Customer Reviews

The Prudent Investor's Guide to Hedge Funds : Profiting from Uncertainty and Volatility

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I tend to rate financial books by how many gallons of espresso I need to stay alert enough to finish reading them. However, I read all 288 pages of "The Prudent Investor's Guide to Hedge Funds: Profiting From Uncertainty and Volatility" sans caffeine and in one sitting. My local Starbucks' cash receipts suffered appreciably the day I read this book, and very nearly closed when I read it a second time.

Author James P. Owen proves he knows the difference between a hedge fund and a hedgehog right from the start as he neatly slices through the popular myth of the "loosely regulated high-flying hedge fund." He writes in the preface:

"Hedge funds are not a kind of investment, but rather a mechanism for making investments in the same sense that mutual funds are a mechanism. As in the case of mutual funds, the vehicle called a hedge fund is not inherently speculative or conservative, large or small, aggressive or passive. It is simply a framework, a legal structure, through which a pool of money can be marshaled and then invested in an almost endless assortment of ways."

Following this simple and sensible explanation of hedge funds, Mr. Owen, a 30-year veteran of the traditional investment world and a hedge fund investor, takes the reader on an alternative investment adventure. Written primarily for high-net-worth investors who are entering the hedge fund arena for the first time, the book deftly moves through an explanation of traditional investment methods, their advantages and shortcomings and then delves into how hedge funds can enhance a portfolio, whether you're looking for wealth appreciation or preservation.

Divided sensibly into three sections, Mr. Owen takes the reader on a guided tour of hedge fund investing. He begins with an explanation of the traditional world of investing and then compares and contrasts it with the world of hedge funds. He also takes the time to discuss the difference between institutional and individual investing and what each can expect from its respective portfolio, as well as the possibilities for capital appreciation and preservation.

The second and third segments of the book are devoted entirely to hedge fund strategies and a thorough discussion of hedge fund performance and investing. There is no mystery in hedge funds for Mr. Owen. He writes: "...in my judgment hedge funds do not constitute an asset class. They are nontraditional investment strategies with risk/return profiles ranging from church-mouse conservative to junkyard-dog aggressive."

A little further on, he writes: "Hedge funds can be a sound addition to a portfolio because they contribute a distinct set of characteristics-a different rhythm-to the asset mix. With their focus on absolute returns and unique, proprietary strategies, hedge funds provide something that is not offered by traditional stocks and bonds, by investments in real estate, or by holdings in a family business."

Although written primarily for conservative, high-net-worth investors interested in preserving capital, "The Prudent Investor's Guide to Hedge Funds" is a must-read for anyone involved in the industry. In plainspoken terms, Mr. Owen strips away the fear and loathing many investors have about hedge funds and offers managers and service providers with a better understanding of what investors want.

Ultimately, what may make this the best book ever written about hedge funds is Mr. Owen's easy-to-read style and when he uses a term, he clearly and immediately defines it. There is no "speaking in tongues" in "The Prudent Investor's Guide to Hedge Funds," nor is there a preachy tone. It's quite simply a very good book that finally provides a clear explanation of the hedge fund phylum.

Mr. Owen is senior vice president of Broadmark Asset Management. Previously he was president of JPO Inc. and a partner with NWQ Investment Management Company. He is co-founder of the Investment Management Consultants Association; author of the financial bestseller, The Prudent Investor: The Definitive Guide to Professional Investment Management; and was associate producer of the PBS television series, Beyond Wall Street: The Art of Investing.

Way too superficial for the institutional investors... Although probably a nice start for privates it does not provide any indepth insight into the strategies employed by hedge fund managers or the risks involved.... For the professional investor I would recommend "Absolute Returns" from Ineichen, which covers the entire spectrum, from indepth analysis of the strategies employed to an extensive overview of market risk factors....

This outstanding book is perfect for bringing the comfort level of investors up in the seemingly arcane world of hedge funds. We recommend hedge funds to most of our high net worth clients and often we send a copy of this book to help them understand that "hedge funds" doesn't necessarily mean high risk. As we use them,they actually lower the risk of traditional investing. For those accumulating capital, traditional investing works well. But for those who want to preserve and live off it, the traditional markets can often be a very scary place.

Highly recommended.

The author takes a look at the hedge fund industry performance and discusses the most popular hedge fund strategies. Learn the powerful diversification benefits of hedge funds in portfolios. As a doctoral student in business administration, I highly recommend this book to any serious investor.

Author has good writing style and the book is laid out well. It is a quick and easy read. Contains good tips on where to get more info on hedge funds and how to perform some basic due diligence. Great for people who are thinking about investing in hedge funds and who don't have finance background. Books does fall short on explaining the risks inherent in many hedge fund strategies.

Neil Chelo, CFA

This book was recommended by the Hennessee Group which was recently fined by the SEC for directing clients into what turned out to be fraudulent hedge funds. In general, the book insufficiently addressed issues of due diligence, safety, and asset allocation as well as giving readers a false sense of security about this secretive and unregulated investment class.

I bought 10 books on hedge fund investing and this book is the premier resource for anyone who is new to hedge funds or who wants to improve his/her financial eduation and have a better grasp of investing strategies beyond 'buy and hold'. People who are considering or just moving into alternative investments should start with this book because it is clear, highly readable, and contains specific suggestions and lists of resources. The latter are invaluable to non-professionals who want a knowledge base for evaluating advice on what to do with their money and some idea of how to perform due diligence with regard to hedge fund investing. That is the target audience for this book and the author more than succeeds in meeting its needs. It is an excellent foundation for more complex treatments that are usually not as well written.

Experienced professionals would do well to read this book and note the clarity of its style and how it leaves the average reader with a sense of greater financial empowerment despite the complexity of its subject and material. Would that all financial writers (and advisors) could be as clear and engaging as Mr. Owen is in this book!

James Owen's book is outstanding. He provides an excellent history of hedge funds, starting with A.W. Jones' concept of conservative investment principles that focus on wealth preservation, yet can result in outstanding long term success. The book gives a very good overview of the types of hedge funds and does a particularly good job of contrasting hedge funds from mutual funds and other relative performance vehicles. Ownen is also the author of my favorite "investment" book: Cowboy Ethics, What Wall Street Can Learn from the Code of the West.

This is the best book I've seen on hedge funds. Comprehensive, theoretically sound, and an enjoyable read--what else could you ask for? Owen tells you exactly what he believes and why. When he challenges the conventional wisdom, he is right on target. If you have any interest in hedge funds, this is the book to read.

This book is worth reading!