Hedgehogging

I started reading the book expecting to find something interesting about the "hedge fund industry background". I found not only interesting background information, but I found exceptionally crafted gems of writing. This book reminded me at times of "Reminiscences of a stock operator". It is a personal story, the author stays with you and you see the world through his eyes, and you cannot escape the tendency of agreeing with him. He is so elegant, so clear, and funny, sophisticated and yet clutter free, that you cannot not like the writing. Sometimes he strikes an emotional chord in you, touching on a certain memory or thought you had sometimes in time of anguish or reflexion. For instance, he is describing the experience of a marathon conference: "I felt estranged and disoriented. [...]. I drank chardonnay and had desultory snatches of conversation with restless people who seemed to have the attention span of hummingbirds as their eyes darted around the crowd. Not knowing anyone and not being an extrovert, to say the least, I found hard to hustle." Nice, isn't it? Investment is tough, and the drama is not the money but what the investor goes through to find the elusive success. You will find in this book many portraits and personal stories of people working in this business. This is how Barton Biggs talk about an idea or subject. He introduces a friend or an acquaintance and follows with a story. The style is great and there is always a lesson to learn. Talking about style, he describes character X: "The face was good - strong, sturdy features arranged honestly - but the eyes had been shot away a long time ago and now there was nobody home a lot of the time". Beautiful portrait, don't you agree? The book is described as an informative background on the hedge fund industry. This is true, but the background is made out of many human stories, that unravel around professional themes, always followed or preceded by insightful observations. I learned a lot about hedge fund industry almost without noticing it. You get to see that behind the huge numbers, these people struggle to make profits consistently and retain their clients. There is no mercy in that space. And that is not because someone is greedy or mean or weak. It is just the way it is. I liked the brief incursions in investment in various asset classes, particularly gold. I liked the analysis of various styles of investing (value versus growth one of the most instructive, I thought). You will find inspiring ideas in the book, no matter what your background is. The book is BS free; Barton Biggs is not advertising anything, not even his won hedge fund. The book is great and it has juicy intellectual ideas in it. I had a distinct feeling that he liked writing it, but because of time constraints and daily pressures he could not have an equal rhythm throughout the writing. The last chapter is dedicated to John Maynard Keynes. The style is so different, and although I believe he has a lot

If you own stocks, love stocks, must have stocks, than this is the book for you. Barton Biggs has spent his entire life in the markets and has influenced some of the biggest names in the business. He's forgotten more than most of the premiere hedge fund managers operating today will ever know. I know because I know this business. Having spent 35 years in the industry, and I still love it every day, I have nothing but respect and admiration for this man who spent most of his career at Morgan Stanley. He was actually the lead man in putting together the Morgan Stanley research department. This is a major feat by itself. By whatever matrix you want to compare this man, you will find him on every winner's list. I have run into him at several conferences, and I have never failed to be impressed by his massive intellect, which can focus like a laser on individual stocks, sectors, commodities or equities, and a whole array of economic issues. He is a first rate thinker, and a first rate analyst. He's just basically smarter than his peers, and he has decades of experience to couple that brainpower with. In this book you have the opportunity to take in about 300 pages of pure wisdom. How else are you going to be able to do this, and from who? Every couple of years I try to retool. It helps me remain humble. This can be done in a number of ways. You can take a stack of books like this one, tuck them under your arm and get away to a retreat or a beach somewhere, and just start taking in the knowledge, and try to integrate it. Back at the height of the Internet Boom when I couldn't understand the valuations being given to hundreds of companies with no earnings, I decided to retool. It wasn't that I just couldn't understand the lack of earnings. I couldn't even find companies that had a hint of an earnings stream. It was suppose to be the new economy. The old methods of valuation were thrown out the window. If you didn't conform, you were mocked, antiquated, a dinosaur. One of the so-called dotcoms we looked at had a valuation greater than the combined valuations of 10 massive, old-line industrial companies that we followed and respected. I ran up to Harvard, which I have done a number of times to see what the academics were thinking. I sat in a classroom with a brilliant professor, who then began to pontificate on why this specific dotcom was worth the price the stock was selling at. I looked at him, and instantly knew he OWNED THE STOCK. Ownership is always a surefire basis for BIAS. Now when you read Barton Biggs' Hedgehogging, you will understand precisely the emotional mechanisms that the professor in question suffered from. Biggs covers it on page 29 of his book. It's called Confirmatory Bias. This is the tendency to collect all the information that agrees with your position, and to ignore the information that doesn't. He even tells you how to fight off Confirmatory Bias, which is something the Professor in question never thought of, or

After 30 years as an manager and researcher with Morgan Stanlety, and 3 or 4 years as a "hedgehog" (a hedge fund manager), Barton Biggs gives us this entertaining memoir of his professional life. Mostly consists of chapters profiling leading investment figures under fictional names. Really interesting to see how even the hottest, smartest, and most driven investors come to grief on a consistent basis; that includes the author himself, who confesses here to some of his mistakes such as shorting oil when it kept going up. Lots of sleepless nights and anxiety in the business, although apparently even the no-talent hacks can make at least 150K a year, and many of the more talented are billionaires. Many of the hotshots in the professional investing world sound like narcissistic cranks in Biggs' description, but entertaining cranks to read about. Like Lefevre's classic REMINISCENCES OF A STOCK OPERATOR, this is mainly interesting for its insights into the psychology of trading. In terms of practical knowledge, the main lesson here is "you're on your own." Even the smartest professionals consistently blow it. There are no magic formulas except knowledge, experience, and intelligence.

I have run a hedge fund for over 20 years. There is no book like Hedgehogging, ever, that has captured the pain, pleasure, hubris, foibles and ego of folks who run money. Running a hedge fund is a life and death battle everyday. There might be a thin veneer of "we are all in this together." But when the bell rings, ultimately, you are on your own. It is your decisions that determine whether you survive. In one way or another, it is the same for everyone in markets and life. Barton has put over 40 years of investment experience into a very amusing and readable book. He brings to life the characters in a brutally honest way. Hedgehogging reminds us that markets are comprised of PEOPLE for all the good and bad. Whether a novice or professional, there is a lot here that will help folks learn about what really happens in markets and how to deal with them. Hedgehogging gives one insights into the psychological and behavioral aspects of all investors. Barton captures the all of this. After all, Hedgehoggers are just like everyone, only moreso. Everyone will recognize some part of themselves or folks they know in this terrific book. This is not a formula. There is no such thing. Barton makes clear that even for the best, everyone makes many errors. Hegdehogging will save people a lot of "tuition" as they learn about markets, investing and themselves from Barton and his cast of characters. This is must reading for anyone who is in markets or is contemplating it.

I previously worked in the hedge-fund industry and now teach college students about finance. Therefore, I found Barton Biggs' anecdotes both instructive and amusing, having seen some of the poor lifestyle choices that some hedge fund managers ("hedgehogs", according to Byron) make. However, the book's strength is not an "inside look" into the world of hedgehogs, but a series of instructive vignettes about how to be an "investor". According to Biggs, a true investor sees one step ahead, while the rest of us are responding to the "now". The true investor pays a high price for this insight. A true investor makes mistakes, is inevitably early, has doubts, lives in a lonely world, and is abandoned at precisely the wrong time by his most loyal investors. Sleepless nights, grinding teeth, and poor digestion are just part of the price paid. (I certainly can attest to this, though I would never claim to be a true investor. I guess that I am just a "journeyman".) The goal of people with money to invest is to find these true investors, give them their money, watch them closely, and stick with them through thick and thin. One must constantly watch, though, for the weaknesses that often come with success. In the first half of the book, Byron provides many instructive stories, centered on his town of Greenwich, of successful hedgehogs who let their money determine their lifestyles. Inevitably, pride comes before the fall, destroying both lifestyles and businesses. I strongly recommend this book, not as an investment guide, but as an "investor guide" -- a guide on how to be a successful investor or how to find successful investors to work for you. This book fills an critical hole in my library. Addendum January 8, 2006: I've spoken to a few friends in the business who are quite angry about the passages in the book concerning the Breakers meeting that is sponsored by Morgan Stanley. I, too, felt that Biggs' comments were unwarranted, but they did not detract from the book for me. There are many in the hedge fund community who feel that Biggs owes them an apology. I agree.