It's a sad tale. According to a piece in today's New York Times, hedge fund managers and private equity titans aren't spending big for palatial mansions like they did just a few months ago.
The problem? The threat of increased taxation on private equity could mean a sharp decline in paydays. In addition, hedge funds have provided lackluster returns of late and there is a growing realization that the enormous fees make it very difficult for most to outperform the market.
The recent draw-downs have shaken the confidence of some managers: When your fund is trailing the market, you might feel weird going out and buying a $70 million penthouse. Even though they're still fabulously rich, their confidence and swagger is gone: it's a psychological thing.
Some large funds even have psychologists/psychiatrists there to help their traders/managers!
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