- Series: Council on Foreign Relations Books (Penguin Press)
- Paperback: 512 pages
- Publisher: Penguin Books; Reprint edition (May 31, 2011)
- Language: English
- ISBN-10: 0143119419
- ISBN-13: 978-0143119418
- Product Dimensions: 5.4 x 1 x 8.4 inches
- Shipping Weight: 14.9 ounces (View shipping rates and policies)
- Average Customer Review: 142 customer reviews
- Amazon Best Sellers Rank: #18,935 in Books (See Top 100 in Books)
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More Money Than God: Hedge Funds and the Making of a New Elite (Council on Foreign Relations Books (Penguin Press)) Paperback – May 31, 2011
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"[T]he bright light shed by More Money Than God is particularly welcome. Mr. Mallaby... brings a keen sense of financial theory to his subject and a vivid narrative style."
-The Wall Street Journal
"[S]plendid ... the definitive history of the hedge fund history, a compelling narrative full of larger-than-life characters and dramatic tales of their financial triumphs and reversals... Mallaby weaves into his narrative just the right amount of economic theory and market history, and he has a wonderful knack for explaining complex trading strategies in simple and elegant prose."
-The Washington Post
"[A] splendid account of the ups and downs of an industry in which few of the twenty-something hedge-fund wannabes know their history. They, and meddling politicians, should read this book before they are condemned to repeat it."
-The Financial Times
"Mallaby's book is informative and entertaining..."
"More Money Than God is an expert primer on America's most obscenely lucrative investment tool... [Mallaby is] incisive, informative, and as good a financial writer as he is a storyteller."
-NPR's All Things Considered
"In MORE MONEY THAN GOD, his smart history of the hedge fund business, Mallaby does more than explain how finance's richest moguls made their loot. He argues that the obsessive, charismatic oddballs of the hedge fund world are Wall Street's future-and possibly its salvation."
-The New York Times Book Review
"Sebastian Mallaby's history of hedge funds is well written, smart, and balanced."
"Sebastian Mallaby's in-depth research and clear writing style is engaging... With great insight into the lucrative world of hedge funds, More Money Than God is one of the best, most engrossing of the current financial books."
-The Finance Professional's Post (A publication of the New York Society of Security Analysts)
"[A] superb book"
-David Brooks, The New York Times
"Mallaby... effectively combines an insider's knowledge with a colorful storytelling ability... A lively, provocative examination of a little-understood financial realm."
"A superbly researched history of hedge-fund heroes stretching back to the 1950s, it is a fascinating tale of the contrarian and cerebral misfits who created successful, flexible businesses in an otherwise conventional financial world."
"More Money than God shines a fascinating light on what is still the most obscure route to becoming a billionaire--the mysterious world of hedge funds. Sebastian Mallaby's rollicking tour of industry legends--famous and otherwise-- tells the improbable story of A.W. Jones, the vagabond journalist-sociologist and daring anti-Nazi activist who, after the war, would create the first "hedged" investment fund. From there, we get rip-roaring profiles of investing titans from the full-throated gambler Michael Steinhardt to the bold TmigrT George Soros and the courtly stockpicker Julian Robertson to the ill-fated intellects of LTCM and the hedge fund stars of the present day. Even as Mallaby entertains he advances an unorthodox yet compelling brief: rich as they are, hedge funds are probably the best vehicles society has for assuming risk. Any who disagree will have to contend with the evidence of the recent Wall Street collapse. If one shudders at the prospect of concentrating risk inside giant banks whose chieftains wager other people's money and cavalierly call for taxpayer bailouts then, as Mallaby points out, hedge funds are a necessary antidote."
-Roger Lowenstein, author of The End of Wall Street
"Sebastian Mallaby takes us into the secretive world of hedge funds and the result is a wonderful story and an education in finance. The book is full of colorful characters playing high stakes' games. Throughout, with his customary intelligence, Mallaby helps us understand this important transformation of the financial industry."
-Fareed Zakaria, author of The Post American World
"When Alfred Winslow Jones started the first hedge fund, he had no idea where it would lead. Sebastian Mallaby, who must be the keenest student of hedge funds anywhere, now does-and he shares it with you in this crackling good read."
-Dr. Alan S. Blinder, Professor of Economics, Princeton University, and Former Vice Chairman, Federal Reserve
"A fascinating history. Mallaby combines vivid description of key personalities and episodes with thoughtful discussion of the sources of advantage for different investment styles in different periods of financial history. I enthusiastically recommend this book to colleagues and students in academia and asset management."
-John Y. Campbell, Chairman of the Department of Economics, Harvard University, and Partner, Arrowstreet Capital
About the Author
Sebastian Mallaby is the author of several books, including More Money Than God and The Man Who Knew: The Life and Times of Alan Greenspan. A former Financial Times contributing editor and two-time Pulitzer Prize finalist, Mallaby is the Paul A. Volcker Senior Fellow for International Economics at the Council on Foreign Relations.
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Sebastian Mallaby is currently the Paul Volcker Senior Fellow for International Economics at the Council on Foreign Relations. He's also a columnist at the WA Post and spent over a decade with The Economist responsible for international finance coverage - serving a bureau chief in Washington, Japan and southern Africa. He is the author of several noteworthy books on the political economy.
This work is an epic contribution to the historical evolution of certain financial products and the global industry(s) spawned therefrom in primarily, the western world. Welcome to the hedge fund industry, including an amazing cast of characters, their thought processes, training, relationships and the outcome of their work - The Making of A New Elite - with More Money Than God.
Admittedly, it is rare for me to dedicate myself to the reading of 400+ pages contained in any one volume, on any subject. Yet, the manner in which this book develops contains the unique qualities that inflame the desire within reader to come back for more. Incredibly well-written, researched, balanced and apolitical. This work is REQUIRED READING as an essential component in developing an understanding of global financial markets, risk assessment, risk management and the art of speculation.
As I read the book, Mallaby makes some points that have been central themes of other authors (See The WSJ's Scott Patterson's - The QUANTS), regarding the miscues that fueled poor investment/risk management strategies. Listen to Mallaby to garner the essence of this observation as it relates to the "art of speculation" - "The art of speculation is to develop one insight that others have overlooked and then trade big on that small advantage." P.91
"After the 1971 debacle, Weymar set about rethinking his theory of the market. He had begun with an economist's faith in model building and data: Prices reflected the fundamental forces supply and demand, so if you could anticipate those things - you were your way to riches. But experience had taught him some humility. An exaggerated faith in data could turn out to be a curse, breeding the Sol of hubris that leads you into trading positions too big to be sustainable."
"The real lesson of LTCM's failure was not that its approach to risk was too simple. It was that all attempts to be precise about risk are unavoidably brittle." P.231
(LTCM) Had misjudged the precision with which financial risk can be measured."p.245.
The point is that an unrepentant belief in the quantitative modeling that provides that "one insight that others have overlooked and then trade big on it" can have enormous consequences in either capturing returns or accelerating a cataclysmic demise of the capital under management.
How has that all worked out, in recent years? According to Mallaby, "Between 2000 and 2009, a total of about five thousand hedge funds went out of business, and not a single one required a taxpayer bailout."
Ah yes, "bailouts" - what is Mallaby's take on this issue? Listen to the following: "Capitalism works only when institutions are forced to absorb the consequences of the risks that they take on. When banks can pocket the upside while spreading the cost of their failures, failure is almost certain." P.13. Mallaby is clearly not a proponent of "privatizing the gains and socializing the losses."
What about our affection with history that drive financial and other forms of socio-economic modeling. Mallaby has some succinct insights:
"Projections are based on historical prices, and history could be a false friend." P. 233.
"In 1997, Merton and Scholes (LTCM) received the news that they had won the Nobel Prize for economics. The award was greeted as a vindication of the new finance: The inventors of the option-pricing model were being thanked for laying down a cornerstone of modern markets. By creating a formula to price risk, the winners had allowed it to be sliced, bundled, and traded' l thousand ways the fear of financial losses, which for centuries had acted as a brake on human endeavor, had been tamed by an equation." P.231.
So, where does Mallaby leaves us at the end of this magnum opus? His analysis leads him to conclude "The worst thing about the crisis is that it is likely to be repeated." P. 377. However, to suggest that the hedge fund industry was the primary culprit in either the creation or magnitude of the Great Recession would be erroneous. Again, between 2000 and 2009, 5,000 hedge funds are to have ceased operations - none of which required a taxpayer bailout. Mallaby also takes a rather benign approach to the plausibility/practicality of regulating this industry ("The record suggests that financial regulation is genuinely difficult, and success cannot always be expected." P. 379).
Yet, at the conclusion of this work, one quote from Mallaby continues to resonate with me: "It is the nonintuitive signals that often prove the most lucrative." p.302. However, the term "lucrative" as is as applicable to assessing risk and thereby avoiding potential losses, as it is to capturing returns on investment.
Like I said, an epic contribution to the historical evolution of the hedge fund industry. An uncanny, incredibly thorough, balanced treatment - written in a way that is appropriate for both industry insiders, and the lay-person. A perfect volume for graduate coursework in finance -- one that focuses on human beings, as well as the quantitative financial services products they develop and deploy in the global markets today.
I have been fascinated by Renaissance Technology for some time. Renaissance is probably the most successful quant fund, year after year, in existence. If I were twice as smart as I am, I would say that I aspire to be Jim Simmons (the founder of Renaissance) when I grow up. The book Quants and MMTG attempt brief profiles of Renaissance, which is also one of the most secretive funds in a very secretive industry.
Among the things that are remarkable about Renaissance is how little information has leaked out about them. As a result, the profiles of Renaissance are shallow, at best.
One of the themes in MMTG are the causes for various fund blow ups. The author makes the point that, from a formal point of view, risk management at Long Term Capital Management was actually very good. The problem is, VaR, ETL and any other measure you would like to pick is of no use if the instruments in your portfolio are, or become, illiquid and you can't sell them. The author relates a number of cases where funds became a major part of the market for some instrument. Or they were in a market where all of the players headed for the exits at the same time. As a result, when the market turned against them, they could not get out of their position. I have not seen any formal risk measure that will reflect this.
We have actually seen a situation like this recently (May 2012), with J.P. Morgan and the "London Whale" who took huge positions and then could not get out of them (resulting in a loss of somewhere between 2 and 4 billion dollars, by some estimates). Once such a situation becomes apparent in the market, MMTG makes clear, the jackals will feed on the distressed fund.
The only criticism I have for MMTG is that there are places in the book where the author goes on about how hedge funds should not be regulated because they present much less systemic risk than the highly leveraged investment banks. He makes some good points, but it gets old after a while. The author doesn't seem to notice that financial regulation has been captured by the very industry that it is supposed to regulate.
Most recent customer reviews
Well written and with a lot of information brilliantly delivered. I really recommend yo read this book if passionate about hedge funds.