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More Money Than God

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More Money Than God

Hedge Funds and the Making of a New Elite

Penguin Group (USA),

15 min read
10 take-aways
Text available

What's inside?

A gripping history lesson shows how hedge funds earn superior returns – except when they don’t.

Editorial Rating

9

Qualities

  • Innovative

Recommendation

As hedge funds increase in size, variety and number, they also exercise growing power over central banks and national governments, as well as companies and industries. Unfettered by a fixed investment philosophy, hedge fund managers bank on the flexibility to buy assets and sell them short as dynamic markets dictate. Some hedge funds have succeeded spectacularly and some have failed, such as those holding too many mortgage securities when the U.S. housing industry collapsed in 2007. But over its history, the hedge fund industry’s performance has been remarkably good. Here, business journalist Sebastian Mallaby forcefully argues that hedge funds contribute to economic stability by chasing the true value of mispriced assets. His richly detailed book centers on the successes and occasional missteps of famous hedge fund managers, including such luminaries as Stanley Druckenmiller, Paul Tudor Jones II, Michael Steinhardt, Julian Robertson and George Soros. getAbstract recommends this book as a vivid introduction to hedge funds for those who are unfamiliar with them, and as a valuable, often entertaining, reference for financial professionals. And if you want to know even more, read the illuminating footnotes.

Summary

How Hedge Funds Got Started

The first hedge fund manager, Alfred Winslow Jones, was an unlikely leader in financial innovation. The son of a General Electric executive, he graduated from Harvard and embarked on a world tour as a purser on a freighter. After time as an export buyer and investment firm statistician, he joined the U.S. State Department, which assigned him to a post in Berlin in 1930. His short marriage to a “left-wing anti-Nazi activist” and their involvement in the Leninist Organization, forced his State Department resignation. He returned to America in 1934, but stayed abreast of the “German left” and possibly remained “involved in U.S. intelligence.”

Worried that a political hysteria like the Nazi movement could undo even his own nation, Jones authored an ode to American democracy. His 1941 book and doctoral thesis, Life, Liberty and Property, led him into journalism. After Fortune published an abridged version, Jones started writing articles for the national business magazine, including a notable essay criticizing investment strategies that remain intransigent and fixed in the face of changing market conditions.

His focus gradually...

About the Author

Sebastian Mallaby, a senior fellow at the Council on Foreign Relations, is a Washington Post columnist. He previously covered international finance for The Economist and was its bureau chief in Japan, Africa and Washington. He also wrote The World’s Banker and After Apartheid.

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