Plenty of people are laughing at the financial
services industry these days. But Barry Rafe, an actuary and former director at
Trowbridge Consulting, got in ahead of them a few months back when he left the
industry to try standup comedy.

After attending comedy courses at NIDA last
year, 51-year-old Rafe, who remains on the council at the Institute of
Actuaries, recently competed in the semi-finals of the Royal Comedy Competition
(the lead up to the Melbourne Comedy Festival) at Fox Studios, and is waiting
to find out if he made it through.

Who knew that mortality tables could become
the stuff of a good night out? Perversely, Rafe reckons people get a kick out
of hearing others’ woes. “Comedy is about truth and pain, that’s what I learnt
at NIDA,” he says. “People aren’t interested in hearing jokes, what they’re
interested in hearing about is what pain you’re going through in your life, and
they laugh at that.”

Rafe refers to his act as “old-man humour”, saying it’s
really about the realities of a bloke who’s getting on in life and facing a
mid-life crisis. “You do embellish stories but really it’s about yourself; in
fact most people who do stand-up are loners and they are quite negative people,
whereas I’m usually quite positive, which is why I’ll probably never be very
good at it,” he quips.

But while he’s proved there’s more to actuaries than
just numbers, Rafe isn’t about to make a full-time career out of comedy. “There’s
no money in stand-up comedy for a start,” he says. “It’s actually quite high
stress, the whole lead-up to it, and the only excitement you get is the 10
seconds after you finish, when you get a big high. I feel like I’ve tried it
now, I’m not too keen to push it [further].” He says he’ll probably continue to
do after-dinner speeches at functions, and only do stand-up shows when he craves
the buzz of “feeling alive” that he gets when he’s on stage.

“You know you’re
alive when you’re on stage because you’re absolutely on the edge, you’re aware
of every second, of everything that’s going on around you,” he says. Bernie
Madoff (pronounced Madeoff, as in made off with your money) has ruined many
people with his Ponzi scam, and he’s done no favours for the credibility of
hedge fund indices either.


Australia last month to tout AQR
Capital Management’s hedge fund beta process as an alternative to hedge fund
benchmarks, AQR Capital Management’s Ronen

Israel reminded us that at its
height, three managers investing in Bernie’s faux fund comprised 40 per cent of
the CS Tremont equity market neutral index.

The value of those funds has since been
taken to zero, which makes all the surviving funds suddenly look like heroic
outperformers, and undermines the assumptions of anyone who ever invested in a
market neutral strategy. Madoff wasn’t the only one doing strange things to
hedge fund indices. We all know that John Paulson’s hedge fund, Paulson &
Co., made a motzer from shorting the subprime crisis.

What’s not so well known,

is that the benchmarkers had him classified as a merger arbitrage manager, a
discipline at best distantly related to the trades he was actually making. Since
last October, AQR has been managing the DELTA Fund (it stands for – wait for it
– Dynamic Economicially intuitive Low leverage Transparent Alternative) which
makes all the obvious, beta-capturing trades across the nine major hedge fund

says funds should be comparing the performance of their ‘active’ hedge fund
managers to DELTA, rather than the likes of a CS Tremont index, because the
3000 positions it holds at any one time represent pure beta across the nine


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