More Money Than God

More Money Than God

Hedge Funds and the Making of A New Elite

Book - 2010
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The first authoritative history of hedge funds-from their rebel beginnings to their role in defining the future of finance.

Based on author Sebastian Mallaby's unprecedented access to the industry, including three hundred hours of interviews, More Money Than God 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 twenty-first #65533;century capitalism. Ken Griffin of Citadel started out trading convertible bonds from his dorm room at Harvard. Julian Robertson staffed his hedge fund with college athletes half his age, then he flew them to various retreats in the Rockies and raced them up the mountains. Paul Tudor Jones posed for a magazine photograph next to a killer shark and happily declared that a 1929-style crash would be "total rock-and-roll" for him. Michael Steinhardt was capable of reducing underlings to sobs. "All I want to do is kill myself," one said. "Can I watch?" Steinhardt responded.

Finance professors have long argued that beating the market is impossible, and 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.

More than just a history, More Money Than God is a window on tomorrow's financial system. Hedge funds have been left for dead after past financial panics: After the stock market rout of the early 1970s, after the bond market bloodbath of 1994, after the collapse of Long Term Capital Management in 1998, and yet again after the dot-com crash in 2000. Each time, hedge funds have proved to be survivors, and it would be wrong to bet against them now. Banks such as CitiGroup, brokers such as Bear Stearns and Lehman Brothers, home lenders such as Fannie Mae and Freddie Mac, insurers such as AIG, and money market funds run by giants such as Fidelity-all have failed or been bailed out. But the hedge fund industry has survived the test of 2008 far better than its rivals. The future of finance lies in the history of hedge funds.
Publisher: New York : Penguin Press, c2010.
ISBN: 9781594202551
Characteristics: 482 p., [8] p. of plates : ill. ; 25 cm.

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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.

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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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