Who is the author of More Money Than God?

The author of More Money Than God is Sebastian Mallaby.

Money & Investments

More Money Than God Book Summary - More Money Than God Book explained in key points

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More Money Than God summary

Name: More Money Than God
Rating: 4.2 (103 reviews)
Author: Sebastian Mallaby

Sebastian Mallaby

Hedge Funds and the Making of a New Elite

4.2 (103 ratings)

20 mins

Brief summary

'More Money Than God' by Sebastian Mallaby is a detailed account of the rise of hedge funds and their impact on the global economy. It traces the history of the industry and provides insights into the strategies and personalities of the most successful funds.

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Investments Personal Finances

Table of Contents

More Money Than God
Summary of 9 key ideas

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Key idea 1 of 9

What’s in it for me? Learn key investment strategies from the most successful hedge funds in history.

Hedge funds tend to stay out of the financial spotlight, because their success usually relies on finding an unexploited niche in the financial market. Throughout history, the most successful hedge funds were able to develop new approaches to investing before their contemporary rivals could even understand them. In these blinks, those secrets will be revealed, giving you key insights into how and when to bet big.

In the following blinks, you’ll also discover

How one investor made $30 million in eight minutes;
How a small hedge fund can reverse the economic fortunes of a nation of 240 million people; and
Why, unlike investment banks, hedge funds never need a taxpayer bailout.

Hedge funds take a mixed approach to financial investing, which can include capitalizing on overvalued stocks.

You’ve probably heard the term hedge fund before. What does it mean and how do hedge funds actually work?

In 1949, A. W. Jones founded the first “hedged fund,” as it was called at the time. Since then, hedge funds have become major financial institutions.

Today, the vast majority of hedge funds closely follow Jones’ initial model, which took a mixed approach to stock market trading.

Here’s what that means: Like other investors, hedge fund managers buy long – selecting stocks in promising companies and hoping the values increase, thus earning a profit.

But what makes hedge funds special is that they also buy shares with the hope that the stocks' values will decrease. This practice is called selling short and it entails borrowing stocks in less promising companies, selling them, and buying them back as soon as the price falls.

For example, let’s say you think a certain company is overvalued. So you call a broker and ask him to lend you 50 stocks from that company, which you then sell for $2 apiece. Now you’re “short” 50 stocks. Luckily, the following week, shares from the company fall to $1, so you buy up 50 and give them back to the person who lent them to you. In the end, you earned a $50 profit from the exchange.

Essentially, the people who run hedge funds understand the market deeply: They know how to buy long and sell short to maximize profits, but often they have little capital. So they find investors to lend them large sums, which allows the hedge fund to invest on a massive scale. This is how they earn money.

And although they often invest other people’s money, hedge fund managers actually keep a portion of the profits they earn as a performance fee, which motivates them to trade successfully.

Although hedge funds involve an element of gambling, they actually tend to be risk averse.

Are you concerned that hedge funds have a little too much in common with poker? How do these guys know, you might be wondering, whether stocks will rise or fall? How can they be so sure that they won’t lose all their money on a bad bet?

Of course, all stock trading involves an element of gambling, since no one can ever fully predict the outcome of a trade. But hedge fund portfolios are diversified, which means they aren’t actually very risky for investors. Traders assemble diverse portfolios by buying “long” and selling “short,” a strategy that protects against market swings.

Steinhardt, Fine & Berkowitz was the first hedge fund to invest on a massive scale, with astounding success.

After A. W. Jones famously struck gold with his “hedged fund” in 1949, others followed suit. And one especially notable early hedge fund was Steinhardt, Fine & Berkowitz.

Although founders Michael Steinhardt, Jerrold Fine and Howard Berkowitz mostly followed Jones’ original model, they were the first to do it on a massive scale – which meant that they earned more profits than anyone had before.

Commodities Corporation conducted deep data analysis to anticipate market changes.

Commodities Corporation was another giant in hedge fund history. The firm, which was founded in the early 1970s, further improved upon A. W. Jones’s original method.

It did this by conducting deep analyses to foresee market changes. The company’s president, F. Helmut Weymar, was a scientist at heart, so it’s no surprise that he took a scientific approach to finance.

George Soros made hedge fund history by betting on currencies.

Meet the hero of the next chapter in the history of hedge funds: Quantum, a firm started by George Soros in 1973 (though initially under a different name).

Quantum achieved its big successes a decade later, in the 1980s, at a time when currency seemed to be stable. It was a period of economic equilibrium, and the dollar in particular was thought to be safe from speculations and crashes.

Tiger developed a method for picking the very best stocks.

The year 1980 saw the birth of another influential hedge fund firm, Tiger, founded by Julian Hart Robertson.

Tiger was started at a time when most traders didn’t actually care that much about stocks. Today, most people understand that when you’re trading on the stock market, it helps to have insight into which stocks are likely to become more valuable.

Farallon built a sterling reputation by holding traders accountable for losses.

Another important firm was immortalized in hedge fund history: Farallon, founded by Tom Steyer in 1985.

Farallon’s main contribution to hedge fund practices was to make traders accountable for losses. Before the firm came along, traders were primarily motivated by performance fees, but these could have a negative effect on a hedge fund’s overall profits.

When an international crisis occurs, a hedge fund can either play hero or villain.

In today’s United States, you don’t have to be a politician to get into politics, you just need massive influence – which most hedge funds can definitely claim.

Why are they so influential? Well, hedge funds have the power to invest enormous amounts of money fast, and that can devastate an entire country’s economy.

Although hedge funds do pose a threat to the economy, they never become “too big to fail.”

Since hedge funds pose an enormous threat to governments and economies all around the world, you might be asking yourself why we allow them to exist at all.

It’s worth remembering that financial risk is inherent to all kinds of institutions, not just hedge funds. And like any other firm or organization, hedge funds take various different forms: Some are nice guys, and others are vicious, but neither type characterizes the whole industry.

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What is More Money Than God about?

More Money Than God takes a critical look at hedge funds, the powerful and often mysterious organizations that have a huge impact on global finance and our day-to-day lives. By looking back at the history of this influential investment practice, it reveals how hedge funds developed and how they operate today.

More Money Than God Review

More Money Than God (2010) is an intriguing exploration of the rise of hedge funds and their impact on the global financial industry. Here's why this book is worth reading:

With its in-depth research and insightful analysis, it provides a comprehensive understanding of the hedge fund industry and its role in shaping markets.
The book offers compelling stories of legendary hedge fund managers, revealing their unique investment strategies and the risks they took to achieve success.
Through its examination of market crashes and regulatory challenges, More Money Than God highlights the complexities and controversies surrounding hedge funds, making it a thought-provoking and informative read.

Best quote from More Money Than God

Fact: Hedge funds usually borrow only once or twice the amount of money they already have.

—Sebastian Mallaby

Who should read More Money Than God?

Students of economics and history
Anyone who’s working in the financial industry
Anyone who wants to understand hedge funds and financial markets

About the Author

Sebastian Mallaby is an editor at the Financial Times and the Paul Volcker Senior Fellow in International Economics at the Council on Foreign Relations.

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