Abrazolica

More Money Than God: Hedge Funds and the Making of a New Elite, by Sebastian Mallaby

This book is a history of hedge funds. Its quality is as good as one could hope, and an order of magnitude better than the last hedge fund book I read, The Quants by Scott Patterson. The details and extensive references are superb. I especially enjoyed the accounts of Commodities Trading Corp, LTCM, and Renaissance Technologies. It has one big fault. It makes no mention of Ed Thorp - probably because, as my brother Stefan said, he boringly made money consistently and never blew up. Incidentally, The Quants discusses Ed Thorp extensively, which is the best thing about that book.

This book should be read by every investor because the size, leverage, and behavior of hedge funds have a significant influence on the financial markets. I do not agree with the author's assertion in the last chapter of the book that hedge funds are not a destabilizing influence in the financial markets. They can be destabilizing. The concluding chapter of the book concerns the authors views of hedge funds in finance, which was the most boring chapter, and can safely be skipped.

My favorite quotes from this book:

I thought random walk was bullshit. The whole idea that an individual can't make serious money with a competitive edge over the rest of the market is wacko.(F. Helmut Weymar, pg 64)

Commodities Corporation was not about salesmanship and relationships and looking like a market insider; it was about beating the market with computer models, math, and superior information.(pg 65)

So long as hot dogs were selling, the world could not be ending.(Muriel Siebert, pg 98)

Great investors tend to have a screw loose, pursuing the game not for profit, but for sport.(David Swensen, Pioneering Portfolio Management, pg 252)

...there was a Henry Moore sculpture outside and a lawn where beautiful people ate organic sandwiches.(pg 275)

Simons...never hired economists. He wanted people who would approach the markets as a mathematical puzzle...(pg 289)