Volume 76, Number 9 | July 19 - 25, 2006


My early financial education: The first hedge fund

Daniel Meltzer

Hedge funds are a big deal today, but they are nothing new. When I was a kid several decades ago, I ran my own.

In our part of Brooklyn back in the day, nobody clipped coupons or knew from beans about stocks. In the middle of the 20th century our middle class was the working class; we got our income by actually working for it.

Today’s middle class generates significant gelt by speculating (legal gambling) on Wall St., or in real estate, stamps, coins, gold bars, racehorses, pork bellies, paintings, mutual funds, and/or hedge funds. Real work — making things — is what they do in India, Indonesia and China. We invest, directly or indirectly, in the companies or governments who employ those who actually do the work. It’s called capitalism. It works, even if many of us don’t anymore, and even though some of us may be doing better now than when we did then.

Today my old ’hood is African and Caribbean. During my childhood it was mostly Italian-American and Eastern European. An immigrant working-class ’hood then, and also now. Little has changed but skin color, cuisine and the music. If you bought a house for $20,000 then, you could sell it 10 years later, if you were lucky, for roughly the same amount, provided you had kept it up well.

My hedge fund: Once a week, I clipped the hedges in front of our house with a pair of low-tech shears, and I got a dollar for it. One clip at a time; snip, snip, snip… and then I swept up the clippings. I also mowed the lawn and then raked. Another buck. So I cleaned up, raked it in, and socked it away, literally, in my sock drawer.

My father owned a small, local movie theater; old technology taking a major hit at the time from the advent of network television. My mother worked as a secretary for a company that produced textiles, which now come to us from overseas.

Our next-door neighbor, a small-time entrepreneur, owned two butcher shops. He also owned an electric hedge clipper; cutting-edge technology of the day, with an extension cord about 300 feet long. A hired handyman was always either manicuring the hedges, pruning rose bushes, power-mowing their lawn, painting window frames or washing and Simonizing the butcher’s Chrysler Imperial.

During high school, I was intermittently active in various markets — At different times, I worked for the butcher or the grocer or at the hardware store, and yes, I took tips.

I also generated a modest income from pharmaceuticals by delivering prescriptions for the local druggist. This was not without some risk, as I was constantly presenting myself at the front doors of sick people who sneezed or coughed on me. A certain percentage of my income, therefore, would be allocated into deductible acquisitions of Listerine disinfectant, isopropyl alcohol and hydrogen peroxide.

Gratuities and expenses were scrupulously entered in my personal budget. If I feared germs, I was even more nervous about “the authorities,” having been a devotee of “Dragnet,” “Gangbusters,” “Perry Mason,” “The Untouchables,” “The Shadow,” “The FBI in Peace and War” and other crime and punishment radio and TV programs, as well as to “Dick Tracy” in the Sunday News color comics section, all of which (and whom) impressed upon me the virtues and vigor of our various watchdogs, along with the evils and shame of transgression. Ephram Zimbalist Jr., Jack Webb, Robert Stack and Raymond Burr kept me on the right side of the law.

Isopropyl rubbing alcohol nearly ruined my life when I sprained my back one day lugging cases of it up from the pharmacy basement to the selling floor, a setback that ultimately led to years of deductible treatments by an osteopath and the ministrations of his very attractive and attentive nurses, whose weekly massages, heat and unguent applications, and sonic and mechanical vibrators, enhanced my teen years considerably.

Today, I still make my living the old-fashioned way, by working for it — writing and teaching — along with a little of what they call “consulting.” No heavy lifting. I learned that lesson a long time ago, even though it did pay a dandy dividend at the time.

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