Podcast Summary

New Books Network: Megan Tobias Neely on "Hedged Out: Inequality and Insecurity on Wall Street"

Date: December 16, 2025
Host: Alfred Marcus
Guest: Megan Tobias Neely, sociologist and author
Book: Hedged Out: Inequality and Insecurity on Wall Street (University of California Press, 2022)

Episode Overview

This episode of "On the Cusp," hosted by Alfred Marcus on the New Books Network, features a conversation with sociologist Megan Tobias Neely, author of Hedged Out: Inequality and Insecurity on Wall Street. Drawing on years of ethnographic research and interviews with hedge fund insiders, Neely examines the highly exclusive and lucrative world of hedge funds. The discussion focuses on the cultural, organizational, and structural dynamics that fuel inequality and insecurity in this elite financial sector, revealing how privilege, homogeneity, and a lack of oversight perpetuate outsized rewards and limited accountability.

Key Discussion Points and Insights

1. Origins and Methodology of the Study

• Personal and Professional Background
  • Neely entered finance after her undergraduate studies in history, initially joining BlackRock's alternative investments division (03:20–05:01).
  • Her experience, beginning right before the 2008 financial crisis, fueled her sociological curiosity about the industry's impact and dynamics.
• Research Approach
  • Ethnographic research included years of observation, dozens of interviews, and participant insight at conferences and firms.
  • Initially, Neely's insider credentials actually created more wariness among potential participants. Approaching as an outsider sociologist proved more effective for gaining candid access (06:40–07:43).

2. What Is a Hedge Fund?

• Defining Characteristics
  • Hedge funds pool money from wealthy individuals and large institutions, investing in a wide array of (often high-risk) financial strategies (08:04–09:19).
  • Entry is exclusive: investors need at least $1 million net worth or $200,000 annual income—criteria met by less than 10% of Americans.
  • Pension funds, university endowments, and nonprofits now comprise 60% of investments, making hedge fund activity relevant to society at large.
• Industry Structure and Culture
  • The major players (e.g., Millennium, Citadel) originated in the late ’80s/early ’90s and have become major market shapers.
  • "If you tell people you're invested in hedge funds, it's a way of saying how wealthy you are without saying how wealthy you are, and that you're part of those networks." – Neely (09:45)
• Blurred Boundaries
  • Hedge funds now also invest in private equity, make loans, and engage in activist investing, eroding the boundaries with other alternative asset classes (10:19–11:16).

3. Organizational Dynamics and “Radical Transparency”

• Structure: Centralized vs. Decentralized

  • Firms like Millennium and Citadel operate hundreds of specialized investment teams, allowing them to wield enormous market influence (12:17–12:36).
  • Contrasts in organizational approaches: Ray Dalio’s Bridgewater prefers centralization and "radical transparency," while Millennium and Citadel are more decentralized.
  • “The idea is that anybody who talks about anybody else is going to be candid about it... They actually have a rule that if you’re going to discuss someone, you need to have them in the room.” – Neely on Bridgewater (14:25–15:05)

• Reality of Flatness

  • While hedge funds tout "flat," participatory cultures, in practice real power remains concentrated at the top, and flatness can serve as a mask for reinforcing executive control (19:24–20:00).

4. Risk, Reward, and Career Insecurity

• Justifying Enormous Pay

  • Hedge fund managers see rewards as proportional to risk-taking, contrasting themselves with "safe" corporate or investment bank employees (20:00–21:02).
  • The high rate of firm failure (average lifespan: 5 years) breeds job insecurity, but this uncertainty is framed by insiders as a form of freedom and entrepreneurialism (22:12–23:27).

• Portfolio Careers & Identity

  • Managers embrace the idea of "portfolio careers" (24:22), relying on networks, passion, and personal branding to navigate instability.
  • Those with the most privilege (white, elite men) take their network advantages for granted; marginalized groups must consciously cultivate reputation and visibility (25:31–26:03).

5. Motivation, Greed, and the Status Game

• Motivations

  • Many claim a "passion" for investing, but this serves partly to obscure money motivation; Neely found that even the goal of "financial freedom" is redefined as the ability to work indefinitely, with "the number" (needed for retirement) always increasing (27:11–28:47).

• Status, Meritocracy, and Neoliberal Values

  • The ultimate motivator is often status among peers, with continual upward shifts in what counts as success.
  • Hedge fund managers deeply embrace the ideology that monetary results and merit are intertwined—a belief mirrored in broader American attitudes toward wealth and success (29:31–29:55).

6. Homogeneity and Inequality — Gender, Race, and Class

• Demographic Dominance
  • The field is overwhelmingly controlled by white men. Neely references reports showing “there are more hedge fund managers named David than there are women” (32:02–32:18).
• Mechanisms of Exclusion
  • Exclusion is maintained not just through pipeline issues, but through tight, homophilous networks and gendered assumptions about who is “fit” for core investing roles (32:49–37:09).
  • Women and minorities are often steered to client services or sidelined from investment tracks, regardless of credentials.

7. Elitism, Recruitment, and the Role of Elite Institutions

• Recruitment
  • Hedge funds aggressively recruit from elite universities, sometimes as early as freshman year, reinforcing self-enclosed, privileged networks (38:51–40:23).
• Credentialism
  • The preference is often for social capital (network, pedigree) over technical training, which is mostly acquired on the job.

8. Accountability and Harassment

• Corporate Culture
  • Although meritocracy and openness are touted, discriminatory behaviors are difficult to call out, and whistleblowing can end careers.
  • Sexual harassment and pay discrimination are normalized by routine and lack of HR infrastructure (43:02–46:56).
• Power & Impunity
  • Close industry ties and self-reinforcing hierarchies mean that bad actors often remain unpunished, bolstered by a revolving door with political power centers.

9. Hedge Funds, Politics, and (Lack of) Regulation

• Lobbying and Shadow Banking

  • Hedge funds have become deeply embedded in political processes, lobbying for favorable regulation and lower taxes (47:54–49:24).
  • After 2008, as banks faced more regulation, hedge funds grew even more dominant, particularly in shadow banking (50:08–50:34).

• Examples

  • Hedge funds’ aggressive tactics in sovereign debt, such as Elliot Management’s seizure of Argentine assets, illustrate their global reach and power (51:03–51:16).

• Implications for Society

  • University endowments and pension funds deeply invest in hedge funds, with little transparency and accountability, sometimes resulting in major budgetary tensions at public institutions (53:04–54:39).

10. Systemic Risk and the Future

• Potential for Crisis
  • The system’s opacity and complexity make it vulnerable to cascading crises, as seen in 2008; hedge funds profit in both collapses and booms, but underlying inequality remains unaddressed (55:03–57:29).
• Inequality Remains
  • Regulatory reforms may patch risk, but do not disrupt systems of privilege and exclusion at the heart of high finance.

11. Neely’s New Research Directions

• Comparative Studies
  • Neely is now studying venture capital and tech startups, noting strikingly similar structures of privilege, power, and discourse (59:13–60:20).
• AI Sector
  • Current research investigates how AI scientists perceive risk and organize their work, aiming to cut through hype to understand real social impacts (60:41–61:18).

Notable Quotes with Timestamps

• On Hedge Fund Exclusivity:
  “If you tell people you're invested in hedge funds, it's a way of saying how wealthy you are without saying how wealthy you are, and that you're part of those networks.”
  – Megan Tobias Neely (09:45)

• On Radical Transparency:
  “The idea is that anybody who talks about anybody else is going to be candid about it... They actually have a rule that if you’re going to discuss someone, you need to have them in the room.”
  – Megan Tobias Neely, describing Bridgewater Associates (14:25–15:05)

• On Meritocracy and Power:
  “On the whole, this sort of discourse about flatness and decentralization is actually a mask for the system where there’s all kinds of checks and balances and middle managers who are removed in a way that actually bolsters the power of executives.”
  – Megan Tobias Neely (19:24)

• On Networks and Privilege:
  “People who were included in the tight inner network... more likely to be white men, they took it for granted. They were just part of those networks... For them, it seemed natural. It was organic.”
  – Megan Tobias Neely (25:39)

• On Demographics:
  “There are more hedge fund managers named David than there are women.”
  – Megan Tobias Neely (32:18)

• On Exclusion Mechanisms:
  “It’s not about a pipeline problem... It’s about how when you have a group that’s based on homophily... that’s part of how they can wall themselves off from oversight and accountability and demand these high incomes.”
  – Megan Tobias Neely (32:43–32:58)

• On Organizational Power:
  “Sexual harassment and discrimination... is part of reinforcing the power structure of organizations. It helps to bolster that hedge fund managers’ power and authority and sense of invincibility.”
  – Megan Tobias Neely (47:29–47:38)

• On Regulatory Aftermath of 2008:
  “At the same time... we saw a lot of capital flight to shadow banks. So this unregulated, less regulated... that people are getting appointed from them is indicative of that, that newfound power or that really came out of crisis on an even bigger scale.”
  – Megan Tobias Neely (50:04–50:44)

• On Endowments and Power:
  “Harvard has been described as a hedge fund with the university attached.”
  – Megan Tobias Neely (53:02)

• On Cyclical Crisis and Inequality:
  “Our best example is the 2008 financial crisis... it always brings to light the fraud and corruption that good times kind of concealed... we very much likely will have future events.”
  – Megan Tobias Neely (55:03–57:04)

Important Timestamps

• 03:25–07:43: Neely describes her accidental entry into Wall Street, early experiences, and methodological lessons about researching elites.
• 08:04–11:16: Explanation of hedge funds—their structure, exclusivity, and blurred lines with private equity.
• 13:39–16:19: Organizational models (centralized vs. decentralized) and the myth/reality of radical transparency.
• 20:00–23:43: Ethics, risk, and justification of outsized rewards; transition to portfolio career ideology.
• 27:11–28:47: On passion, financial freedom, and the moving target of “the number.”
• 32:02–37:09: In-depth on demographic exclusion and gender/race mechanisms in hedge funds.
• 38:51–41:47: Elite recruitment, networks, and social capital as gates to hedge fund careers.
• 43:02–46:56: Sexual harassment, pay discrimination, and accountability gaps.
• 47:54–50:44: Hedge fund political influence, shadow banking, and post-crisis regulatory shifts.
• 53:02–54:39: Endowment management, university politics, and power disparities.
• 55:03–57:29: Systemic risks, financial crises, and the persistence of inequality.

Memorable Moments

• Neely’s anecdote about being assigned to retail investments despite oil and gas expertise (36:08–36:50).
• Finding out that some hedge funds actively promote exclusion and exclusion via tight social networks and “elite” logic rather than explicit skills or training (32:49–33:19; 38:51–40:23).
• The “David” demographic comparison (32:18) and the story of women’s invisibility/routinization of harassment.
• Neely’s observation that 2008 was both a reckoning and a catalyst for even greater hedge fund dominance (50:08–50:44).
• Summing up the challenge: “Flatness” and meritocracy are often managerial myths that obfuscate real power and privilege (19:24–20:00; 25:39).

Conclusion

Megan Tobias Neely's Hedged Out provides an unrivaled look inside the world of hedge funds, unpacking the systems of privilege and exclusion that allow a narrow elite to reap extraordinary rewards while much of society absorbs the risks. The conversation reveals how meritocracy, risk, and decentralization serve not only as guiding myths of the industry but also as shields that reinforce inequality and limit genuine accountability—both internally and in the broader economy. Neely's ongoing research looks to extend these findings into adjacent areas like venture capital, tech, and AI, pointing to the enduring relevance and urgency of scrutinizing power and inequality in the highest echelons of finance and technology.