More Money Than God Hedge Funds and the Making of a New Elite

Author:	Sebastian Mallaby, Director of the Maurice R. Greenberg Center for Geoeconomic Studies and Paul A. Volcker Senior Fellow for International Economics

Publisher:	A CFR Book. Penguin Press

Release Date: June 2010

496 pages
ISBN 978-1594202551
$29.95

Overview

Wealthy, powerful, and potentially dangerous, hedge-fund moguls have become the It Boys of twenty-first-century capitalism. Their weekend mansions are fodder for Vanity Fairphotographers; their potential to cause chaos preoccupied authorities even before the recent financial cataclysm. Based on esteemed financial writer Sebastian Mallaby’s unprecedented access to the industry, including three hundred hours of interviews and binders of internal documents, More Money Than God tells the inside story of hedge funds’ origins in the 1960s and 1970s, their explosive battles with central banks in the 1980s and 1990s, and finally their role in the financial crisis of 2007–2009.

“A wonderful story and an education in finance.”
—Fareed Zakaria

Hedge funds reward risk takers, so they tend to attract larger-than-life personalities. Jim Simons of Renaissance Technologies began life as a code-breaker and mathematician, co-authoring a paper on theoretical geometry that led to breakthroughs in string theory. Ken Griffin of Citadel started out trading convertible bonds from his dorm room at Harvard. Julian Robertson staffed his hedge fund with college athletes half his age, then he flew them to various retreats in the Rockies and raced them up the mountains. Paul Tudor Jones posed for a magazine photograph next to a killer shark and happily declared that a 1929-style crash would be “total rock-and-roll” for him. Michael Steinhardt was capable of reducing underlings to sobs. “All I want to do is kill myself,” one said. “Can I watch?” Steinhardt responded.

“The fullest account we have so far of a too-little-understood business that changed the shape of finance and no doubt will continue to do so.”
—Wall Street Journal

Finance professors have long argued that beating the market is impossible, and yet drawing on insights from mathematics, economics, and psychology, hedge funds have cracked the market’s mysteries and gone on to earn fortunes. Their innovation has transformed the world, spawning new markets in exotic financial instruments and rewriting the rules of capitalism.

“A fascinating history.”
—John Y. Campbell, Department of Economics, Harvard University

More than just a history, More Money Than Godis a window on tomorrow’s financial system. Hedge funds have been left for dead after past financial panics: after the stock market rout of the early 1970s, after the bond market bloodbath of 1994, after the collapse of Long-Term Capital Management in 1998, and yet again after the dot-com crash in 2000. Each time, hedge funds have proved to be survivors, and it would be wrong to bet against them now. Banks such as Citigroup, brokers such as Bear Stearns and Lehman Brothers, home lenders such as Fannie Mae and Freddie Mac, insurers such as AIG, and money market funds run by giants such as Fidelity—all have failed or been bailed out. But the hedge fund industry has survived the test of 2007–2009 far better than its rivals. To a surprising and unrecognized degree, the future of finance lies in the history of hedge funds.