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45 of 50 people found the following review helpful
on March 26, 2010
I read both Michael Lewis' "The Big Short" and Steve Drobny's "The Invisible Hands" this week and found them both fascinating. As per usual, Lewis is a wonderful story teller which makes "The Big Short" a fun read, though the book sensationalizes a few guys who made great one-off trades. Drobny's book, on the other hand, focuses on traders who are not one-trick ponies, but the stalwarts of sound investment. These are the less known, but equally successful traders that are often guarded about their methods and secretive about their dealings. The candid insight in "The Invisible Hands" is both impressive and enlightening and full of good ideas for the most effective ways to manage money in the future. It is a must read for anyone who manages money professionally.
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28 of 31 people found the following review helpful
on April 10, 2010
While there are plenty of books cataloging the events of 2008, few have the direct insights of the participants who were actually putting their own money on the line. It's rare to get access to the thinking and process of such successful managers as they often have little incentive to disclose such information. As a result, we are buried by the media with market pundits sensationalizing investing and who have very little skin in the game. Here you get to sit in the passenger seat with a turn by turn account of why they did what they did in 2008 and how they anticipated what many failed to see. While each manager is different in style and perspective you discover that they all share a common ability to think independently and find trades with highly asymmetric payouts. If you want to learn how to really "think" like a successful macro manager read this book, if you want to simply be entertained then sit back, follow the herd and watch CNBC.
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16 of 17 people found the following review helpful
on November 25, 2010
The book follows the format of the earlier book [[ASIN:047037909X Inside the House of Money, Revised and Updated: Top Hedge Fund Traders on Profiting in the Global Markets]. I really liked that book, so I had great hopes for this book.

The book is not for beginners. In fact it is not so easy to know what the target market is for this book. You need some hands-on familiarity with shorter-term trading (like a couple of months). The book is not about trading with a couple of weeks horizon or less.

The book consists of interviews with people that are heavily involved in trading different markets using what is called a macro-global strategy. The people interviewed control hundreds of millions of dollars. The questions are okay but not as good as the in the author's previous book. A lot of the questions are hypothetical, like what would you do if you were in charge of a university endowment fund. This calls for speculation and that isn't very interesting.

The interviews are longer than in the old book. The people interviewed do not feature with their name. Just an alias. Expect 50% of the interviews to be dull or useless, e.g. The House and The Bond Trader. Some interviews are nice like The Philosopher. Still they only provide snippets of information, but that is okay with me. However, I don't like that the author probably included all interviews he conducted. Some people like The Bond Trader just say nothing; if I were the author I would feel insulted. Now I only feel irritated after having read some of the interviews. Waste of time.

There are good interviews in the book and they deserve four stars. Right now there are too many one star interviews in the book. I understand why those people do not want to have their name mentioned in the book.

The author's first book gave an insight into hedge fund thinking. We don't need a second book that does the same. Too little discussion about the thought process of trading. My advice is to buy that author's first book. It is better. The currently reviewed book doesn't get more than two stars.
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28 of 33 people found the following review helpful
on May 22, 2010
Drobney has compiled a decent enough book which will be of short term interest to those who track the markets. However, the format is not original and was far better done in Market Wizards and New Market Wizards by Schwager. These books are also likely to stand the test of time far better than Invisible Hands.

The anonymity in the book of most of the interviewees proves annoying as you can only really place their insights in context if you know who they are. Having said all of this it does provide an interesting look inside the macro global funds that have been pushing and pulling markets in recent months / years. Clearly Drobney has a view on what he was being told by the interviewees but there is limited analysis of their responses. The result is lightweight in parts and comprises little more than an extended set of interviews with faceless money managers who did not drink quite as much Kool Aid as many others.
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6 of 7 people found the following review helpful
on May 8, 2010
I was excited to find out that Steve Drobny came out with a follow up to "Inside the House of Money" (his first book) with "The Invisible Hands", a book that gets inside the minds of some of the best Global Macro Hedge Fund Traders in the world...the ones that actually survived and thrived through the crash of '08.

Steve Drobny follows up "Inside the House of Money" with another excellent set of interviews with anonymous Macro Traders based in a number of different countries. These two books are almost like an extension to Jack Schwager's "Market Wizards" which came out in the early 90's. "Inside the House of Money" and "The Invisible Hands" cover the next generation of absolute return money managers. What makes these two books so good is that Steve Drobny has a huge network in the hedge fund space and also has a hedge fund background so he knows how to ask the right questions.

With the myriad of investment themes in the world today and the global economy in a fragile state of affairs, this book is a must read in an effort to make sense of it all. Each interview gives you much to think about, from mananaging risk to the impact of China to the inflation/deflation debate. Whether you aspire to manage money professionally or are looking to invest your money or just want to see where the global economy might heading, you must read this book and learn from the ones that can make money in any type of economic environment. You can't find this treasure trove of insight anywhere else.
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3 of 3 people found the following review helpful
VINE VOICEon February 24, 2011
I read a decent amount of macrofinance books, but don't buy very many - largely because they tend to be thin on content and long on self-promotion (e.g. anything Jim Rogers has written in the last decade), pop psychology, and "get rich quick" schemes. Even many of the more interesting biographical accounts written by journalists still suffer from a lack of insight into finance, accounting, or macroeconomics and often seem to take cheap shots at Capitalism. There's a dearth of books that describe real strategies of successful macro traders.

This book is quite different. It's a meaty selection of interviews delving into strategies, analysis, and differing perspectives from "real money" fund managers compiled by Drobny, himself a hedge fund founder. In case you don't know the parlance (I didn't before this book), "real money" managers aren't leveraged like hedge fund managers often are. These type of people manage endowments, pensions, etc. It's well-written, too.

Drobny provides us with the gory details of how the funds work - information which is generally extremely tough to find. It's still accessible though - when it gets too technical with the details, financial jargon is defined in boxes. This is useful for those of us who associate "gamma" more with the incredible hulk than stock options.

If you're familiar with Drobny's first book, rest assured he doesn't recycle material. This covers different ground and while both books are excellent, I found this one more accessible because of the "real money" focus. That serves as an interesting counter-point to his first book Inside the House of Money, Revised and Updated: Top Hedge Fund Traders on Profiting in the Global Markets which was about the heavily leveraged world of hedge funds.

I'm not in the business, but a private investor (and one with a pension). Since I'm not fond of the additional risk leverage entails, I fond this book more interesting and many of the strategies to be things that were actually relevant to the way I invest (and relevant to the way my pension fund is invested), unlike the strategies Hedge managers used in Drobny's first book.

Unlike many of these books where the subject prattles on about their personal philosophy of life (looking at you, Soros) Drobny directs the interviewers with the narrative skill of a journalist and the probing depth that belies his level of knowledge and skill in his field. He also anticipates the looming CalPers and larger Pension crisis and talks to fund managers about their opinion of that. I'm sure CalPers will be in the news within the next few years.

Highly recommended to anyone vaguely interested in Finance, esp. Macrofinance or anyone with a pension. I'd even buy it again in paperback if it gets a second edition. To be honest, for what it contains, this book is probably the best buy in Finance on the market, by far. Drobny's first book is also recommended, though that will likely be of more interest to financial professionals.
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3 of 3 people found the following review helpful
on March 10, 2011
An outstanding and deeply insightful work that I have no doubt will rank with Reminiscences, Market Wizards and Livermore's "How to Trade in Stocks", as a must read for an investor's library. The interviews are not only insightful and provide much advice, but unlike other works that purely ruminate on historical data to predict the future, the managers here talk frankly about multiple possibilities that the "interplay between the international economy and geopolitics " will provide. While we have seen many works about the origins and victims of the crash of 2008, here is a great discussion about the lessons learnt from those who survived. Even the amateur trader will learn much about protecting and positioning himself in these interesting times from those that emerged as winners.

Despite all this knowledge, its not a hard read at all. Indeed, if it wasn't for my underlining parts of every other page, I would have finished in a few days.

At some level we all manage money- even if just our own; If you are interested in the economy of the future and how to navigate it from those that have succeeded, read this book.
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3 of 3 people found the following review helpful
on May 2, 2011
Not all of the interviews are equally insightful, or candid. However, each has some angle that it is worth considering. Will you learn a lot that is new in terms of trading strategy? Sort of and sort of not. None of the trades described in the book will jump out as crazy unique. However, the execution, the attitude, the balance, the measure of risk, etc. is where it all comes together and separates the dudes with good ideas from the ones making money. The insights are in the subtleties here. Don't expect a how to book. Just expect some good thought and behavioral patterns that may be worth taking into consideration.
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2 of 2 people found the following review helpful
on January 12, 2013
The hedge fund advisor Steven Drobny had a huge international success with the book Inside the House of Money where he in a very easy going way interviews a number of high profile macro hedge fund managers on topics such as how they got into the business, their processes and beliefs. Perhaps because I am not as into macro trading I was not as thrilled as many others. This new book takes on a very serious topic: what will come after the 60/40- and the Yale-models? That is, how should the investment models of the likes of pension funds develop?

The concept is the same as in the last book. Drobny interviews a new round of managers of smart money, but this time on how managers of real money should run their business. Not surprisingly given that some of these people have egos larger than the empire state building the short answer is that they should be like macro hedge fund managers or at least give their money to them. Most agree on the problem description and I also think that it's spot on: low understanding of illiquidity risk and overlooking the opportunity cost of not holding cash to be able to reinvest in bad times, underestimation of tail end risks, not understanding the time varying nature of expected returns, being too complacent around the variations in asset correlations and around the fact that diversification into overvalued and overcrowded assets gives no diversification. Furthermore the obsession with relative return gives a short term focus which prevents paying small fees for insurance in good times to be able to soften the drawdowns later.

As the interviewees are a diverse bunch the remedies proposed are quite diverse. Some would hardly work on a larger scale and most would at least not work if they actually became the new model and the whole long only crowd would move in the same direction even if they could be good investment cases for the individual fund. The broad conclusions that Drobny draws from are three pieces of advice; 1) replace return targets with risk adjusted return targets, 2) look forward, not backwards and 3) rethink liquidity. I would say that another general advice in the book is to broaden the search for risk premium to invest into. The Bridgewater "all weather model" gets its fair share of votes also. The second piece of advice above points to the need to replace allocations based on return expectations build from averages over 50 years and instead adjusts these averages to what is reasonable for the next five to ten years when taking the starting valuation, overcrowding and the economic picture into account.

This is not light reading for the layman but the idea behind the book is till great. Input to an important topic from a knowledgeable but unrelated source. My main objection is that this is only about 1/3 of the text. The rest is basically "House of money II" where the hedge fund managers' discus their best trades etc. I'm also not really sure if the hedge fund managers' focus on avoiding drawdowns is always suitable for someone who truly has a very long time horizon. With a true long horizon it only becomes relevant to avoid drawdowns to the extent that they impair the returns compounding more than the potentially higher return from the volatile asset will give? The usefulness of a model focused on avoiding drawdowns as opposite to "seeing over the dips" depends very much on the type of environment one is in. When we eventually enter the next structural bull market the 60/40-model might not be so bad.

Drobny makes you feel like you're sitting in on a number of conversations between friends so even if the topic of pension fund revamping is perhaps not the sexiest in town it's a fairly pleasurable reed. I'm not sure the book goes all the way with the proposed topic though.

This is a review by eqtbooks.com
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2 of 2 people found the following review helpful
on February 21, 2012
I have read many investment and money management books and interviews over the years, and usually find them worthwhile to some extent. This one surprised me though because it had deeper insights and wasn't just some money managers views on markets and economies, with the occasional interesting idea. Or some technique that I've heard before with a slight twist. This book has almost renewed my belief that there are some money managers out there that differentiate themselves, have developed processes and systems that seem repeatable and have the ability to add value. Though I don't think investment management is the most creative field out there, its good to read about the passion, thoughtfulness, empiricism and courage of their convictions, with some uniquely creative approaches carried out by these people.

Every interview was worthwhile even when i thought it might not be based on the title/ names given to each of the Invisible Hands.

I would say this book is a must read for anyone in the business particularly if you manage money or aspire to. For the serious investor or someone who is trying to hone their skills or just understand who and what is out there, that you may be competing with, it also is a must read. For the casual investor or occasional dabbler in markets, then this may be too technical, or theoretical. Many of the ideas will not be easy to implement unless one is a professional or puts in a lot of time, but the main point here I believe is to get people inside and outside of the business to think differently about investing because it has huge ramifications for much of society.

It would have been nice to know the results of these managers not just in 2008, but over longer periods, and I did wonder about the idea that some people had to make money during the crisis (so its self-selecting, and some could be one-trick ponies or gotten lucky), but ultimately these managers at least on the margins do seem a cut above.

I learned a lot and really enjoyed reading this outstanding book.
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