More Money Than God

More Money Than God

Hedge Funds and the Making of A New Elite

Book - 2010
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Based on unprecedented access to the industry, including three hundred hours of interviews, economist/journalist Sebastian Mallaby tells the inside story of hedge funds, from their origins in the 1960s and 1970s to their role in the financial crisis of 2007-2009. Wealthy, powerful, and potentially dangerous, hedge fund moguls have become the It Boys of 21st century capitalism. Ken Griffin started out trading convertible bonds from his Harvard dorm room; Julian Robertson staffed his hedge fund with college athletes half his age; Paul Tudor Jones posed for a magazine photograph next to a killer shark; Michael Steinhardt was capable of reducing underlings to sobs. Finance professors have long argued that beating the market is impossible, yet drawing on insights from physics, economics, and psychology, these titans have cracked the market's mysteries and gone on to earn fortunes. Their innovation has transformed the world, spawning new markets in exotic financial instruments and rewriting the rules of capitalism--From publisher description.
Publisher: New York : Penguin Press, 2010.
ISBN: 9781594202551
1594202559
Call Number: 332.64 MALLABY
Characteristics: 482 p., [8] p. of plates : ill. ; 25 cm
Subjects: Hedge funds.
Investment advisors.

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Stresstested
Mar 05, 2015

* This was a good read. I recommend it for the 99% to the 1% (not ".01%").

* Why? There are lessons ("actively" managed funds, cutting of losses, leverage, liquidity, research, regulatory risk) in the book for all investors, from professionals to those starting out. Everyone can apply them regardless of their level of knowledge or experience.
i.e. One section seems to focus on the success of HF's in breaking the European Exchange Rate Mechanism. But the lesson behind the story is about policies that are unsustainable. If we update the lesson for 2015, the Swiss National Bank was forced to stop supporting their EURCHF cap (aka "currency peg") of 1.20 in January. The Swiss franc appreciated as opposed to Sterling, but the lesson is the same today as it was in 1992. There are consequences (losses) for all who misjudge the risk of a policy.

* There's nothing granular or boring on financial instruments (ABS, CMBS, synthetic CDO'S, CDPO's etc) or any reference beyond "portfolio insurance" from the 80's, because that's not what the author was writing about.

* The book will not appeal to everyone, but give it a chance.

s
StarGladiator
Jun 17, 2012

Truly a pre-financed, propagandistic tract, not surprisingly published by the CFR press (Council on Foreign Relations - where Mallaby is a senior fellow). The entire book can be summed up in 2 sentences: (1) Don't regulate, and (2) government should support and invest in hedge funds????? If you are complete ignorant of the causes of the economic meltdown, you won't learn it from Mallaby's drivel, but there are 2 items of interest if you know nothing: (1) he mentions how Paulson (the hedge fundster Paulson, whom Alan Greenspan went to work for after leaving the Fed) would buy CDSes for $1.4 million, then make $100 million per on the payouts, which is why AIG had to be bailed out -- to pay off all those CDSes purchased by Paulson from AIG (whom Greenspan went to work for, and ditto for Goldman Sachs, Morgan Stanley and JPMorgan Chase); (2) how Goldman Sachs had to recapitalize their largest hedge fund -- but Mallaby doesn't mention it was because of those oil prices being speculated 13.8 times above physical market price, principally by Goldman Sachs, Morgan Stanley, etc. on their ICE Futures exchange. Purely a tract for hedge funds, those opaque monstrosities of the .01%. [Followup comment: It has since been officially learned - - view SEC documents, and so on - - that Paulson and his fund conspired with Goldman Sachs on a number of CDOs, especially the featured Abacus CDO, whereby they loaded the derivatives financial instrument with the trashiest mortgage loans conceivable, then bought those CDSes ($1.4 million a pop with a payout of $100 million per) and made many, many billions off that financial fraud scheme, as did Magnetar Capital, and in a similar fashion, Ambac, MBIA, and AIG made fortunes selling those CDSes without the requisite capital on hand to make those "unregulated" insurance payouts --- hence the "necessity" of those TARP bailouts and Federal Reserve bailouts so that Goldman Sachs, JPMorgan Chase, Morgan Stanley, Citigroup, BofA, etc., and John Paulson and his hedge fund could be paid! Insurance fraud pays bigtime in the USA!]

jlazcan Oct 19, 2011

This is a great book on the history of hedge funds. It covers the most popular and successful hedge funds. Each different fund is described in detail. Mallaby covers the fund managers and their investment strategies. Jones, Robertson, Soros and Simons are just some of the names that are covered. If you want to learn about the past 50-60 years of the hedge fund industry than this book delivers.

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