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:
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?
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.
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,