Posted by Davy on August 4th, 2008 in Market Commentary
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I read it in Barron’s so it must be true!

Anyway, last week’s issue…yes, last week, I subscribe but don’t usually read most of it the week it comes out because what’s the hurry in reading about stocks that are either going to jump 5% the following Monday or fall due to a bad market… but back to my point, last week’s issue had an interview with Leon Cooperman of Omega Advisors.  I don’t know much about him or his firm but the following passage rung true (keep in mind, Cooperman is ex-Goldman Sachs chief investment strategist):

[Barron's]: Did they [Wall Street] get too greedy?

Cooperman: You better believe it.  Now, Wall Street is in the penalty box.  We are not an investor in that space.  I determined many years ago that if you want to make money on Wall Street, you work there; you don’t invest there.  They just pay themselves too well.

I’ve never understood the obsession with the big Wall Street banks and to some extent, the big money center banks.  Why would you put money in a venture where over half the profits (and even non-profits!) go to the employees?  These employees, as we are finding out now, are rarely worth their bonuses or even their normal salaries from the looks of it now.  For people who hate unions so much (and I don’t like them much myself, despite having worked and campaigned for them), investors are mighty generous toward Wall Street employees.

Of course, the 2+20 fees were one of the main reasons I shunned Apollo Investment Corp (AINV) and chose American Capital (ACAS).  Look where that got me!