Where could you read this?
When greed exceeds fear, markets rise — and vice versa. Today, fear seems to be increasing: Even before last week’s jitters, many smart operators thought assets were priced above their fundamental values. But greed has been increasing even more rapidly. As a result, what one could call “net greed” is still on an upward trend.
The globalization of finance has spawned a global greed pandemic. As the rich get richer, they don’t stop wanting to get richer. Hedge-fund managers, buyout barons, investment bankers and oligarchs look around and see others who are making even more money than they are.
The smart players are infected more by greed than by fear largely because they often have safety nets. Managers of hedge funds and private-equity firms — the two dominant species in the modern financial jungle — typically collect 20% of the profits when things go well. But they don’t share in the losses when things go badly. This one-way bet accentuates greed and blunts fear.
Probably in one of the many lefty blogs or publications I favor, you’d think. Wrong. It’s Hugo Dixon’s Breaking Views (subscription required), a Lex-like column syndicated in The Wall Street Journal. I think his analysis is sound, and I like his rhetoric. But it’s certainly discordant with most of what I read in the Journal, where “greed is good” seems to be a watchword.