A friend of mine is a trader with a huge agribusiness firm - essentially his job is to invest all the profits. He explained to me how his hedge fund worked - essentially guaranteeing double digit returns to rich people (minimum of $10,000,000 to invest) by combining loans into tranches, then taking the “best” tranche (with all the good investments, high payouts, etc.) and giving it to the hedge fund investors with guaranteed returns, while the other tranches are purchased by insurance companies, pension funds, whatever, who are satisfied with a 3% return. (my terminology may be off a bit, conflating terms from “The Big Short”)
I asked him how this was legal or why you had to have $10,000,000 to get in on it, why can’t I get in on this? His answer was “transaction costs - if you let everyone do it, then it will get bogged down with too many shareholders, etc.”
In other words, because it’s a private club you clown - who the fuck do you think you are to get the same deal as these billionaires?
We’re not friends anymore - for this and other reasons, mostly related to his lack of a soul.
