Wednesday, December 04, 2013


I came across Felix Salmon using the term "2-and-20 crowd" and I had to google to learn what or who he was referring to: hedge fund managers. It seems that Warren Buffet was the first to use this term in his 2006 investment letter:
“A flood of money went from institutional investors to the 2-and-20 crowd. For those innocent of this arrangement, let me explain: It’s a lopsided system whereby 2% of your principal is paid each year to the manager even if he accomplishes nothing or, for that matter, loses you a bundle and, additionally, 20% of your profit is paid to him if he succeeds, even if his success is due simply to a rising tide."

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