More Money Than God Quotes

“All new markets are inefficient at first,”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“Years later, (Paul) Jones described the mental gymnastics that went into writing these scripts. "Every evening I would close my eyes in a quiet place in my apartment ... I would visualize the opening and walk myself through the day and imagine the different emotional states the market would go through... Then when you get there, you are ready for it. You have been there before. You are in a mental state to take advantage of emotional extremes because you have already lived through them.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“He read Adam Smith, Thomas Hobbes, and Niccolò Machiavelli.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“He commuted to his Canadian office in a Ferrari, though sometimes snowy conditions forced him to use Bentley.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“Capitalism works only when institutions are forced to absorb the consequences of the risks that they take on.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“By now Soros had melded Karl Popper’s ideas with his own knowledge of finance, arriving at a synthesis that he called “reflexivity.” As Popper’s writings suggested, the details of a listed company were too complex for the human mind to understand, so investors relied on guesses and shortcuts that approximated reality. But Soros was also conscious that those shortcuts had the power to change reality as well, since bullish guesses would drive a stock price up, allowing the company to raise capital cheaply and boosting its performance. Because of this feedback loop, certainty was doubly elusive: To begin with, people are incapable of perceiving reality clearly; but on top of that, reality itself is affected by these unclear perceptions, which themselves shift constantly. Soros had arrived at a conclusion that was at odds with the efficient-market view. Academic finance assumes, as a starting point, that rational investors can arrive at an objective valuation of a stock and that when all information is priced in, the market can be said to have attained an efficient equilibrium. To a disciple of Popper, this premise ignored the most elementary limits to cognition.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“The great thing about alpha was that it could be explained:”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“Edward Crosby Johnson II, who in the 1950s established Fidelity as a dominant investment firm and made the same point in his own way: “The market is like a beautiful woman—endlessly fascinating, endlessly complex, always changing, always mystifying. I have been absorbed and immersed since 1924 and I know this is no science. It is an art…. It is personal intuition.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“Jones was like a boy atop a mountain after a fresh snowfall; if a great mass of powder was ready to tumble down the slope, he could throw a well-aimed stone and set off an avalanche of money. Of course, as Jones insisted, he could no more move a market against fundamental economic forces than a boy on a mountain can cause snow to fall uphill. But the ability to start an avalanche is a formidable thing. If he could judge a market’s potential for a move, Jones could set off a chain reaction at a time of his choosing—and be the first to win from it.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“In an investment note written in 1970, Soros explained the workings of real-estate investment trusts in explicitly reflexive terms. “The conventional method of security analysis is to try to predict the future course of earnings,” he began; but in the case of these investment trusts, future earnings would themselves depend on investors’ perceptions about them. If investors were bullish, they would pay a premium for a share in a successful trust, injecting it with cheap capital. The cheap capital would boost earnings, which would in turn reinforce the appearance of success, persuading other investors to buy into the trust at an even greater premium. The trick, Soros insisted, was to focus neither on the course of earnings nor on the psychology that drove investors’ appetite. Rather, Soros homed in on the feedback loop between the two, predicting that each would drive the other forward until the trusts were so completely overvalued that a crash was inevitable. Sure enough, the real-estate investment trusts followed the boom-bust sequence that Soros expected. His fund made a fortune as they went up and another as they crashed downward.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“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.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“By contrast, hedge funds made it through the mayhem without receiving any direct taxpayer assistance: There is no precedent that says that the government stands behind them.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“If the Fed had curbed leverage and raised interest rates in the mid 2000s, there would have been less craziness up and down the chain. American households would not have increased their borrowing from 66 percent of GDP in 1997 to 100 percent a decade later. Housing finance companies would not have sold so many mortgages regardless of borrowers’ ability to repay. Fannie Mae and Freddie Mac, the two government-chartered home lenders, would almost certainly not have collapsed into the arms of the government. Banks like Citigroup and broker-dealers like Merrill Lynch would not have gorged so greedily on mortgage-backed securities that ultimately went bad, squandering their capital. The Fed allowed this binge of borrowing because it was focused resolutely on consumer-price inflation, and because it believed it could ignore bubbles safely. The carnage of 2007–2009 demonstrated how wrong that was. Presented with an opportunity to borrow at near zero cost, people borrowed unsustainably.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“Hedge funds built their strategies on short selling, but governments imposed clumsy restrictions on shorting amid the post-Lehman panic.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“In 1994, the Federal Reserve announced a tiny one-quarter-of-a-percentage-point rise in short-term interest rates, and the bond market went into a mad spin; leveraged hedge funds had been wrong-footed by the move, and they began dumping positions furiously.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“Let specialists obsess about minutiae. Soros’s motto was “Invest first, investigate later.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“Because they mark all their assets to market and live in constant fear of margin calls from their brokers, hedge funds generally monitor risk better and recognize setbacks faster than rivals:”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“In the first weeks of October, Citadel fought a two-front war against these enemies. It jettisoned assets that were not part of its main strategies, thus raising capital without telegraphing its distress too obviously.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“One hedge fund had imploded, threatening to start a systemic fire. Another hedge fund had swooped in, acting as the fireman.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“Small companies may excel at generating ideas, but big companies excel at implementation.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite

“The firm found it could charge clients almost anything it pleased: It billed them for expenses amounting to more than 5 percent of their capital before slapping on the 20 percent performance fee.”
― Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite