Madeleine Albright Takes on High Finance

Madeleine Albright Takes on High Finance

That fund managers design complicated instruments and execute huge trades and transactions cannot be denied. This leads this blogger to respect the conventional view that management of a hedge fund requires very highly specialized skills and capabilities. Daniel Gross of Slate magazine reports that there is a definite tendency for high profile individuals from the public sector to establish or earn appointments to hedge funds while totally bereft of prior investment experience. While Prof. Larry summers has also been appointed as a part time manager of a separate hedge fund, the entry of individuals with experience in the public service and no financial training is worthy of examination.

The Albright Capital Management not only bears the name of Madam Secretary Madeleine Albright but has put together up to US$ 329 million in seed money courtesy of a Dutch pension institution. Granted that this fund will be managed in consultation with experienced financial gurus, I am led to question whether Madeleine Albright underestimates the skills in running of such a fund. Among the large portfolio of skills that Madeleine Albright has proven to have are high level diplomacy, an understanding of political formations, the trajectory of failed states, serious authorship in addition to being a distinguished professor in her craft. The relevance of this explicit set of talents to running a hedge fund are not immediately apparent to this blogger.

However, that may well be the wrong question because all that hedge fund management may require is unquestioned intelligence which enables a diplomat to convince a pension fund to place US$ 329 of seed money in a newly registered hedge fund bearing the name of a person who has no trading experience, training in economics or finance. That is real diplomacy. I posit that it may well be that high finance is not as much about unintelligible financial models as hedge fund managers make it but about the command of markets and the economic principles that govern them. No doubt that ACM will have more clients due to the reputation of its principal, but whether it will register superior returns is an issue for future blogs.