Smarter Money: Don't Let Just Anybody Run Your Money

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Can anybody manage money? I often ask myself that when I look at the carnage in my mutual fund accounts and I think about the hedge fund world I live in.

Of course, I should have known all along that this business could be something that anybody could get into. I remember when I applied to be a Registered Investment Adviser in 1982, I was shocked that all I had to do was fill out a form. When a nice chap from the SEC's Boston office interviewed me and warned me about the business not soon after, I asked him what qualifications I really needed. He said that there were two issues. One was regulatory; I had to keep good records, understand the accounting and the law. But the other was more important. It was other peoples' money, he said, and with that came a responsibility, a real burden, and he wasn't sure I was ready for that.

I assured him that I lived and breathed the markets and that I had been investing for several years in a bear market and had done well personally. He said fine, and that was that. I walked out of the office and I said to myself, "Anybody can be a money manager." Of course we had just come through a multiyear bear market, so the issue was, "Why would anyone want to be a money manager." ...