shark poker player staring down an opponent a la Billions, sometimes the swashbuckling economist like Jack Ryan (who does surprisingly little economics). Thankfully, however, the job is never portrayed as it actually is. I can forgive script writers who exaggerate for dramatic effect. Watching someone stare at Excel for hours on end would not make for very good TV.

The job is exciting in its own way, of course! Finance is a world where knowledge and wisdom matter, and both are applied daily. Modern financial theory is rich and complex, often leading you to conclusions you wouldn’t initially expect. Professional investors spend years learning the theory, then years learning to apply it in the real world. Contrary to the popular entertainment view, an investor who relies on gut and shoots from the hip has a short career.

That’s why the recent article from Wells King of American Compass struck me as hopelessly naïve: arguing that hedge funds, venture capital, and private equity are a net detriment to society. Rather than a professional and well-researched view of financial markets, American Compass argues a TV show version of finance. Entertaining though it may be, it is hardly represents the how the world actually works. […continue reading at Lone Star Policy Institute…]

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