A commenter to my post on hedge funds argues that since Larry Summers is an economist, he’s not necessarily just hedge fund window dressing. Larry’s not just an economist, he’s one of the great economists of his generation. But I still don’t believe David Shaw hired him for advice on arbitrage strategies. That said, I’ll send Larry an e-mail and ask him what he actually does at D.E. Shaw. (Although that place is mysterious enough that if he tells me, he may have to kill me.)
John Snow also has a Ph.D. in economics, Richard Breeden has an awful lot of market experience (although he’s never managed money before), and Madeleine Albright presumably knows a few things about risks and opportunities in emerging markets. I’m not saying these guys are nitwits. I just think the best money managers are hungry and stealthy and unconventional. Already successful, famous people don’t really fit that bill.
That said, I fully agree with the commenter’s final assessment that, “When Norm Mineta and Elizabeth Dole start hedge funds, panic.”
Update: Here is my post on Larry’s response.