Based on my practice experience, I would venture to say that hedge fund managers, as a group, consider themselves superior both materially and in terms of how they perceive their value and self-importance. They do walk the earth with huge sums of money in their pockets.
Much of this self-importance is validated in the compensation model, where a hedge fund manager usually receives both a management fee and a performance fee from the fund. This has traditionally been referred to the “2 and 20” model, where the fund manager receives 2 percent of the fund’s net asset value annually as a management fee, as well as a 20 percent slice of the profit each year. The downturn in recent years has eroded these percentages in some instances, but fund managers are still generously rewarded, much to the envy of the rest of the industry. These are the rock stars of the industry—and they know it.
Sebastian Mallaby’s book “More Money Than God: Hedge Funds and the Making of a New Elite”[3] sheds intriguing light on the elite of the hedge fund industry. Mallaby really likes hedge funds because he feels they create fluidity and movement in the markets. Stasis is more lethal in his opinion. Action and movement are what it’s all about.
I had another patient who is also an enormously successful hedge fund manager. He earns several hundred million dollars per year, has an elaborate penthouse in Manhattan, a Hamptons’ beach house, a Lear Jet, horses, and enjoys exotic vacations throughout the world. His raging narcissism compels him to feel superior, richer, brighter, better looking, and cooler than anyone he has ever known.
However, he also feels special in quite another way. He feels destined to suffer great physiological harm and has a major emotional ailment focused around his hypochondrias. He is terrified of becoming ill, and he is an Obsessive Compulsive Germaphobe suffering profound anxiety and fear.
When a person convinces themself that they are a special breed of super human, this lends credence to heightened anxiety. Basically, the logic follows that no mere mortal ailment could penetrate their superior physiology.
So, when they are sick, they fantasize that they are really, really sick on an epic level. It’s almost as if they embrace the illness and the illness gratifies their narcissism.
[3] “More Money Than God: Hedge Funds and the Making of a New Elite,” by Sebastian Mallaby; Penguin Press HC, The; 2nd Printing edition (June 10, 2010).