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The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money

3.84  ·  Rating details ·  219 Ratings  ·  7 Reviews
Hedge fund managers who survived and profited through the 2008 financial crisis share their secrets In light of the colossal losses and amidst the resulting confusion that still lingers, it is time to rethink money management in the broadest of terms. Drastic changes need to be made, and managers who actually made money during 2008 make for a logical starting place.

The Inv
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ebook, 476 pages
Published August 8th 2011 by Wiley (first published March 18th 2010)
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Matthew
Oct 06, 2010 rated it really liked it  ·  review of another edition
Excellent and deep. Nothing you can take away and immediately implement, but tons to chew over about how these top money managers (across different asset classes -- bonds, equities, commodities, multi strat) approach the markets, think about and dig deep into what they do. Definitely something to reread and I will get for my shelf when the paperback comes out.

One thing I do take-away, which I have suspected for a while, is that top money managers with large portfolios all use deep fundamental re
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Tahir Haneef
Mar 13, 2013 rated it it was amazing  ·  review of another edition
brilliant
Asif
Nov 10, 2016 rated it liked it  ·  review of another edition
Found it a bit boring.
Carl Yang
I was excited to purchase this book following Inside the House of Money, but found it noticeably weaker. My main complaint would be that Drobny focused very narrowly on real money and should have just renamed the title "The Smoke and Mirrors in Pension Funds." Traders or other fund managers might develop a negative view of real money after reading this.

First off, the managers and interviews in this book are much more academic and less practical than normal fund managers. Generally, Inside the Ho
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John
Jul 22, 2010 rated it liked it  ·  review of another edition
like drobny's first book, "inside the house money," there are some nuggets of insight into global macro trading here. also some analysis and critique of the "yale" or "endowment" investment modeling that failed spectacularly in 2008. the interviews are (as another reviewer noted) most relevant for those with an interest in the inner workings of the strategies of successful macro traders. however the sections detailing the shortcomings and risks of the endowment model, which is the asset allocati ...more
Alex Mcloughlin
Mar 08, 2014 rated it really liked it  ·  review of another edition
Very good read with great insights from many different traders from global macro to commodity traders. The key message throughout the book is capital preservation and the avoidance of large drawdowns that can kill long term performance. Being fully invested all of the time is not a necessity, knowing when to sit back and watch the market is as important as knowing when to go all in. Good insights and food for thought throughout
Alex
May 04, 2010 rated it liked it  ·  review of another edition
Good if you want to read detailed accounts of macro investors' strategies. Not worth it otherwise.
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“Fund management is a skill—you cannot run money through consultants or committees. If you have a committee, you should buy an index fund and stop trying. Committees settle to the lowest common denominator, which is the lowest risk. A committee will not take risk. By the time a committee decides to buy tech, it is already March 2000. Fund management is like cooking, whereby 10 chefs have the same ingredients but make 10 different things. You have great chefs who get three stars and lousy chefs who make horrible food. Fund management is similar in that what is important is what you make out of the mix, how you interpret information, how you structure trades and build portfolios. But with committees somehow the results are always the same. When you have a committee, you cannot be the only guy making the decision because, at some stage, you will be wrong in the short-term and everyone will get fired. So the whole groupthink model makes things very difficult, as does the visibility of these posts. Making or losing a lot of money always makes headlines—there is no upside or solution for that.” 0 likes
“2008 was a reminder that it really matters to care about liquidity and correlation, that it matters to worry about a large range of risk indicators rather than just one, that counterparty risk is important, that your balance sheet is important. Most of these lessons are as old as the hills, which is why I really cannot understand all this talk about black swans. When the same thing happens over and over again, how can you be surprised? “Black swan” may have become the most confusing phrase in markets. Nassim Taleb's recent use of the term is commonly understood to denote an unlikely and unforeseeable event, but this is not the main story of 2008. I saw a crisis as highly likely given people's beliefs and behaviors. Many people seem to use the “black swan” idea to reassure themselves when some bad things happened that they did not expect. They use it to claim that it was not their fault, which I do not think was Taleb's meaning. Too often, people use it to avoid taking responsibility for their actions by claiming the events—and their losses—in 2008 were unforeseeable, whereas in fact their hypothesis of how markets worked was just disproved. The other hypotheses always existed. The metaphor of the black swan is of course an old one and was used by Karl Popper in the 1930s to illustrate the fallacy of induction. It is an example of something that can falsify a hypothesis. If you have a hypothesis that all swans are white, a single black swan falsifies that hypothesis. In this usage, the existence of a black swan is of course neither unforeseeable nor even a low probability event, since hypotheses are falsified all the time.” 0 likes
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