You're so right. I had the same reaction to this and the New Yorker article covering the same.

I got interested in hedge funds in high school after reading a lot of articles like this. But after learning a lot about economics and finance I learned to pick up the sensationalism in these articles.

I think just about every article about a hedge fund has a line like, "consistently beats the market...which most economists say isn't possible." That's not even true. The free market hypothesis has not been given much stock outside of the University of Chicago (Eugene Fama) since the 90's. Most economists who even study such things focus on under what scenario can an investor outperform the market and what types of securities tend to be undervalued.

I'm even amazed that the article doesn't begin by mentioning Ray Dalio's childhood as a chess prodigy/math olympiad/other thing that only really really smart people can do.

These articles typically have a set format: 1. Intro into the mysterious culture of the hedge fund 2. Background on the precocious child prodigy turned market whiz 3. Description of firm's hiring practices of PhD's etc 4. Questioning value of Hedge Fund's to society 5. In conclusion, this hedge fund makes a lot of money...

I almost want to run some NLP scripts over a corpus of profiles of hedge fund managers and automatically generate a dozen of these, print them, and see if I can get a job at Bloomberg.

I agree that its financial porn. I disagree on the "dubious field" and "no value to society" premise - In the past, I've interviewed with and worked for several s/w startups that were/are much more dubious and useless than finance.

Also, "attracting all sorts of people into the field" is really stretching it. Getting into the field to make a serious non-trivial impact - like running a derivatives desk or managing say a non-ferrous futures portfolio or even something straightforward like a 130-30 long-short equities fund takes a whole lot of expertise, something a whole lot of people simply don't have. For example, the codebase for one of the largest 130-30 fund in the world, run by Blackrock out of the Howard street office in SF, is actively managed by 3 Applied Math PhDs, 5 Java Programmers with CS Masters, and a dozen SQL , QA & misc scutwork CS undergrads. The guys using the codebase ie. the portfolio managers and the junior portfolio mgrs, are another dozen econ grads with CFAs and some 50 years of combined market experience. Its a pretty challenging job, and they've come up with a +ve alpha through most of the crisis, which is a minor miracle in itself.

Your first paragraph contains a deductive error.

Your second paragraph has enough industry lingo and insider info that it strongly suggests you work(ed) for a hedge fund, yourself. So your opinion on whether it's a dubious field or of value to the society is going to be a wee bit biased. :)

Financial porn or not, the article still offers an interesting look at how a company or a group of people could be structured and how a "value driven approach" may (or may not) beget success.

The debate on the social "value" of hedge funds and the like is a horse that has been flogged so hard, one doesn't know if it is dead or a sofa. My take is that speculation and trading have been a part of society since we stopped being hunter gatherers and started living in settlements. The difference is that now, a single speculator, given enough technical and financial means (read - leverage) has the ability to truly disrupt the global market, not just the local village market.

So, please, lets not talk about social value - that is irrelevant. In a capitalist system, if there is profit to be made, people will bend whatever rules there are to make that profit. Let us focus instead on the rules and the framework within which hedge funds operate and see what can or cannot be done. But that is way off topic. Apologies.

But they are approaching it from the standpoint of rules and a framework. The rules are called ethics and the framework is society. Laws and government regulations are a different set of rules, and much newer and more transient. What should be guiding all of us, I hope -- regardless of the current state of legal rules & regulations -- is whether something is ethical and what the impact is on society. By some standards, what hedge funds are doing is unethical or parasitic, and may in fact be a chaotic force which on the net creates more hardship than benefit to most of society. Thus, the details of whether they are currently legal or not is not important, in comparison. We can change laws to better reflect our ethics and what we think is best for society. So talking about social value is precisely and massively relevant: it's one of the main reasons we have laws. And it's quite possible that hedge funds are exploiting a temporary state of affairs where technology and the legal context allow them to do certain activities, and they'll continue to exploit until and unless we make changes to their environment.

Reminds me of The Suit Is Back // http://www.paulgraham.com/submarine.html

Kind of like how HN is full of startup porn every day?

Internet companies in the Valley make something like $1 million per employee, per year (mean, not median unfortunately). The industry is almost a pantomime of creative destruction (zero to world domination, to the butt of all jokes takes what, 10 years?), so startups are essential. But you don't read that in mainstream news articles (which are meant to be unbiased), just on this little VC-run discussion site.

Would it be accurate to say that the cult-like atmosphere was intentionally created to dissuade people from unethical behavior in a field that is rife for that sort of behavior? I.e. if you can control people in a field that is overflowing with excess then you can be confident that they'll be loyal employees.

I'm not criticizing people for wanting to get filthy rich, but brainwashing people into conforming to corporate standards for the sake of harmony seems not only insidious but evil. YMMV...

I kind of agree.

Every great company with a strong culture has some cult-like aspects.

But this firm does have a rep for being particularly weird. Like, if you don't get into the habit of calling people out for any mistakes or shortcomings sufficiently often, in a sufficiently impersonal brutally honest way, it will limit your career.