Diary of a Very Bad Year: Confessions of an Anonymous Hedge Fund Manager

Perhaps the best thing about this long interview with the anonymous hedge fund manager (I am convinced he exists and is not a made-up composite) is that it gives the reader "tone" about what happens to an industry in a crisis scenario (sub-prime crisis). It can be a little frustrating at times, from a English language perspective, to read the extended interview with very little editing (the only reason for witholding a star). However, once you make allowances for that, you realise that you are hearing unfiltered thoughts and initial reactions to questions that give so much more "feel' for what it's like to actually be a hedge fund manager than a more academic and edited book could ever convey.There are some particularly valuable conversations that illustrate, through examples, the risk magnification from instruments that become illiquid combined with leverage. In a panic, the interviewee points out how contracts (such as for collateral haircuts, or funding commitment period) may not be honored (a law suit will be irrelevant because it will not save the fund in time), how word gets around the market and, together with asset liquidations and investor withdrawal restrictions, causes a rapid, downward spiral.There were also some interesting observations, that you wouldn't necessarily know without being in the industry. One was that, at the time of the Lehman collapse, arbitrage trades unusually existed for which very few players had the capital to be able to take advantage, such as simple covered interest arbitrage (buying a high quality foreign government bond and hedging out the FX exposure, which should produce a return close to U.S. Treasuries). The "basis" (difference between the U.S. Treasury and the hedged foreign government investment) between the two moved out from the usual 2 basis points (2/100ths of 1%) to 20 b.p.s That's something, I'm sure, a better-capitalized bank like JPMorgan Chase was able to use to considerable profit advantage.If you have a interest in the day-to-day workings of hedge funds (and bank prime-brokerage), perhaps as a credit officer, a internal audit professional or a regulator, I thoroughly recommend the book. It's a relatively quick read and the anonymous hedge fund manager is a smart and thoughtful person who gives many highly insightful comments.

in the past I read Soros and Buffet books/comments. If you read them, You can see in their books that this is REAL MONEY TALKING. REAL MONEY TALKING is a big difference from some academical think-tanks, Brookings stuff, HARVARD Busines Review with all its student inputs and extracuricullar proffessors!There is a big difference, when MONEY TALKS.Because MONEY and MARKETS is a true mirror of what is REALLY GOING ON. It is the best B.S. DETECTOR. Professors and academia DO NOT day to day place bets at various markets, do not put trades, do not watch CDS curves live as history is being made and do not make or loose millions every day by prooving themselves RIGHT or WRONG. Therefore ACADEMICAL books are academical.But when you want REAL STUFF, when you need REAL ADVICE, you seek views and advice of REAL MARKET PEOPLE who have seen and done it all personally.THis books is equal to best Soros books i read and as wity and funny as some best Buffet articles and comments, but it is even better to some extent. WHY?Firstly, BECAUSE the AUTHOR is anonymous! He has no political, advertising or PR components that are always present in the books written by big and active hedge fund managers or great investors under their real names. (they need to ensure clients stay and also new ones come and this influences and limits their books.) HFM has no such constrains.Secondly, this guy is apparently young and pretty rich person. Usually only loosers or sales people (Michael Lewis) from financials world take their time to write books, when they are young and still working.The real deal people are too busy making money. So we should say thank you to the CRISIS, that it allowed such a YOUNG person as HFM some time to share his reflections on a VERY RECENT events, instead of dedicating all his time to making extra 100,000,000 US Dollars for himself and his former HEDGE FUND!Finally, Anyone planning to invest in any MARKETS must read these two classical books:1. "Where are the customers yachts" (one of Warren Buffet favorite books)2."Letters of Menahem Mendl and Shayne Shendl" by Sholem Alleichem.(It is reccomended to read them BEFORE you LOOSE most of your money, and not AFTER)

A good read. Real insight into the 2008 financial crises. Probably only applicable to those interested in finance

Having read hype on this- I was quite keen to read it so snapped it up here- in the end it turned out to be poor decision and waste of my time- for anyone working in Finance I would not recommend this as it has little in way of meaningful insights and has lot of very very basic back and forth - maybe more readable for a non-finance person

Great book! Really enjoyed it!

I read the articles that were pulled together for this book (originally published in n+1, a literary magazine out of New York), but they're even more compelling put in sequence and updated. The HFM is a friend or relative of the interviewer, who knew nothing about the financial sector, so the explanations are really well-pitched for a non-expert, but funny and personal. The one thing I would advise is to skip the introduction, which tries to tell you how much to like the HFM, and make your own decision on that.