Hell Is Empty And All the Hedge Fund Managers Are At The Bellagio (2024)

Blue blazers. Blue checked shirts. Collar open. No tie. Brown shoes. Black shoes. Or Nike shoes. New, new, all new. Soft leather satchels with bold brass zippers. Good cufflinks. Good watches. Better than you know. Hundred dollar haircuts. Straight razored shaves. Shaped cuticles. Manicured nails. Clean, soft, tailored. New. Talking boisterously in the check-in line at the Bellagio. “I have to be in Palm Beach. Everyone is in Palm Beach.” Pencil skirts. High heels. Rolling out of bed at five a.m. for spin class before the markets open, day after day after day. “I can get a lot of business done in Palm Beach. Where am I supposed to be—in exile?”

Rich people go to Vegas to spend money. Really rich people go to Vegas to learn how to make money. Each spring, as fat tourists sweat out on Las Vegas Boulevard, taking pictures of dancing fountains and wandering aimlessly into undifferentiated warehouses of slot machines and gaping at Chanel stores they cannot afford and being physically and financially sucked dry by this hot, abominable desert Babylon, the people who Know How Things Work gather in the other Vegas: the airy, cool, marble-floored conference rooms of The Bellagio, where silver coffee urns and platters of croissants sit on the patio next to the pool, and maroon-jacketed security guards keep out the general public. This is the SALT Conference, where the hedge fund industry gathers to talk about money and politics, all while voraciously sucking its own dick. If you have ever wondered whether there really is a cabal of elites plotting in private to rule the world, wonder no more. Here they are.

SALT is short for “Skybridge Alternatives,” but that could be replaced by any number of combinations of pseudo-profound finance jargon: Strategic Alternative Liquid Tranches; Superior Alpha Limited Trading; Standard Accelerated LIBOR Taxation. It all fits. Skybridge Capital is—was—the investment firm run by Anthony Scaramucci, the schmooziest man in the hedge fund world, and the conference, which has been running for nearly a decade now, is the capstone of his schmooze-powered empire. Scaramucci has a Harvard and Goldman Sachs pedigree, but no one has ever accused him of being an investment genius; rather, he has built his career on a preternatural ability to schmooze, which is powered by a very genuine, almost pathological, need to be liked. Real hedge fund managers, the ones with the proprietary algorithms and inside sources and secretive trading compounds in Greenwich, shy from the public spotlight; Anthony Scaramucci seeks it out in the way that a vampire seeks blood. The happy side effect of this is that many of the big hedge fund guys who rarely talk to the press will appear on stage on the SALT Conference to have their egos gently stroked in front of their lesser peers, making the event one of the only times of the year that the press can hear directly from many of the richest financiers in America, all conveniently gathered in one place. Scaramucci, the facilitator of all this, parlayed his connections into a role as Donald Trump’s top Wall Street fundraiser. After Trump won, Scaramucci sold Skybridge Capital to a Chinese conglomerate in preparation for a job in the White House that never came. He is now a man with a hedge fund conference, but without a hedge fund. This is like showing up on a bicycle to host the local hot rod races, not that any of the hedge fund guys would be so impolite as to say such a thing to his face.

There are a few reasons why people whose time is worth so much money take some of that time to come to things like this. One is that it provides a friendly launching pad for career revivals. If you f*ck up enormously in the investing business, the thing to do is to keep your head down for a little while, then appear somewhere like the SALT Conference to express your newfound humility along with your new and improved investment strategy of the future. Thus we were treated to not only Scaramucci’s own “I made a massive political miscalculation and now I don’t have a job!” self-deprecation, but also to his Q&A with Bill Ackman, who was one of the hedge fund world’s brightest stars right up until he lost $4 billion betting on Valeant Pharmaceuticals, a company most famous for jacking up the price of life-saving drugs so blatantly that it sparked a nationwide backlash. Ackman, who has the look of a Godfather-era Al Pacino, will have you know that he’s learned his lesson. Now he’s turned his attention to reviving Chipotle. “My philosophy is, you make progress every day,” he said, smiling. Wiping out a $4 billion hit to your reputation is just this easy.

Likewise, we witnessed the public return of Jon Corzine, the former head of Goldman Sachs who purchased himself a Senate seat and the governorship of New Jersey and then, in his first job back in the financial sector in 2011, immediately drove the firm MF Global into one of the biggest bankruptcies in U.S. history, losing track of more than a billion dollars in the process. This incident did not do wonders for Corzine’s reputation for management skill. Now, five years later, he was on stage in Vegas, expressing his “profound remorse” for what happened before segueing into his thoughts on the European Union, North Korea, education reform, and the need for mandatory national service. Corzine’s current project is a teeny little hedge fund, but he’ll be back in politics before you know it.

On a more basic level, people attend these things in order to get ideas about how to make more money. One nifty feature of Wall Street is that unlike in politics or entertainment, where the incentive is for the principals to lie to you for their own gain, the incentive in the investment world is to (more or less) tell the truth for their own gain. By this, I mean that a parade of prominent hedge fund managers will sit on stage loudly lecturing you on what their best investment ideas are, and those ideas are true (more or less), because the more people they can convince to agree with them, the better their investments will perform. For an industry that is built on a foundation of bilking less-savvy people out of their money with outrageous management fees, this is a remarkable dynamic.

You cannot afford to invest in any of these hedge funds. But these people were happy to sit on stage for three days and expound on their biggest bets and convictions about business and economic trends to an audience of their competitors. Do you want to know what the world’s most high-priced investment talent is betting on now? Here, I can tell you: The end of the retail industry as we know it. The decline of shopping malls. Machine learning in every industry. Neural networks. A headlong rush into the roboticization of everything. Artificial intelligence. Self-driving cars. Commercial real estate is overpriced. Moderate macroeconomic growth continuing for the foreseeable future. Selling portions of the broadcast spectrum. Short Tesla. Long Sarepta Therapeutics. And buy the HMMJ ETF to capture a good portion of the marijuana market in Canada, though recreational weed in America is considered too risky of an investment for this crowd. At least one thing is still left for the little guy. For the moment.

In practice, three days of “Alternative Alchemy: An Investor’s Guide to Shifting Global Paradigms” and “Investment Insights From the Titans of Finance” lacks the poetry associated with the softer liberal arts. The price of investment glory is grinding boredom. “Closed end funds ... leverage ... dividend yields ... ETFs ... cap ex ... M&A deals ... beta ... tranches ... residential mortgage credit ... legacy markets ... embedded options ... defensive in the CLO space ... compensated for risk ... cohorts of capital ... capital ... capital .... CAPITAL.” These phrases echoed everywhere, from the stage to the vast meeting room where younger hedge fund worker ants were assigned to sit at coffee tables and pitch their ideas to potential investors, like an awful version of speed dating in which the only thing you could discuss is “structured credit.” All of the younger men looked like Jared Kushner, and all the younger women looked like Ivanka Trump might look if she had to work 14-hour days. Their lives stretched out in front of them, down the Bellagio’s gaudy, carpeted halls. They could fall in love over credit strategies, have a marriage announcement in the New York Times at 26 and a scandalous divorce announcement in the New York Post at 44. Until then, they could manically shake hands with each other in the SALT Conference reception area, where a brand new silver Mclaren supercar was on display, its batwing door swept up so everyone in a tailored blue suit could sit in the molded leather driver’s seat and snap a selfie. Just steps away was the official SALT Conference/ BDO Shoe Shine area, where you could gaze at that Mclaren and browse Bloomberg on your phone without making eye contact with the two women and one black man who were there shining shoes.

Hard work is how you climb the ladder. Elbow grease, and shoe grease too.

Television is for poor people. With the average net worth in this building, the television shows come to them. Sports? There was Jerry Jones, with an accent like Texas Satan, explaining what sports are all about. “I’m trying to help Ford sell trucks, and to me that’s what we use the Cowboys for,” he said. “It’s all about selling.” There was Mike Tyson, in a white shirt and pink pants, at the absolute peak of his “I’m just here for the f*cking money” vibe, giving aggressively disinterested answers to questions from Jim Gray. (“What do you remember about your fights?” “I don’t remember my fights. It’s not interesting to me.”) Music? There were the Gipsy Kings and Duran Duran, brought in to play concerts on successive nights. News? There was Lara Logan, interviewing former CIA director John Brennan about North Korea and Iran, and suggesting in a distinctly joking-not-joking tone that Brennan should have assassinated Edward Snowden, a man who, in Logan’s opinion, should be “tried for treason.”

It is not hard to figure out why Republicans and all varieties of wealth-mad goons would be appearing at a hedge fund conference. They are just doing what they do. There is good reason to be suspicious of the Democrats and other allegedly righteous types who appear at a hedge fund conference. Lara Logan, representing Responsible Journalism, joked around with the former CIA boss and the former NATO ambassador like old drinking buddies. Joe Biden sat for an emotional interview, in which he nearly came to tears speaking about the death of his son and his regrets about not running for president. Later he declared, “You guys paid me $200,000 to be here, and I gave it all to charity.” The fact that he chose an audience of hedge fund managers as the proper gathering to deliver these remarks really makes you think.

For the annual Dems-and-Republicans political yakfest panel, SALT matched Karl Rove and Trump deputy campaign manager David Bossie with Donna Brazile and Obama press secretary Josh Earnest. This is a fairly accurate picture of what represents “the left” in the mind of Wall Street. Earnest, whose bland white guy face and corporatesque language will make him a great flack for Uber or some sh*t one day, tossed off fiery, radical lines like “I don’t agree with [Sean Spicer] ... but I’m rooting for his success,” and nodded along to Karl Rove’s condemnation of Wikileaks.

Here they are—The establishment! The elites! They’re all here! The specter of Donald Trump hung over the SALT Conference like a heavy cloud that threatened to burst open at any moment. This was simultaneously the crowd that Trump had campaigned against, and the crowd that held fundraisers for him, and the crowd that he was making it his business to help, and the crowd that his ineptitude and idiotic mistakes threatened to severely harm. Average people often think that this sort of high finance crowd is engaged in nuanced alchemy that surpasseth all understanding. But anyone can understand these people if you can grasp one thing: When the money gets big enough, finance and economics and politics are all the same thing. They are ways to measure risk. When you run five or ten or a hundred billion dollars, your overriding concern in life is that pile of money—growing it, yes, but, more fundamentally, preserving it. Geopolitics therefore become just another business risk to be measured alongside interest rates and consumer trends, and judged based on the threat it poses to your money. Climate change? A risk. War in North Korea? A risk. Donald Trump’s insanity? A risk. What normal people think of in moral or ideological terms, those who control all the world’s wealth think of simply in terms of risk. Almost anything can be tolerated, if it allows them to make more money with less risk. This is the logic of capitalism.

If you scrape a few inches below the surface of many very rich and successful people who imagine themselves to be worthy of praise and emulation, you find a governing philosophy that cares nothing for humanity. We all grasp this, on some level, but it considered impolite to bring up in friendly settings. Investors imagine that their “business” and “personal” behaviors can be separated, but of course what they do in business ends up having vastly more impact than whatever small, nice things they do in their personal lives. This erasure of the borders between politics and finance is actually an erasure of the power of anything so quaint as morality. The SALT Conference, where these financial titans gather in comfort, is the place to witness this up close. For example: at one point David Rubenstein, the co-founder of the Carlyle Group, gave a talk about his expectations for what would be happening in Washington in the near term. Rubenstein is one of the most powerful men in private equity, an unassuming billionaire and D.C. wise man who has provided many powerful political figures a nice place to work after they leave government. He knows what is happening. First, he spent several minutes explaining why the Republican tax reform package was unlikely to pass this year. “No one here should assume you’re gonna get a big tax cut soon,” he told the disappointed crowd. “For those who are looking for relief from Congress, you should look elsewhere.”

Later, he wrapped up his talk with an earnest plea for everyone there “if you can afford to come to this conference you are in the top one-tenth of one percent, and you should feel blessed,” he said—to think about what they can do to “give back.” In our age of great inequality, Rubenstein said, he has found much greater satisfaction in giving away money than in making it. He encouraged everyone else there to do the same.

The cognitive dissonance between the business portion of his speech and the personal part perfectly encapsulates the problem. First, he delivered valuable inside knowledge to a crowd of the extremely rich that was all premised on the unspoken assumption that everyone in the room wanted and expected to get a substantial tax cut; then, he bemoaned inequality. There is a 100% likelihood that any substantial Republican tax reform bill of the sort that attendees of the SALT Conference want will exacerbate the inequality problem. One hundred percent. It is certain. And yet it is taken as a given that this crowd will throw its ample political muscle behind achieving that goal. Then, they will talk about how to give back—perhaps, like David Rubenstein, they could pay to repair the Washington Monument. Nice and patriotic. As they do that, they will be accruing millions of dollars of gains thanks to tax cuts, as social programs for the poor accrue equivalent losses. Perhaps they will donate a basketball court to the inner city later to make up for it. This is the logic of capitalism at work. The fact that we feel no collective sense of surprise at all of this goes to show just how well capitalism covers its own tracks.

This dynamic is so pervasive, in fact, that Anthony Scaramucci himself—Donald Trump’s chief Wall Street fundraiser, a man who is partly responsible for installing a billionaire president who is now working to slash billions from the taxes of other billionaires, while cutting Medicaid, at a time of historically high inequality—stood up at the podium at The Bellagio and earnestly told hundreds of hedge fund managers, “The rich people in this room—you don’t wanna live in a barbed wire enclosure in your McMansion like they do in Latin America. So we gotta fix this problem.” And I have no doubt he was sincere! At least as sincere as a hedge funder’s heart is able to bear.

There are only 540 or so billionaires in America. At SALT, I asked two of them what they think should be done about our nation’s inequality problem. One was Jim Chanos, a famous short-seller who’s built his fortune betting on bad companies to fail. Chanos is, by the standards of this crowd, a real lefty—a Democrat, who told me last year that he made more money as a young man working as a union steelworker than he did during his first year on Wall Street. He is well-schooled on the health care industry, calling the AHCA “an abomination” and a “ripoff” that will leave “a lot of poor people without coverage.” But as to what should be done in a larger sense, he demurred with a statement that did not sound very credible: “That’s above my pay grade.”

The other billionaire was Mark Mobius, who runs an enormous fund for Templeton that invests in emerging markets. Mobius is a slight, bald man who wore a powder blue suit, white shoes, pink shirt, and matching pocket square, like a dandyish version of Dr. Evil. And what did he believe was the solution to inequality—more progressive taxes? Better regulations on monopolies? No. The opposite, in fact.

“Wherever you are in the world, you’re finding that government interference, particularly to small businesses, is a barrier to growth ... it’s when you have a government that has so many barriers for the small guy to come up and create something new, that’s when you have the real problems,” he said. “That’s the reason you’re seeing this populist sentiment. You see it in the U.S. You see it in Europe, where people are fed up with the bureaucracy in Brussels ... a lot of people can’t articulate that, necessarily, but they just know intuitively that they’re being prevented from doing something they’d like to do.”

From a billionaire investor’s perspective, the thought process of the frustrated common man is remarkably similar to the thought process of a billionaire investor. What is it that frustrates all those faceless regular people out there, whose wages have stagnated for three decades as the top 1% claims an ever-increasing share of national wealth, thanks in large part to deregulation? Well ... it’s the remaining regulation, god damn it! All of those laid-off factory workers are mad as hell about the government bureaucracy that is impeding business development! They may not know it, but that’s what’s in their hearts. They’re being prevented from doing something they’d like to do—start a thriving international corporation with a minimal tax rate in order to maximize investor return. It is the classic dream of the little guy.

Extremely rich people treasure money, yes. But once you have a certain amount of money, you can stand to give some away, if only for the praise that it brings you. What they cannot stand to give up is power. The attendees of the SALT Conference, the absolute winners of the grand American capitalist experiment, are capable of expressing heartfelt concern for the abstract idea of people poorer than them. What they are not capable of is admitting that in order for the public as a whole to win, the hedge fund class may have to sacrifice more than just the checks they write at the annual Hamptons charity balls. They may have to sacrifice power. That, I’m afraid, is unthinkable. To be very rich is to have the luxury of constructing a plausible theory of morality that allows you to hold on to everything you have. It is to believe that you can sit in the shoeshine booth and drive a $300,000 McLaren and raise money for Donald Trump and lobby for a zillion-dollar tax cut paid for on the backs of the poor and still be a good American. And to never have to think twice about it. On Thursday evening, the singer Jewel appeared to play a set for the crowd in the Bellagio ballroom. In front of a screen reading “INVEST IN HUMAN CAPITAL,” she recounted how she became homeless and was forced to live in her car and then her car got stolen, before launching into her tune,

Who will saaaaaave your soul,
After all those lies you told?

When she finished, everyone looked up from their phones and applauded.