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efficiency is considered in the U.S. fund. He says excellent tax optimization is achieved with the goal being long-term gains.

INDUSTRY VIEW

Singer finds it simplistic to delineate a dichotomy between the old-generation and the new-generation hedge fund manager. "Each has its own approach. Managers fit their own personal skills, styles, and personality quirks in varying degrees into an organization. It depends on each of their own experiences and the kind of adversity they have faced."

Singer feels some of the new managers may not be fully aware of the extent their success in their pre-hedge fund life and their initial success in their hedge fund life has to do with the unusual markets that have existed for 5, 18, or 26 years—depending on how you measure trends. Essentially, the bull market has been roaring since October 4, 1974, through early 2000.

He describes the market up through early 2000 as extraordinary with a high degree of public speculation. "Uninformed performance chasing and momentum chasing. It is a mob, a crowd." He recalls a book he read many years ago "which basically said 'the power of the public on a stampede is incalculable.' There is no connection to value in many sectors of today's market." Day traders (i.e., Internet traders) and technology have made the stock market incredibly dangerous for professional investors. Staggering moves occur in the stock market that have nothing to do with rationality or anything fundamental. "It makes the markets more volatile and less efficient. It is harder to sell short."

Singer also observes how quickly an environment can change. "Ideas, tones, markets can go in one direction for so long supported by one concept—and on a given moment's notice, and unpredictably, it may be over and replaced by a whole other feeling and last another 20 years." He recalls the 1968 to 1982 period, which was a grueling environment and devastating for many managers.

Singer also sees the institutional investor community as deteriorating in its professionalism. There is more performance chasing, more momentum chasing, and more throwing money at the latest stars. Furthermore, many of the institutions don't know when to get off the stock market train or are afraid to get off. Singer believes that more institu-