It's a pleasure to say it: "House" is a worthy successor to Jack Schwager's "Market Wizards" series. Having first read it a few years ago, it's a shame I'm only just getting off my duff to review it now - in October 2008 - after so much has happened.

As of this writing, Wall Street as we know it has "ceased to exist" (according to the WSJ). The investment banking model has gone up in smoke. More than one featured player in "House" - like Dwight Anderson's Ospraie fund for example - has violently gone the way of the dodo. No doubt at least one or two more will be carried out in the ongoing carnage that has brought about the worst year for stocks (and perhaps commodities too) ever. Ever!

Needless to say, I greatly anticipate Drobny's updated and appended version (due out Jan 2009)...

Awe inspiring turmoil aside, it's a great book. And with the financial crisis sucking Wall Street into the vortex, it is perhaps instructive to note how the big hedge fund players have seemingly split into two camps.

On the one hand you have those like Ospraie, who were too exposed to commodities, or illiquid capital commitments, or maybe just leverage in general, to survive. On the other hand you have the big players like Farallon and Perry Capital (neither mentioned in "House") where little leverage is used at all. While the now defunct houses of Lehman and Bear thought nothing of taking on risks that would make a gun-slinging futures trader blanch, the best of the hedge fund survivors played it very close to the vest.

When the 2008 smoke clears - and the fires are still billowing at this point - the nearly $2 trillion hedge fund industry will look a lot different (and a lot smaller). But I imagine the bloodletting will work to the advantage of the survivors... the players who truly internalize the lessons in "House," as opposed to merely paying lip service to them.

There is another subtle yet marked division that stands out to me among "House" participants: those who cut their teeth on the equity side, and those who cut their teeth on the futures side.

The equity players, not to put too fine a point on it, are (or at least were) generally more fast and loose with risk. They seemed altogether more likely to double down on bets going against them, and to congratulate themselves on doing so. This was freshly highlighted for me in the Dwight Anderson interview (which I reread closely for "clues" after the widely reported Ospraie meltdown).

Anderson did not radiate feverish waves of self-destructive tendency (as, say, Victor Niederhoffer did in "Education of a Speculator"). And yet, in talking about his training, Anderson favorably references an ingrained habit of his mentor, Julian Robertson: the willingness to "ignore" price action, obtusely so if need be, and to get aggressively "bigger" when one feels one is right.

Anderson then references Paul Tudor Jones' mentality as a path not taken for Ospraie -- managing risk tightly via "technicals," something Robertson and cubs (Anderson included) chose not to do. Is it a truly big surprise, then, that Robertson's Tiger fund ultimately went under -- Anderson's too -- while PTJ is still around?

The lessons in "House of Money" are rich and varied. If you are a trader or an aspiring fund manager, you will surely get some excellent ideas from this book... or at least be reminded of some key principles worth reconsidering.

For me, the sad fate of Anderson (and others) serves as a clarion call warning against hubris. I have deep respect for fundamental traders, and a personal affinity for the virtues of value investing. And yet, perhaps befitting my early trading background, I ultimately prefer to "manage risk by technicals" as Jones does.

At the end of the day, it's an odds game in which information is never perfect. As with poker, you can be 80 - 90% sure, but you are very rarely 100% sure. So why not hedge? Why take on risk you don't have to? I cannot help but think that some traders (a small handful) have some mysterious and ineffable connection with risk deep down in their souls. This theory argues that the true "lovers of risk" also have the deepest respect for what risk can do.

Every one of the participants interviewed by Drobny is brilliant, no doubt excellent in their own way. In that they are like soldiers sent out to battle, or grizzled poker pros making their way through a giant tournament. Some will rise and fall on the sweep of serendipity alone... the panic of 2008, in particular, will slay virtuous and wicked alike. It doesn't make sense to lament this, though; the sweep of fate is just part of the deal. Fortuna will not be denied; excellence and dedication gets you a ticket to the dance, but it in no way guarantees a share of the prize.

Those who wish to compete on talent and drive alone are no doubt put off by the fickleness of fate... as are those who got lucky early in life (right parents, right schools etc.) and want to freeze the status quo in place.

But I take comfort in Fortuna's whims for a reason that might seem odd to some: She makes sure that the top spots are never permanently filled, and that hungry fighters always have a chance. There are always new stars rising as old ones fall from the firmament. (And sometimes, instead of falling, the "old" stars happily retire to their memoirs and their gardens.)

And finally, the enthusiasm and diverse ideas in "House" reminded me of one more key truth in regard to markets, trading and investing: It's a truly beautiful game -- one worth playing for its own sake, even in light of horror shows like late 2008. Those who love to play for the sake of the game itself will find day-to-day reward in that, above and beyond the millions won or lost.

Bought this book to learn more about hedge funds.

The books looks into the thoughts and investment process of the great investors.

It is a good read and I highly suggest reading it.

I liked how Keynes, the great economist, made good money. Also, Jim Rogers making a fortune (he is an economist too).

Now there are more resources about hedge funds online including blogs and podcasts.

Still it is a nice read. I suggest reading the book with googling the investor.

You will learn far more doing so.

I love to have extended conversations with experts. I feed off their enthusiasm and expertise. These conversations are even more exciting to me, when the person with whom I am speaking is an expert in a field I love.

With only one lowly exception, Steven Drobny has written a winner for me. By interviewing as assembling the edited transcripts of his conversations in his book, Inside the House of Money, Drobny opened a gateway into the thinking and experiences of 13 successful Global Macro investors.

Although many have the reputations as being secretive and reluctant to discuss their market approaches, the author gives the reader a glimpse of the thinking that goes into placing a multi-million trade on currencies, economies and securities.

Drobny is uniquely qualified to do these interviews. As a partner in an international macroeconomic research and advisory firm, he brings a seasoned professional's insight to the interviews. Key historical events that shaped the experiences of these traders are explored. Nuances of the current crowded markets are discussed intelligently. As a result, the reader gains precious insights into the subtleties of running a Global Macro Hedge Fund.

There is only one problem with the book. I found myself wanting more from the interviewees. Drobny gave me access to people with whom I would never have the opportunity to speak. What I read was great, but I wanted more. But then again, I trade like that.

MY RATING SYSTEM:

* - if you have to chose between torture and reading this book, then you might want to consider reading the book - although it depends on just how severe the torture would be.

** - if you've lost your job and have quite a bit of free time on your hands, and don't have anything else better to do, then you might want to consider reading this book; don't expect to learn much or really be entertained. It will however, help you pass the time until your death.

*** - meh...I'm indifferent. Reading this book will not alter your life in any significant way, yet it is not so horrendously dreadful that your taking the time to read it will be a complete waste of time.

**** - Good book to great book zone here. You should probably read this book if you have some spare time. This book could be interesting, entertaining, or informative.

***** - Outstanding book! Make time to read this book - you'll learn or be entertained or intrigued. The book might even be good enough to provide original or helpful insights into the world that we live in.

REVIEW:

Overall, while I found Inside the House of Money to be, at times, an interesting and engaging read, I did find that my perception of the value or interest of each of the interviews varied greatly throughout the book. I have not read the Market Wizards series or any of the other trader interview books that some other reviewers have mentioned as being superior to this book, so I can't really compare.

For me, the highlight of the book was quite likely the interview with Jim Leitner, with the interviews with Jim Rogers, Dwight Anderson and Scott Bessent also catching my interest. These interviews seemed to be more transparent in their discussions, more accessible, and more thought provoking than some of the others.

Generally, each of the interviews tends to hit on a few main areas: (a) how their careers developed and how they got into the industry; (b) that their main strategy is and some examples of good and bad trades they made; (c) some discussion of how they obtain/analyze information; (d) risk management/portfolio construction; (e) general views on the markets and areas they like/don't like; and (f) their thoughts on global macro as a strategy. There are a variety of different perspectives presented throughout the book, and while a couple of the interviews contained some basic technical finance lingo, most of the interviews should be easily understandable by readers with an understanding of economics and financial markets. Where is jargon, the author does a good job on including explanation boxes that clarify key terms and events to provide the reader with some background that helps clarify or put the interviewee's comments in context.

One of the interesting things that I picked up throughout the book is that there are a variety of different styles and techniques that are employed by these traders, and all are able to employ them in a way that achieves success. For example, some of the traders get research from investment banking research and sales groups while others avoid it. Some traders like to take vacations to clear their heads, others don't. Some traders find it valuable to visit the markets they are considering investing in, others find that doing so might make you more subject to making decisions based on anecdotal evidence.

I also enjoyed a couple tidbits that I picked up along the way. One trader mentioned the idea that being right at the wrong time is still being wrong. Also, the discussions of cost/benefit of managing money for others once you've established your skills and have accumulated enough of your own capital that you can trade for your own account.

In conclusion, I found the book interesting, but not captivating. I would have liked to have had more consistency in interview quality (some of the interviews didn't really seem to be that thought provoking or communicate that much of value to me). A decent read, but I'll take a look at some of the other trader books before I consider increasing my rating.

To anyone who sees the description of this book and dismisses it out of hand due to the seemingly esoteric strategy that is global macro, I have this to say: Don't. Whether your investment strategy involves US stocks, grain futures, risk arbitrage, currencies, plain vanilla bonds, or anything in between, global macro events and strategies affect your returns sometimes in very subtle ways that would seem nonsensical. What happens in Asian debt or Russian commodities has a huge effect on US stocks. No single market (e.g., US stocks or UK bonds) is an island, and it's important for anyone involved in the markets (which includes everyone investing directly or via a retirement account) to know how the financial world really works.

Drobny has really done a great job getting these secretive managers to open up and discuss their strategies and views. I felt as though I was sitting in each interviewee's office having a series of conversations with friends, which made for a very pleasurable read. I've already read a couple of the interviews twice.

Bottom line: great book; highly entertaining; extremely educational; and now sitting on the top shelf of my book case (which is reserved for my favorite investing books) next to such classics as "Market Wizards" and "Reminiscences of a Stock Operator."

The preponderance of enthusiastic reviews for this book is very surprising to me. Frankly, I thought there were two chapters in the entire book that provided any type of meaningful insight - the pieces on Jim Leitner and Scott Bessent are really quite excellent - the jim rogers piece is also entertaining as always. The piece on Leitner may make the entire book worth buying. Otherwise, I think Drobny has assembled a collection of pretty dull and not particularly inspired commentary on the markets and trading from a group of investors of inconsistent quality.

Frankly, the number of positive reviews on the book and the fairly cookie cutter nature of many of them makes me awfully suspicious - I'm giving it 1 star to try to even this out a little (probably deserves a 3). This book isn't bad, but it's far from excellent, and clearly inferior to other books in the genre.

If you've read any of the Market Wizards or Money Masters books and have thought about investing in any level of depth, I think you will find this book pretty dissapointing. Mkt Wizards and Money Masters are drastically superior to this collection both in terms of the quality of the insight and commentary and the quality of investors surveyed.

Drobny provides a broad overview of global macro investing through these diverse interviews of participants. Their diverse time frames (daily trades versus multi-year, and everything inbetween) instruments (equities, debt, currencies, domestic, international) and employers (banks, hedge funds, family home offices) demonstrate the breadth that is global macro. The book provides a great introduction to "What is this fuss about global macro investing all about?" as well as various insights into "How's it changing?" and "Is it getting too crowded?"

The market insights are particularly relevant as many of the investors foresaw the 2007 market challenges. The Jim Rogers interview is especially relevant, given his recent resurgence.

Definitely a great overview. Enjoy!

I've read a lot of trading books including the two Market Wizards and this book is right up there. The one difference is that the traders are just not as well known. The results and methods that the traders have are expressed, which is very useful, and the stories are complete. Good job to the author for helping to add some color to the people's lives too. I highly recommend this book to students of trading, it's worth it.

Great format, short chapters on each industry expert. Great real insider insights. Lots of smart and clever thoughts from those who were interviewed

今話題のヘッジ・ファンドについての本です。中身は、理論的にこのテーマにアプローチするというよりは、このビジネスへの参加者への長時間のインタビューがそのまま採録されています。ということで、euromoneyを読むような感覚で気楽に読むことができます。インタビューの中身は、確かに、示唆に飛んだものです。市場に生き残ることが一番の成功の証であるわけで、そういう意味では、このインタビューの相手は、厳しい確率の法則を生き抜いてきた、みな成功者です。このインタビューから明らかになるのは、様々なスタイルをとっているファンドの実像（哲学、ファンド・マネジャーの経歴、過去の失敗例と成功例）ですが、どの程度真実が語られているのかは、知る人ぞ知るといったところでしょう。ただ過去のいくつかの市場のクラッシュ時（ブラック・マンデー、メキシコ・ペソ危機）に、どのようにこれらの人々が対処したかは、オラル・ヒストリーの観点からは、貴重な証言です。このような状況下で、ただただ慌てふためいてポジションのクローズだけを考えていた私のようなものには、ただただ仰ぎ見るだけです。でも歴史の過去は過去でしかないわけで、いくら話を聞いても、それ自体が、読者の参考になるわけではありません。ただいくつかの基本（流動性、オプションの売り、ロスカット）についてはその重要性をもう一度認識させてくれます。しかしこの本のあちこちにちりばめられているケインズの有名な格言（市場の非合理性と投資の期限性の乖離）を超えるものはないようです。

Great product, no complaints

i bought it for a colleague

great book