Tuesday, June 15, 2010

Insane Insana: Ron Insana's Vicious Attack on Ron Paul

Now this is rich. 

Ron Insana, a failed  hedge fund manager, just went on CNBC to diss Ron Paul's investment strategy.

Follow along here.

In March 2006, Insana left CNBC to start Insana Capital Partners, a money management firm that would manage a fund of funds. He closed the firm in less than two years. His return to investors who put money with him was negative 5% .

What is particularly noteworthy about Insana closing shop is that he charged a 1.5 percent management fee and would have taken 20 percent of all profits, if there were any. As NYT put it at the time:

Over the course of more than a year, Mr. Insana raised about $116 million. It was a respectable number, to be sure, but it wasn’t $3 billion. And here is where Mr. Insana ran into trouble...[Because he didn't make any money for his investors] That left his management fee, which amounted to $1.74 million. (That’s 1.5 percent of $116 million.) On paper, that may seem like a lot of money. But it’s not. Like many first-time fund managers, Mr. Insana was forced to give up about half of the general partnership to his first investor – in this case, Deutsche Bank – in exchange for backing him. After paying Deutsche Bank, Insana Capital Partners was left with only about $870,000.

That would have been enough if it was just Mr. Insana, a secretary and a dog. But Mr. Insana was hoping to attract more than $1 billion from investors. And most big institutions won’t even consider investing in a fund that doesn’t have a proper infrastructure: a compliance officer, an accountant, analysts and so on. Mr. Insana had seven employees, and was paying for office space in the former CNBC studios in Fort Lee, N.J., and Bloomberg terminals – at more than $1,500 a pop a month – while traveling the globe in search of investors. Under the circumstances, $870,000 just wasn’t going to last very long.

Now, contrast this with Ron Paul, his advice back in March 2006 (with no staff to help him with his advice) would have been to buy gold. You could have learned this not by sending him 1.5% of your assets and then sending him 20% of any profits, but by buying for $14.00 a copy of his book, The Case for Gold.

So we know Ron Insana shut down his fee charging money losing machine, after charging his investors over a million dollars in "management fees". How's Ron Paul doing, based on advice you could have received from him for $14.00? 

Let's see, Ron Paul's advice in March 2006 , when Insana started his firm, would have been to buy gold. Gold back then was trading around $550 an ounce.  Today, it is trading at over $1200 an ounce, a gain that Insana might even be able to calculate out (although never achieve) that is more than 100%.

Yet, Insana has the balls to say on CNBC:

Listen, the Ron Paul stuff, you know, if it weren't part of a conflict story would be funny because Ron Paul is one of the many elected representatives who we have that doesn't even have a basic understanding of fundamental economics, let alone more complex issues and better ways to hedge against inflation than buying gold. Gold is a complex instrument. You know, it speaks to a bigger point. He doesn't even know what he's doing.
It would be really difficult to find a more ludicrous comment. Insana knows of a better hedge against inflation than gold? Is Insana going to fill us in, or just throw this flaky comment out? Insana's hedge fund buddy, John Paulson, who actually makes money for his clients, unlike Insana, just loaded up on gold by purchasing over a billion dollars worth. Is he as unsophisticated as Ron Paul? Is Insana going to go on the air and diss him?

And just what does Insana know about Ron Paul's knowledge of economics?

It's clear that if you really pay attention to Paul that he has read Ludwig von Mises, Frederic Bastiat, F.A. Hayek, Henry Hazlitt and Murray Rothbard. This country would be in much better shape if the public at large read half the books on economics that Paul has.

I really have to think that Insana is clueless about economics, if he can't pick up the cues that Paul is extremely well read on the subject.

Maybe it's time Insana stop reading his marching order memos, from his controls, to diss gold and Ron Paul, and start reading up on the subject so that he doesn't sound so ignorant in  future commentaries and so that maybe he can make some money the next time he tries to manage other peoples money. He might start his reading with a great book that explains how the Federal Reserve manipulates the system and how gold is the antidote to such manipulation. The book is titled, End the Fed,

29 comments:

  1. Thank you for a GREAT POST! I caught CNBC contributor Ron Insana yesterday and simply shook my head. Most of the day, my mute button is fully engaged however I did witness Mr. Arrogance. No surprise that CNBC deems him a contributor given their overall programming dribble.

    You nailed it!!

    The Vigilant Grandpa

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  2. Ron paul is the only person in washington with an understanding of Economics. Insana obviously believes in Keynesian economics, which paul claims is flawed, and it is. You cant judge the wealth of a country by how much it spends, you measure it by how much it saves. Keynesian economics is fundamentally flawed, you must have commodity backed currency and a truly feee market if you want to fix our economic problems. The Austrian School of Economics has been preaching this for years, everybody should read up on Ausrian Economics, they know there stuff.

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  3. Bravo to RW for a great critique. Although its a bit of a softball. Insana the ignorant vs. Ron Paul!? No contest. I did enjoy the details about Insana's failed MM business. Surprised he was even able to raise $100 million.

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  4. Great piece. I have always found insana to be a pompous ass. Who is he trying to kid? After his colossal failure trying to run a hedge fund, he comes crawling back to CNBC (where he doesn't need to know what he is doing to make money), and suggests other people don't know what they are doing. Some people might be humbled by such an experince, but not this guy. Who are the fools that invested with him anyway?

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  5. Why doesn't the Mises Institute and others like them have an army of young video makers that take these Osana gems and simply flood the internet with "Peter Schiff Was Right" style videos?

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  6. Mr. Insana can't make money in a bear market so he starts whoring for CNBC theater of the absurd.

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  7. Nice piece. I don't agree with Paul on gold standard, but Insana has ZERO credibility when it comes to investment advice or politics. I will sure he was saying all along we would not go into recession in during late 2007 and 2008.

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  8. Insomnia is a pompous Jerk, CNBC is too dumb to understand that.

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  9. Wow, Robert. Just - wow. Talk about a total verbal smackdown.

    To say that Ron Paul is ignorant of economics while licking your wounds from a total failure in money management is the height of irony. What's sad is that this bozo is given free rein to say these things without rebuttal, without a counter-argument.

    I'd say it's tantamount to slander.

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  10. Ron Paul is the voice of wisdom. People like him should be running things instead of the power mongers who have and always will cause damage of the human psyche.

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  11. Slander requires that you say something not true. His opinion is that Ron Paul doesn't know anything about economics. He didn't cite it as the absolute truth, only the truth as he sees it. Thus, like O'Reilly calling people pin-heads there is no slander. Your comment is tantamount to stupidity.

    (but then I suspect that you just wanted to use the word Tantamount in a sentence...)

    But the article is great! Excellent work! Just wish they wouldn't write you off as a "gold bug" and not put you head to head with this guy on TV!

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  12. Saying that Ron Paul is ignorant of economics is like saying LeBron James can't jump.

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  13. The Keynesian dolts at CNBC are simply shills for Wall Street and the Federal Reserve!!

    Our military, law enforcement, and ELECTED OFFICIALS need to HONOR THEIR OATH TO THE U.S. CONSTITUTION!!!

    oathkeepers.org

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  14. "Slander requires that you say something not true."

    He said Ron Paul is ignorant of economics, and that is NOT true, even if not the basis for legal action. However, we get your point, although it's tantamount to puerile. You must be a lawyer.

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  15. Insana?

    More like Retardo

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  16. I heard Insana say that and I thought it was a very stupid thing to say given the fact that Paul's investment advice would have netted a very nice return for anyone that followed it. How can anyone that is intelligent about investing call an investment strategy that yields a 100% return in 4 years stupid? Only a nitwit would think this way.

    It’s no wonder the general public is sitting on the sidelines completely confused about where to put their money to work in the market. When someone that is presented as a sage in finance tells you that a doubling of your money in 4 years is a bad thing, what the hell makes sense after that?

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  17. From now on, let him be known as MO-ron Insana.

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  18. i like ron insana and anyone who opened a fund in 2008 got slaughtered more than 5 % if they were not short also many of the smartest have missed the gold Run insana is no dummie just because he lost money does not make him stupid many of the smartest were crucified in the last few years an missed the gold run

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  19. dik, I'm sorry but your runonsentence(s?) and general ignorance of economics disqualify you from intelligent discussion of this topic. Insana might be your "cup of tea", but his gross ignorance of real world economics should be enough to keep him from misleading people about investments, on TV and in real life. If you listen to him, or the idiotic Jim Cramer, like a fool you will soon be parted from your money.

    Did I say Fool?

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  20. I'm sure that the good doctor has more important matters to occupy him than the blatherings of an incompetent wannabe financier.

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  21. Insanely good work here bro!

    Go Ron 2012 BABY!!!!!!!!!!!

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  22. "He doesn't even know what he's doing"
    Insana's wife probably says the same thing about her hubby! BWAHAHAHAHAHAHA

    What a buffoon this guy is. He probably thinks the cowbell is also a "complex instrument"

    More cowbell!

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  23. This post nails it. CNBC owes Ron Paul an apology, and Insana deserves to be tarred and feathered. Ron Paul did get an interview on CNBC where he was able to respond to Insana's accusations tangentially, but I don't think it was a sufficient mea culpa - http://www.youtube.com/watch?v=yxh2CaQLRMM&feature=player_embedded

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  24. Insana is a great name for that idiot, just one letter off.

    Insana = insane.

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  25. send Ron Insana an email:

    http://www.roninsanashow.com/pg/jsp/general/contact.jsp

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  26. Yeah, I stopped listening to this no pundit long time ago.

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  27. If Insana even made $87, it would be $87 too much. I can't believe this clown made nearly $1 million for NOTHING!

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