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Inside the House of Money
Book

Inside the House of Money

Top Hedge Fund Traders on Profiting in the Global Markets

Steven Drobny
Wiley, 2006
First Edition: 2006
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Editorial Rating

7

Recommendation

This fascinating book will take you into the world of current global macro investing. Steven Drobny interviews 13 successful traders, analysts and fund managers who participate in global macro investing in many different ways. Although some of the discussions are technical (but never mathematical), they are readable and easy to understand. Drobny also provides some information on the origins and early years of global macroeconomic investing, from John Keynes to George Soros. He talks to his interviewees about their backgrounds and asks their investment advice. His question-and-answer approach keeps things moving. getAbstract enjoyed Drobny’s descriptions of the people he interviewed, though the interview-style format leads to somewhat choppy data. This book is surprisingly fun for what could have become a very dense, technical tome in less skilled hands.

Summary

What Is Global Macro Investing?

While no standard definition of global macro investing seems to exist, the circular explanation is that it is investing based on global macroeconomic conditions. Global macro investors attempt “to generate outsized positive returns by making leveraged bets on price movements in equity, currency, interest rates and commodity markets.”

Hedge fund managers use macroeconomic principles to identify “unusual price fluctuations” anywhere in the world. Global macro trades can be either “directional,” where a manager bets on a single price movement, such as short Japanese bonds, or “relative,” where two assets of similar values are paired, such as long emerging European equities versus short U.S. equities. The potentially huge profits derive from a trader correctly predicting which way a price or spread is likely to move.

Since global macro investing is still relatively new, and has not yet achieved stability or equilibrium, your best bet is to examine how experts go about their business. Global macro traders invest in many products and markets, without restriction. They have earned reputations as risk-taking speculators due to their field...

About the Author

Steven Drobny has worked in various countries for a major international bank’s hedge fund group, and is co-founder of a consultancy that provides macroeconomic research to leading global hedge funds.

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