MORE MONEY THAN GOD REVIEW

Alfred Winslow Jones created the first hedge fund a century ago, but the funds did not begin to flourish on Wall Street until the early 1990s when investors George Soros, Julius Robertson and others dazzled the financial world with their market acumen. The key to the success of the hedge funds were their ability to make quick shifts with huge amounts of capital-usually pooled from wealthy investors-in bets on the rise or fall of investments. Its the combination of going long on some funds and short on others or hedging the bets-that gives the fund their name.

In More Money Than God, author Sebastian Mallaby has traced a smart history of t he hedge fund business and has more than explain how finances richest moguls made their loot. He argues that the obsessive, charismatic oddballs of the hedge fund world are Wall Streets future and possibly its salvation. Mallaby shows in more than a dozen interlocking stories, trendbucking bets, the history of hedge funds is a history of the men who were able to spot market opportunities others missed, and who were prepared to gamble a fortune on their convictions.

Mallaby whose thesis was largely based on the money , points out that stand-alone hedge funds didnt cause the most recent financial meltdown and hedge fund model will survive the crisis and thrive in its aftermath . In fact in 2009, the top 25 hedge fund managers earned a collective $25.3 billion, more than they did in the fat years before the crash. Their comeback is a vindication for Mallaby, who did the bulk of his research for this book at a time when many pundits were proclaiming that his subject was dead and gone.

Mallaby skillfully weaves two broader economic themes into his business tales. The first is an indictment of the efficient-market hypothesis, the view that the rational behavior of the investing crowd will keep prices and markets in equilibrium. He reminds that in academia the efficient-market view began to fall out of favor more than two decades ago, after the October 1987 crash. He points out that one of the intellectual iconoclasts leading the charge back then was Lawrence Summers, former director of the White House National Economic Council for President Obama.

The second larger economic story Mallaby tells is of the recurring battle between central bankers, determined to maintain an unrealistic exchange rate for their currency, and the speculators who profit from their folly. He illustrates this best with his account of George Soros and Stan Druckenmillers famous bet against the British pound a familiar tale but one the author recounts with vigor. Mallabys repeated demonstrations that when the market is r ight it has more firepower than any national government should be required reading this summer in Athens, and probably Brussels and Berlin, too.

Many individualist billionaires have outsize characters to match, and they provide Mallaby with some memorable vignettes. When a dejected underling tells Michael Steinhardt, All I want to do is kill myself, the boss asks if he can watch. When a Tiger cub, as the protgs of the legendary Julian Robertson of Tiger Management are known, slips off a rope bridge during a team-building mountain retreat, he proves his mettle by cheerfully bouncing on his harness and almost kills himself. Mallaby even squeezes some juice from Renaissance Technologies, the hugely successful number-crunching fund run by secretive and geeky mathematicians on Long Island: when they use their computers to devise a dinner-party seating plan, their algorithmic effort to divine human chemistry places one investor next to a woman who had sued him for sexual harassment. He has also made a comparison of Goldman Sachss treatment of the failing
hedge fund Long-Term Capital Management to a hyena feeding on a trapped but living antelope.