Institutional Investor’s alpha is out with its annual ranking (The Rich List) of top hedge fund earners, which always provokes meditation on our upper class. In 2012, the top 25 hedgies collectively earned $14.14 billion. That’s the lowest since 2008, but down only 2% from 2011. It is also equivalent to the collective income of 1.3 million of the poorer households in the U.S.

In the magazine’s telling, this year the markets rewarded “the fearless investor,” who ignored all those macro worries—a crappy U.S. recovery, implosions on the periphery of Europe, etc.—and stayed boldly long. At the top of the list was David Tepper, who made $2.2 billion last year. Tepper, you might be surprised to learn, said a couple of years ago that he was “tired of making money” and wanted to start giving it away. Less surprisingly, Tepper wants to put some of it to work kicking around teachers’ unions and promoting charter schools and vouchers (“Hedge fund manager readies for battle with NJEA to reform NJ schools”). In second place, Ray Dalio at $1.7 billion, less than half what he made as 2011’s #1. Dalio is best known for doing transcendental meditation, and also for cultivating a brutal, chilly, even cult-like atmosphere at his firm, Bridgewater Associates (The Billion-Dollar Aphorisms of Hedge Fund Cult Leader Ray Dalio). Together, Tepper and Dalio earned as much as almost 350,000 poorer households.

In standard theory, income is a reward commensurate with what one produces. What do guys like these produce? Profits for their investors.

technical notes

alpha, the name of II’s magazine, is investment jargon for returns in excess of what can be explained by market averages, adjusted for risk. It’s supposedly the measure of a money manager’s skill, which is not easy to tell statistically from luck.

The income calculation is this: the average income of the poorest 20% of U.S. households was $11,239 in 2011. Divide that into $14.14 billion and you get 1.3 million poorer households.