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Getting Started in Hedge Funds

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Getting Started in Hedge Funds

Wiley,

15 min read
10 take-aways
Text available

What's inside?

Wanted: Serious investors for hedge funds. Cowboys need not apply.

Editorial Rating

7

Qualities

  • Well Structured
  • For Beginners

Recommendation

Author Daniel A. Strachman opens an interesting door on a mechanism for people who have lots of money to make even more (or to drop right back to the middle class). One pleasant feature of this well-edited book is that definitions appear next to otherwise incomprehensible jargon. As suggested by the practical format, this is part of the publisher’s "getting started" series, which includes such topics as mutual funds, securities, options and 401(K) investments. However, it seems as if the "getting started" nature of the book kept Strachman from going into all the behind-the-scenes details that were probably available to him. The book includes profiles of leading hedge fund managers, investment explanations and interesting case histories. At times Strachman sounds a bit too enamored of the industry he covers, but with that grain of salt getabstract.com suggests this excellent volume to anyone interested in understanding the hedge fund industry or investing in it. Just don’t bet the rent.

Summary

Hedging Your Bet

Not long ago a new financial gunslinger pushed open the swinging doors of the securities markets and marched forward, spurs a-jingling, to announce his presence to the Wall Street community. This was the cowboy image of the hedge fund manager. With its million-dollar clientele and its relatively daring approach to making capital grow, the hedge fund became Wall Street’s new, irresistible suitor.

But in late 1998, the romance subsided as a currency crisis spread from Asia to Russia, and then infected Europe. By mid-July, it swept ashore in the United States. The Soros organization, a flagship investment fund, lost more than $2 billion in its Russian investments. Hedge fund investors started to ask, "How do I get my money out of hedge funds, and do I have any left?" The bailout of one firm, Long Term Capital Management, made headlines in The Wall Street Journal and The New York Times. Such events focused attention on the little-understood nature of the hedge fund, which remains an important investment vehicle.

Hedge Fund Basics

A hedge fund has the following characteristics:

  • It is a limited partnership or a limited liability...

About the Author

Daniel A. Strachman  is that most interesting of hybrids, a journalist turned financier. He is vice president of product development at a New York-based money management firm. Before moving to Wall Street, he was a financial journalist and columnist. He writes extensively on hedge funds, commercial banking and trading technology.

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