## Felix Salmon vs. Leon Cooperman

The thing about Leon Cooperman is--he didn't built that. He spent two years in the mid-1960s as a Xerox engineer, then went to business school, then went to Goldman Sachs as an analyst. Since then he has been picking stocks, buying them from people who probably would not sell and selling to people who probably would not buy if they really understood who their counterparty was--and, since 1991, persuading investors to pay him 2-and-20 to pick stocks for them.

He is very good at this.

Omega Advisors' portfolio has apparently averaged 16%/year nominal returns, 6%/year more than the S&P 500, since he started in the early 1990s. If his investors are giving him the hedge-fund standard 2-and-20, they have been making a net 10.8%/year, and thus beating the Vanguard S&P 500 index fund by 0.8%/year--by $8/year for every$1000 invested.

His clients have benefitted from his industry (albeit for every $8 of net value created for them he and his staff have taken home$52--on the other hand, if history is any guide about 1/3 of that 52 will wind up in useful philanthropies). And the rest of us have benefitted: because he has been a stabilizing speculator pushing asset prices closer to their fundamentals, the rest of us are wealthier because fewer businesses that would lose money have gained access to capital and more businesses that would make money have done so. Leon Cooperman has been very valuable to have around over the past two decades--but he didn't build that. He helped the asset price mechanism function more efficiently, he outwitted his counterparties, and he charged his investors an 87% commission on value added. So his leading the charge of the 0.001%, carrying the "I BUILT THAT!!" flag is a little bit strange. And the intelligent Felix Salmon muses on what is going on. Felix: Victimized Billionaires: Chrystia Freeland asks that question in the New Yorker this week, and comes back with answers we’ve all heard before: in short, it’s not the policies, it’s the rhetoric…. [T]his doesn’t stand up to scrutiny; it never did. If the rhetoric is getting overheated on either side, it’s definitely on the side of Obama’s opponents, rather than Obama himself. Chrystia finds multiple violations of Godwin’s law, not among foaming-at-the-mouth Tea Party types, but even from cosmopolitan financiers: Some of the harshest language of this election cycle has come from the super-rich. Comparing Hitler and Obama, as Cooperman did last year at the CNBC conference, is something of a meme…. Schwarzman, of the Blackstone Group, compared the President’s as yet unsuccessful effort to eliminate some of the preferential tax treatment his sector receives to Hitler’s invasion of Poland…. Cooperman… couldn’t resist repeating the analogy when we spoke in May of this year. You know, the largest and greatest country in the free world put a forty-seven-year-old guy that never worked a day in his life and made him in charge of the free world. Not totally different from taking Adolf Hitler in Germany and making him in charge of Germany because people were economically dissatisfied. Now, Obama’s not Hitler. I don’t even mean to say anything like that. But it is a question that the dissatisfaction of the populace was so great that they were willing to take a chance on an untested individual. There’s a limit to how far you can go asking people to justify their Hitler analogies, so Chrystia asks Cooperman about his “never worked a day in his life” comment. It turns out that by “working”, Cooper means that Obama “never made payroll. He’s never built anything”…. [T]he Romney version… where a handful of visionary builders use their skills to create jobs for the masses and wealth for themselves. Recall Nick Lemann, profiling Romney in last week’s New Yorker: He talks to voters businessman to businessman, on the assumption that everybody either runs a business or wants to start one. Romney believes that if you drop the name of someone who has built a very successful company — Sam Walton, of Wal-Mart, or Ray Kroc, of McDonald’s — it will have the same effect as mentioning a sports hero. If you’re the billionaire principal of a business you built yourself… you are very likely to… be very supportive of Romney’s candidacy…. Romney… aligns himself completely with the views and interests of the 0.01%. And given how much discretionary cash the 0.01% has lying around, getting the support of that key group can give a candidate a serious fundraising advantage. This, I think, is one third of the answer to the question of why billionaires feel victimized by Obama. In America’s two-party system, you’re given a simple choice: this guy, or the other guy. If you find yourself in wholehearted agreement with one of the two, then the other one becomes the enemy…. And under the rule of the narcissism of small differences, everything which separates your guy from the other guy becomes a monstrosity…. [But] I see something else going on here — the second third…. [A]fter the stock market rebounded sharply in 2009, financiers switched rapidly from Fear mode to Greed mode…. [In 2008] Wall Street trusted him and his egghead technocrat advisers to do whatever was necessary to prevent their world from imploding. And that’s exactly what they did. Geithner, Bernanke, Summers, and the rest of the Obama economic team threw everything they could at the markets: they were the liquidity provider of last resort, they took that role seriously, and they did exactly what was necessary to save the US — and, for that matter, the global — financial system. McCain, by contrast, never came across as being particularly competent… treating the financial crisis… as an excuse for political stunts…. After 2009, however, Wall Street felt that the crisis was over. Yes, unemployment was still unacceptably high, growth was unacceptably low, and the real economy was still struggling. But never mind that: Wall Street profits were enormous, corporate profits were hitting record highs, and bonus season was just around the corner. America’s financiers… wanted… Washington to get out of the way… in no mood for gentle reminders from Washington that if it wasn’t for the public sector they’d all have been wiped out. It’s notable that all of the 0.01% moaning about Obama in Chrystia’s piece are financiers… first to rebound… the sector of the economy least exposed to the plight of the 47%. Hedge fund managers like Leon Cooperman don’t make their money from little people…. Cooperman tells Chrystia, of a cardiologist friend of his who has accumulated some10 million in savings, that “it was shocking how tight he was going to be in retirement”….

Which brings me to the final third of the answer to the question of why America’s billionaires are feeling so victimized: I think that in fact most of them simply don’t…. [Y]ou don’t see Mark Zuckerberg or Mike Bloomberg or Larry Page kvetching about how Obama hates them. Neither do you see a lot of old money (the Waltons, the Mars family) pouring money into Super PACs…. The rhetoric that Chrystia is picking up on started I think with Jamie Dimon… but it’s not particularly contagious outside Wall Street circles….

So my feeling is that the sense of victimization is one part narcissism, one part greed, and one part tactical…