Morgan Stanley loses chief strategist as mainline firms bleed talent

Another one bites the dust. Morgan Stanley (NYSE: MS) lost its chief investment strategist, Henry McVey, today. He had held the job since early 2004. The company said he would be moving to another firm, but its name was not mentioned.

It is probably a safe bet that his new home will be in private equity or at a hedge fund. And as those sectors grow, the need for the kind of advice that Mr. McVey and his department put out is dwindling. According to Bloomberg, "fund companies cut spending on Wall Street research to $4.9 billion in 2006 from $5.4 billion in 2004 and will reduce it to $4 billion in four years."

The news comes on the same day that is was disclosed that Blackstone CEO Stephen Schwarzman and his co-founder will get $2.33 billion when the company completes its IPO. They will also retain a 28% interest in the firm. Studies of hedge fund compensation have turned up a number of managers who made several hundred million dollars.

Mr. McVey is not likely to make what Mr. Schwarzman does, but, if he can only get a little piece of that pie, it is easy to see why he is changing jobs.

Douglas A. McIntyre is a partner at 24/7 Wall St.