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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: neolib who wrote (165068)	11/19/2008 10:56:27 AM
From: GraceZ	Respond to of 306849

In the case of hedge fund managers, Hedge fund managers have very different compensation set ups from someone who works as a market maker or mutual fund manager at an IB, insurance company or commercial bank. The reason the hedgies have been able to push their compensation as cap gains is because they almost always have their own capital at risk whereas a person working at a bank usually has only the bank's money at risk, or OPM. I think that eventually this claim will get knocked down and they will be forced to separate out returns on their own capital from "fees" paid from managing capital for others. This would make them more subject to the same high tax rates paid by dealer brokers, etc. I think they will be lucky if the IRS does make a ruling which is retroactive. As to those who work at the banks and have bonus for performance compensation plans, the high tax rates and the fact that people in these highly paid jobs don't last long sometimes results in much lower lifetime incomes than those working salary. Few people last very long in those jobs, they chew you up. It is sort of like being in the NFL, even if you get the big bucks it is never for long and because the bulk of your income is subject to the highest possible tax rate, you can do worse than someone who makes much less, but makes it on a continuous basis. The people I know who have done the best are those who don't racket up their lifestyle to match their top earnings years but live like it will end tomorrow. Few do this, they all think the party will never end. Plus they tend to spend like they are making their gross not their net and the net can be almost half of what they are paid. Almost nobody quits when they are ahead, they end up pushing themselves until they blow up, fail or burn out. The best scenario is they get kicked "upstairs" to manage others but most find work at some other aspect of money management which pays a small fraction of what they used to make. I have no envy for these people but I don't pity them either.