I can't really grasp it

$15 billion pay for top 25 hedge fund managers.

The combined earnings of the world's top 25 hedge fund managers of more than $14 billion exceeded the national income of Jordan last year and three individuals took home more than $1 billion, according to the biggest annual industry survey.

The survey by Alpha Magazine put Jim Simons of Renaissance Technologies on earnings of $1.7 billion, Ken Griffin of Citadel Investment Group on $1.4 billion and Eddie Lampert of ESL Investments on $1.3 billion. The previous year, two managers, Mr Simons and the septuagenarian T Boone Pickens of BP Capital Management, topped the $1 billion mark.

The ability of individuals to generate so much capital flow in their own personal direction staggers me. Either the volume and/or the percentage return are so far beyond the numbers I ever even hear about as to be breathtaking.

For example, I know the names of a few of shrewd & hard-working commercial real estate brokers here in Seattle who (I surmise) probably sell a hundred million dollars of real estate in a typically good year. That means a personal income to the individual of perhaps $2-3 million dollars a year, after the commissions are split with "the house" and the other broker. That's a lot of money and they work fairly hard for it...at least 40 hours a week. I commend them.

So consider the scale of making a billion dollars a year. Both the scale of the transaction and the percentage which the individual draws from the transaction (they are all transaction-based, I am sure) are wildly beyond my own personal imagination.

Comments

[72 km/h]

You made a good comparison comparing real estate agents to hedgefund managers, but there is a difference.

Real estate agents make their 6% whether their client makes a profit on their property investment, or not.

Hedge fund managers take 20% of profits made with their client's money, but get nothing if there are no profits for their clients that year.

These guys pulling down a billion this year, likely will have bad years down the road, earn squat, get fired, or see their companies dissolved.

Shadenfreude and Efficient Market Theory, what a delightful cocktail! But yeah, the mind still reals at 10-fig paycheck. Enjoy it while lasts guys.

I really don't know anything about this first hand. I just read Jim Cramer's Confessions of a Street Addict.