On a recent sunny afternoon in New York City I was talking with a girlfriend
who happens to be a hedge fund wife. She was complaining about her husband,
once a highly compensated trader whose fund had closed down and who now, in
her opinion, wasn’t doing enough to find a job. The couple had been
bickering non-stop about their cashflow problems. From behind a pair of
oversized black lenses, she confided in me that she was at her wit’s end and
was considering pulling the plug on the relationship. “I didn’t get married
for this,” she whimpered, adding ruefully, “Do you know I have to take the
subway now?”
Since moving to New York eight years ago (and marrying my husband, the
vacuum-cleaner heir Maximilian Hoover), I have become well acquainted with
Manhattan society. We move in elite circles, although my husband is no
hedgie — in fact, he is the president of an alternative energy company.
Nonetheless, I have attended baby showers at billionaires’ homes, a wedding
where the tablecloths were made of faux fur and another featuring Victoria’s
Secret supermodels and mountains of caviar. I have been flown to Paris on
Concorde for a birthday party and watched Jamie Niven, the Sotheby’s
vice-chairman, conduct an auction in aid of a nursery school where the
highest bid — more than $15,000 (£9,920) — went for a tablecloth decorated
with toddler handprints.
Having had a front-row ticket to all the dizzying excess and with some two
dozen hedge fund wives in my circle, I felt compelled to capture a moment in
time that I thought was historical in its ostentations. Go ahead and laugh
but you never know: maybe one day there will be tours of the estate of John
Paulson [the US hedge fund billionaire who became the industry’s biggest
earner in 2007 by “betting against” sub-prime mortgages] in the same way
that there are now for the former estate of the Vanderbilt family.
Life for New York’s hedge fund wives has changed dramatically. Almost half the
city’s 1,000 hedge funds have disappeared. Globally, 10,000 hedge fund
workers lost their jobs last year, and a further 20,000 are expected to be
out of work this year. An industry that was once worth about $1.9 trillion
is now worth half that.
“We’ve been seeing a lot of résumés, a lot of networking — and these are not
newcomers,” says Neil Morris of Kinetic Partners, a hedge fund consultancy.
They are people, he explains, who have been in the industry for years and
are now looking desperately for a new home.
Of those hedge funds that are clinging on, most lost money last year, meaning
no bonuses and drastically reduced incomes.
The other night I was at dinner with a few friends at Minetta Tavern, a hot
new downtown eatery, when the wife of a financial adviser piped up to remind
her husband not to go overboard with his wine selection. “I’m going to be a
recessionista,” she said lightly, “and remind you that we’re on a budget.”
Some at the table blanched, but her candour was refreshing. Her husband, I
noted, heeded her advice. We had three bottles of red at a meagre $60
(£36.50) each.
In the same vein, a hedge fund wife I know recently e-mailed me to report that
she and her husband were renting out their house on Mustique this summer for
the first time; they had even built a website to facilitate (and presumably
anonymise) the process. “I thought I’d share the news with you,” she wrote,
as if she had just agreed to co-chair a charity gala (which is usually the
only time I hear from her).
Initially I felt sorry for her — surely she hadn’t just sunk the past five
years of her life into a home, only to let it to strangers? It can’t be easy
sending out an e-mail to friends that effectively announces that you are
hard up.
Then I clicked on the link to the webpage and read about the property’s
infinity pool, the multiple cottages, grass tennis court, six staff and
$40,000-a-week tariff, and reconsidered my sympathies.
As a New Yorker living among financial kings and wizards, it is hard to avoid
getting caught in somebody else’s awkward moment. Not too long ago my
husband and I were invited to the apartment of an extremely successful
hedgie for dinner. Five of us were sitting around the giant coffee table,
enjoying our cocktails, when one woman remarked that the hedgie’s wife, who
also works in the industry, was likely to out-earn her husband that year.
The silence was deafening. I expected someone — the husband, the wife or the
silly cow who had made the gaffe — to attempt to make light of the
situation, but it turns out that when it comes to money matters, these
people don’t have much sense of humour. Although it is understandable that
they are not guffawing over their lost millions, there is such a thing as
overreaction. I know more than one hedgie who suffers from a grave (and
underdiagnosed) condition that I like to call bank account dysmorphia (BAD).
These guys have lost, in some cases, half their net worth. A tough blow,
granted — but when you still have millions, you’re not exactly penniless.
The trouble is, they think they are and are not just curbing their spending
on extras but cutting them out entirely. I know one investor who has given
up golf and is not renewing his lease on a luxury car because he thinks that
he can’t afford it. Meanwhile, he still has more than $20 million in the
bank.
For some, however, the financial fallout spells opportunity. I know one mother
(not married to a Wall Streeter) who is hoping that the economic outlook
stays dismal long enough to give her daughter, who will be applying to
kindergartens next year, a better chance of getting into a top-tier school.
“Maybe things are loosening up,” she says, referring to the once
ultra-competitive application process. Cut to the wide smile, eyes
glittering with equal measures of mirth and something more sinister:
schadenfreude. If you live in a financial capital, you probably know exactly
the expression I’m talking about. Maybe it is even plastered on your face
right now.
Here in New York there is a quiet revolution taking place. The once-almighty
hedge funders are finally getting their comeuppance and almost everyone is
happy to have a bird’s-eye view of their long (and, thus, quite
entertaining) fall from grace.
From my perch, it is easy to understand why. While I associate with the
super-rich, their wealth is on another plane. They have retinues of staff. I
am privileged compared with most but I pick up Cheerios from my own floor,
make the beds and cook all the meals.
How many of us non-hedgie types have not felt a pang of jealousy on hearing
about a friend’s posh holiday or new penthouse apartment, or the renovation
of their multimillion-dollar home? And, try as we might, it’s hard to feel
sorry for the women who have to make do with one of Jimmy Choo’s faux-skin
handbags because they can no longer afford the real thing.
Much as I hate to generalise, I’d still venture to say that if hedgie wives
had been more discreet, had chosen not to flaunt their wealth through
obscenely lavish birthday parties for their kids and spouses, and hadn’t
gone on about their latest handbag, we might feel a bit differently now.
But, alas, there is no return policy for a decade of conspicuous consumption.
The wives I know seem aware of the ill will towards them and many are doing
their best to fly below the radar. When I tried to interview an acquaintance
whose husband works for SAC Capital for this article, she told me that she
had been advised not to speak to anyone, even off the record. Others echo
the sentiment. “Nobody wants to be in the limelight,” says one
woman-about-town, adding that the moniker of hedge fund wife has become “a
dirty word”.
Yet most of these women refuse to accept that the party may be over for good.
“When things get better,” one friend prefaces so many of her sentences,
while others refer to the downturn as a storm that can be ridden out,
assuming that their “hardships” are temporary. Time will tell, but I would
suggest that increased government oversight of the industry will cramp
funds’ profit-generating capabilities for a long time, and things will
never be quite the same.
In an early chapter of my novel Hedge Fund Wives, Gigi, who is married
to a much older, ultra-successful fund manager, schools Marcy, whose husband
has taken a job trading derivatives for a big New York fund, on the unspoken
rules of being a hedge fund wife. The first of these — that your husband
makes heaps of money but you never get to see him and you can’t complain —
becomes somewhat outmoded as the recession worsens. Women once willing to
sacrifice so much — independence, the self-esteem that comes from earning
their own money, attention and love from their spouse — for apparent
financial security realise that they have made a bad bargain.
For some wives, just like the fictional Gigi, whose husband decides to close
down his fund, the downturn will prove ultimately to be a good thing.
Likewise, I believe that this recession could have a cleansing effect on the
global financial markets. We will have more fairly valued stocks,
responsible lending, due diligence. My hope is that these difficult times
will be remembered not as the second Great Depression but as the Great
Correction.
While many of us may have fun watching hedge fund wives being knocked off
their pedestals, most of us have lived a little too high on the hog, wanted
too much, saved too little, felt entitled to a lifestyle beyond our reach.
There is a hedge fund wife in us all. The question is, can we learn from her
mistakes?
Hedge Fund Wives by Tatiana Boncompagni is published this month in
the US and will be published in the UK by AVON/HarperCollins in August
Seven New York hedge fund wives
The Accidental
So named because she never signed up for the life of a hedge fund wife. She
thought she was marrying a lawyer or an investment banker — anyone other
than the man her husband turned out to be. The most likely to look and feel
out of place in a hedgie gathering.
The Westminster
Pure-bred and pedigree, like the best dog-show entrants. She has a
recognisable last name and sits on all the right charity boards. Her husband
brings the money; she brings the status.
The Stephanie
Includes all former models who decide to cash in their good looks and
sex appeal for a home in the best part of town and a luxury lifestyle (NB:
Stephanie Seymour is divorcing Peter Brant, her wealthy, polo-playing
husband, and all New York is a-twitter, anticipating a messy, dirty
laundry-airing divorce à la Christine Brinkley and Peter Cook, the
architect).
The Former Secretary
This one is self-explanatory. They have fantastically lazy husbands and tend
to be insecure about their lowly backgrounds. Of all the wives, you don’t
want to mess with this one.
The Socialite
Cares only about her social status. She is selfish, vain and stingy, so don’t
be too surprised if you are stuck with the bill for lunch.
The Workaholic
Almost as obsessed with her high-powered job as her husband is with
his. Her motto? What’s his is mine and what’s mine is mine. Not exactly what
the feminists intended.
The Breeder
The easiest to spot because she is usually pregnant or carrying a tot
in a designer baby-carrier, or both. Those at advanced stages of breeding
can be seen leading a parade of nannies and children into the Bonpoint store
on Madison Avenue.
