All ready to sign up for John Meriwether’s next fund?

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The news yesterday that John Meriwether had shut down his latest hedge fund, JWM Partners, wasn’t exactly news. Word got out back in February that the man behind legendary blowup Long-Term Capital Management was again in trouble, albeit of a less spectacular sort than 11 years ago (JWM’s main fund was down 44% from September 2007 through February). But don’t worry, you could have another chance to lose money with Meriwether soon. Reports the WSJ:

Mr. Meriwether has kept largely — and characteristically — mum about what he will do next, even in conversations with people close to him, but he talked in recent months about possibly forming a new trading partnership, people who know him say. They say he is unlikely to ease into retirement any time soon.

Actually, Meriwether already did try to raise money to reboot JWM earlier this year and struck out. But the first couple months of this year were probably the most difficult time ever to raise money for a hedge fund (it also turns out to have been one of the best times ever to put money into risky assets, which illustrates the basic dilemma of the money management business). At some point, when money’s a little looser, I’m betting Meriwether will be able to raise enough money for a fund yet again.

Why is that so? Are investors really that dumb? Well, first, those who got in on the ground floor at LTCM and JWM and didn’t reinvest all their gains through the years probably made out okay. At LTCM the partners even returned most of their investors’ money not long before everything fell apart. They did this more out of greediness than concern for investors, but the end result was that a lot of those who put money into LTCM got it back and then some.

But I imagine the real attraction of investing with Meriwether had less to do with the returns than with, well, the attraction of investing with Meriwether. In an odd and unconvincing—but nonetheless quite revealing—piece he wrote for the New York Times Magazine a few months after the LTCM blowup, Meriwether admirer and former co-worker Michael Lewis wrote:

When I think of people in American life who might have been like him, I think not of financial types but creative ones — Harold Ross of the old New Yorker, say, or Quentin Tarantino. Meriwether was like a gifted editor or a brilliant director: he had a nose for unusual people and the ability to persuade them to run with their talents.

So that’s it. Investing with Meriwether allows you to rub shoulders with the Harold Ross of the investing world. Sign me up! (Although I would have been willing to pay even more to rub shoulders with the actual Harold Ross.) I think Meriwether’s fellow serial-blowup artist, Victor Niederhoffer, exerts a similar attraction—albeit perhaps more Tarantino than Ross. Of course, with Niederhoffer, anybody can get some access to his thoughts and experiences via his books and blog. Maybe that explains why he, unlike Meriwether, was never able to put together a fund quite big enough to almost wreck the global financial system.

A few years ago I was talking to the since-deceased James Lorie, who had been Niederhoffer’s Ph.D adviser at the University of Chicago Graduate School of Business (Meriwether was a Chicago MBA, so maybe the Chicago business school is the real culprit here). Lorie was a member in good standing of the Chicago efficient markets crowd, but he wasn’t doctrinaire about it. A few investors demonstrated real skill, he said, among them his former student Niederhoffer.

“But didn’t he lose everything?” I asked. (Niederhoffer had been wiped out buying Thai bank stocks in 1997.)

“Well, he’s still got an awfully big house in Connecticut, with a tennis court,” Lorie replied. Niederhoffer had also, it turned out, been paying for expensive medical treatments for Lorie’s ill wife. And his new fund put together a spectacular run from 2001 through 2006, before collapsing in 2007. So whaddya say—should we all give him and Meriwether another shot?