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The Experts Versus Amaranth

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Going private touches on one of our pet peeves today in a post about the reaction to Amaranth.

This is why I believe Cramer is confused. He believes both that you can be smart enough to beat the system, but at the same time admits that the capital reserve cushion is the only way to protect "the public." “The only government regulation we need," he quips, "is a prophylactic one: If you aren’t rich or your clients aren’t rich, you shouldn’t be in hedge funds." The fantasy that the market is more "knowable" than the weather serves Cramer, another expert for hire, though. I just can't decide if he knows it, or if he just believes his own lie.

This kind of rule by experts is one of the most striking features of our era. And one of the least observed aspects of this regime is that it large reflects the outlook and interests of the experts themselves. And in reaction to Amaranth we hear the usual mantra: Look out for those those lonewolf traders. Be suspicious of those small hedge funds. Regulate everyone till the cost of regulatory overhead means only the certified, established experts get to play the game. Success always springs from knowledge and expertise; failure from luck and superstition.
Luck as Marketing Illusion [Going Private]