Ron Insana: Ron Paul doesn't understand basic economics
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Meanwhile here's Ron Insana's record:
Tuesday, June 15, 2010
Insane Insana: Ron Insana's Vicious Attack on Ron Paul
Now this is rich.
Ron Insana a failed hedge fund manager just went on CNBC to diss Ron Paul's investment strategy.
Follow along here.
In March 2006, Insana left CNBC to start Insana Capital Partners, a money management firm that would manage a fund of funds. He closed the firm in less than two years. His return to investors who put money with him was negative 5% .
What is particularly noteworthy about Insana closing shop is that he charged a 1.5 percent management fees and would have taken 20 percent of all profits, if there were any. As NYT put it at the time:
Over the course of more than a year, Mr. Insana raised about $116 million. It was a respectable number, to be sure, but it wasn’t $3 billion. And here is where Mr. Insana ran into trouble...[Because he didn't make any money for his investors] That left his management fee, which amounted to $1.74 million. (That’s 1.5 percent of $116 million.) On paper, that may seem like a lot of money. But it’s not. Like many first-time fund managers, Mr. Insana was forced to give up about half of the general partnership to his first investor – in this case, Deutsche Bank – in exchange for backing him. After paying Deutsche Bank, Insana Capital Partners was left with only about $870,000.
That would have been enough if it was just Mr. Insana, a secretary and a dog. But Mr. Insana was hoping to attract more than $1 billion from investors. And most big institutions won’t even consider investing in a fund that doesn’t have a proper infrastructure: a compliance officer, an accountant, analysts and so on. Mr. Insana had seven employees, and was paying for office space in the former CNBC studios in Fort Lee, N.J., and Bloomberg terminals – at more than $1,500 a pop a month – while traveling the globe in search of investors. Under the circumstances, $870,000 just wasn’t going to last very long.
Now, contrast this with Ron Paul, his advice back in March 2006 (with no staff to help him with his advice) would have been to buy gold. You could have learned this not by sending him 1.5% of your assets and then sending him 20% of any profits, but by buying for $14.00 a copy of his book, The Case for Gold.
So we know Ron Insana shut down his fee charging money losing machine, after charging his investors over a million dollars in "management fees". How's Ron Paul doing, based on advice you could have received from him for $14.00?
Let's see, Ron Paul's advice in March 2006 , when Insana started his firm, would have been to buy gold. Gold back then was trading around $550 an ounce. Today, it is trading at over $1200 an ounce, a gain that Insana might even be able to calculate out (although never achieve) that is more than 100%. |
