[Good Rich, Bad Rich] Fund Managers Are Productive Professionals, Not Speculators

Fund managers! They are admired as the flower of capitalism, but theirs is also a profession plagued by extreme stress. A momentary judgment can make or wipe out tens or even hundreds of billions of won of clients’ money. That is why most have to quit once they are past 40. That is also why 89% of fund managers are age 40 or younger.

In a sense, they are the quintessential speculators of our time. Their annual salaries, often amounting to hundreds of millions of won, are the reward for playing a money game with other people’s money, moving it here and there. It would not be unreasonable to call it a profession that pursues unearned income.

And yet they are the flower of capitalism. They do not farm or manufacture goods, but they do highly productive work. That is because they create enormous value for us. Their job is to generate high returns on the money we have carefully saved. To do that, they must be able to see accurately which industries and which companies will make money when invested in. The more accurate their forecasts, the higher the returns they earn, and the more successful they become as fund managers.

Industries that make good money are those that deliver what people want at low prices. Put a bit more technically, they are industries that produce goods for which consumer demand is high but current supply is insufficient. Companies that earn well are likewise those that make products that sell well because demand is strong. People who are good at identifying such industries and companies can make a great deal of money as successful fund managers.

Their success does not stop with themselves. The many people who have invested in their funds receive high returns. Because they exist, each of our personal assets grows.

More importantly, as they find and invest in such industries and companies, supply increases and demand is met. Because of them, the money we save can be invested in highly productive industries and firms. Without them, capital in our society would flow into inefficient companies and industries and simply be wasted. They are indispensable to the efficient functioning of our economy. That is why fund managers should be called not harmful speculators, but beneficial producers of value.

Original title: [좋은 부자, 나쁜 부자] 펀드 매니저는 투기꾼이 아니라 생산적 직업이다

Author: Center for Free Enterprise (CFE)

Date: 2007-12-17

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=19&idx=10702