THE DROBNY VIEW

The Drobny View

Two weeks on the left coast, traveling from San Francisco to L.A., provides a breath of fresh perspective outside the Beltway. The conversation shifts from the partisan political bickering of Washington to the weather (rain, mostly,) the Adventures of Arnold in the statehouse and, of course, the ongoing debate over immigration.
But it was in Santa Monica, at a two-day conference of hedge fund managers organized by Drobny Global Advisors, that I was exposed to a genuinely different way of looking at the world.
These exceptionally bright men and (a few) women, who among them manage billions of dollars of other people’s money, try to view the world as it is, not as they think it should be or wish it to be. They are realists who set aside their personal political views and suspend judgement in an effort to take a hard-eyed look at the economies of different countries.
They are gamblers, of course, but gamblers who do a prodigious amount of research and analysis before they place their bets (or those of their clients) on the Argentine peso or the Japanese real estate market or the fluctuating price of palladium versus platinum.
At the semi-annual Drobny Global conferences, a panel of the best and brightest share with their colleagues what they call their favorite trades, their assessments of what is going up and down in the next six months or a year. There is no concern about sharing proprietary information, because if they are right, and the other hedge fund managers in the room make similar trades, everybody benefits.
It is a refreshing perspective, devoid of the triangulation and three-cushion billiard shots that characterize Washington policy debates.
On each table at the conference, was a copy of a new book, “Inside the House of Money,” by Steve Drobny, that seeks to unravel the mysteries of the hedge fund universe through interviews with some of its most accomplished practitioners. It makes fascinating reading.
The keynote of the conference was given by Jared Diamond, the Pulitzer-prize winning author and UCLA professor, who took the long view in trying to assess why some societies collapse and others survive. The population of Easter Island, for example, was decimated by its own actions. They cut down all the trees, destroyed the native economy and ultimately descended into civil war, starvation and canibalism.
To succeed, Diamond argues, a society needs to be able to anticipate and perceive its major problems, separate long term trends from background noise and short-term fluctuations (think global warming,) and resolve conflicts of interest between different segments of society (think haves-versus-have nots.)
Apply those standards to the Roman empire, and its downfall was inevitable. Now apply them to the United States society today and decide for yourself whether we’ll be still be king of the mountain in a century or two.
As I say, a refreshing perspective.

Please click on the link below to learn more about Steven Drobny’s book, “Inside the House of Money”

Inside the House of Money

BORING? SAYS WHO?

VOLVO VELOCITY

Everybody knows that sailboat racing is a boring spectator sport — as exciting as watching paint dry, the old cliche goes. And mostly that is true. Why then are thousands of people turning out to greet and watch the seven yachts currently competing in the around-the-world Volvo Ocean Race? The answer, I think, is that these boats and these sailors are living on the edge, literally, between survival and disaster. They have already come 25,000 miles over the last seven months through the world’s most treacherous seas at speeds of up to 40 knots, rocketing off waves 30 feet high, dodging icebergs and enduring exhuberant parties at every stop. These boats are too light and too fragile to do what they are doing — and that’s the appeal. In our seatbelted, risk-adverse, liability-protected, politically-correct, over-insured world, these seventy sailors are among the last true adventurers.