The best hedge fund books

7 authors have picked their favorite books about hedge funds and why they recommend each book.

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When Genius Failed

By Roger Lowenstein,

Book cover of When Genius Failed: The Rise and Fall of Long-Term Capital Management

How financial rocket scientists were bested by financial markets. When Genius Failed is the rise and fall of the giant hedge fund Long-Term Capital Management. Its principals involved the best of Wall Street and two of the inventors of the Nobel-winning option price formula. Famed for its expertise in financial modelling, the firm leveraged its bets to make large returns but only for a while. It became unstuck when Russia defaulted on its debts in the summer of 1998 and was only saved from failure by a Fed bailout, which thereby set a bad precedent for the future: favoured Wall Street firms that take excessive risks could expect to be bailed out at other people’s expense. The LTCM fiasco shows the limits of academic modelling of financial markets, not least because even if the academic modelling is initially correct, it fails to account for the ways in which markets adapt…

When Genius Failed

By Roger Lowenstein,

Why should I read it?

2 authors picked When Genius Failed as one of their favorite books, and they share why you should read it.

What is this book about?

Picking up where Liar's Poker left off (literally, in the bond dealer's desks of Salomon Brothers) the story of Long-Term Capital Management is of a group of elite investors who believed they could beat the market and, like alchemists, create limitless wealth for themselves and their partners.

Founded by John Meriweather, a notoriously confident bond dealer, along with two Nobel prize winners and a floor of Wall Street's brightest and best, Long-Term Captial Management was from the beginning hailed as a new gold standard in investing. It was to be the hedge fund to end all other hedge funds: a…


Who am I?

I am Kevin Dowd, a professor of finance and economics at Durham University. I co-authored Alchemists of Loss with Bear’s Lair journalist and ex-merchant banker Martin Hutchinson. Our book discusses the cause of the Global Financial Crisis. Looking over this and many other historical booms and busts, the point that jumps out at me is that the lesson man draws from history is that man learns nothing from it. For it is the doom of men (and women) that we forget.


I co-wrote...

Alchemists of Loss: How Modern Finance and Government Intervention Crashed the Financial System

By Kevin Dowd, Martin Hutchinson,

Book cover of Alchemists of Loss: How Modern Finance and Government Intervention Crashed the Financial System

What is our book about?

Alchemists of Loss explains how a toxic combination of modern financial theory, counterproductive regulation, a captured financial system, and Keynesian easy money policies brought about the Global Financial Crisis of 2007 to 2010. Modern finance has produced a massive rent extraction machine that allows financiers to exploit everyone else. Meanwhile, financial risk management and financial regulation have revealed themselves to be utterly counterproductive, and post-crisis reforms have done little to solve the underlying problem of poor incentives and excessive risk-taking. “Bracing, sharp, bleakly amusing and profoundly depressing, Alchemists of Loss is a fascinating, smart, often contrarian analysis of how the financial system got into the mess into which it now finds itself – and why none of us are likely to emerge in one piece.” (Andrew Stuttaford, National Review Online)

More Money Than God

By Sebastian Mallaby,

Book cover of More Money Than God: Hedge Funds and the Making of a New Elite

Personally, I am not crazy about the title, but this book is an excellent account of the history of hedge funds. The book is thoroughly researched, very well written, and accurate based on my experience in writing about the same subject matter.

More Money Than God

By Sebastian Mallaby,

Why should I read it?

1 author picked More Money Than God as one of their favorite books, and they share why you should read it.

What is this book about?

The first book of its kind: a fascinating and entertaining examination of hedge funds today Shortlisted for the Financial Times/Goldman Sachs Business Book of the Year Award 'An enormously satisfying book: a gripping chronicle of the cutting edge of the financial markets and a fascinating perspective on what was going on in these shadowy institutions as the crash hit' Observer Wealthy, powerful, and potentially dangerous, hedge-find managers have emerged as the stars of twenty-first century capitalism. Based on unprecedented access to the industry, More Money Than God provides the first authoritative history of hedge funds. This is the inside story…

Who am I?

I am the author of a dozen books about trading, including the iconic Market Wizards series in which I interviewed many of the world’s best traders during the past thirty-plus years. My books have been translated into over 20 languages and cumulatively have sold millions of copies worldwide. My career also includes over 20 years as a research director for some of Wall Street’s leading firms, 10 years as a partner in a hedge fund advisory firm, and most recently the co-founder of a fintech startup (fundseeder.com).


I wrote...

Unknown Market Wizards: The Best Traders You've Never Heard Of

By Jack D. Schwager,

Book cover of Unknown Market Wizards: The Best Traders You've Never Heard Of

What is my book about?

Unknown Market Wizards continues in the three-decade tradition of the hugely popular Market Wizards series, interviewing exceptionally successful traders to learn how they achieved their extraordinary performance results. The twist in Unknown Market Wizards is that the featured traders are individuals trading their own accounts. They are unknown to the investment world. Despite their anonymity, these traders have achieved performance records that rival, if not surpass, the best professional managers.

Hedge Hogs

By Barbara T. Dreyfuss,

Book cover of Hedge Hogs: The Cowboy Traders Behind Wall Street's Largest Hedge Fund Disaster

As opposed to another “teach me how to trade” book, Hedge Hogs is the entertaining cautionary tale of Brian Hunter and his failure to manage risk at Amaranth (one of the largest commodity trading hedge funds until its demise in 2006). The book also showcases the trader that was “generally” on the other side of Amaranth’s bullish bets in natural gas, John Arnold of Centaurus Capital. Although this book won’t help you develop the casino paradigm as a speculator, it teaches valuable lessons of modelling for liquidity risk as well as not allowing a single opinion (namely, that natural gas would go up in 2006) to bankrupt you.

Hedge Hogs

By Barbara T. Dreyfuss,

Why should I read it?

1 author picked Hedge Hogs as one of their favorite books, and they share why you should read it.

What is this book about?

For readers of The Smartest Guys in the Room and When Genius Failed, the definitive take on Brian Hunter, John Arnold, Amaranth Advisors, and the largest hedge fund collapse in history

At its peak, hedge fund Amaranth Advisors LLC had more than $9 billion in assets. A few weeks later, it completely collapsed. The disaster was largely triggered by one man: thirty-two-year-old hotshot trader Brian Hunter. His high-risk bets on natural gas prices bankrupted his firm and destroyed his career, while John Arnold, his rival at competitor fund Centaurus, emerged as the highest-paid trader on Wall Street. Meticulously researched and…

Who am I?

Richard L. Weissman is one of the world’s foremost authorities and thought leaders in the fields of derivatives, risk management and technical analysis. He is the author of two books: Mechanical Trading Systems: Pairing Trader Psychology with Technical Analysis (Wiley, 2004) and Trade Like a Casino: Find Your Edge, Manage Risk and Win Like the House (Wiley, 2011) which was a finalist for the 2012 Technical Analyst Book of the Year Award. Mr. Weissman has over thirty years experience as a derivatives trader and has provided training and consultation services to traders and risk managers at investment banks, hedge funds, energy, and agricultural companies for over twenty years. 


I wrote...

Trade Like a Casino

By Richard L. Weissman,

Book cover of Trade Like a Casino

What is my book about?

A detailed look at the common characteristics found in most successful traders While there are a variety of approaches to trading in the financial markets, profitable traders tend to share similar underlying characteristics. Most have a methodology that they believe will prove profitable over the long run and are willing to endure short-term setbacks. If you're looking to make the most of your time in today's markets, you need to understand what separates the best from the rest. And with Trade Like a Casino, you'll gain the knowledge needed to excel at this challenging endeavor.

No One Would Listen

By Harry Markopolos,

Book cover of No One Would Listen: A True Financial Thriller

I found this book absolutely thrilling as a real-life story of one of the biggest bullshit busts in history. Bernie Madoff’s Ponzi scheme ran for almost 18 years without much concern or investigation by the U.S. Securities and Exchange Commission (SEC). But, Harry Markopolos, a little-known number cruncher from a Boston equity derivatives firm, was onto Madoff after looking at Madoff’s financial records, several years before the bust made headlines. Page by page, Markopolos details his pursuit of the greatest financial criminal in history, and reveals the massive fraud, governmental incompetence, and criminal collusion that has changed thousands of lives forever-as well as the world’s financial system. All the while, no one, including the SEC, would listen. As such, the book is the quintessential example of how spellbinding bullshit can be. 

No One Would Listen

By Harry Markopolos,

Why should I read it?

1 author picked No One Would Listen as one of their favorite books, and they share why you should read it.

What is this book about?

Harry Markopolos and his team of financial sleuths discuss first-hand how they cracked the Madoff Ponzi scheme No One Would Listen is the thrilling story of how the Harry Markopolos, a little-known number cruncher from a Boston equity derivatives firm, and his investigative team uncovered Bernie Madoff's scam years before it made headlines, and how they desperately tried to warn the government, the industry, and the financial press. Page by page, Markopolos details his pursuit of the greatest financial criminal in history, and reveals the massive fraud, governmental incompetence, and criminal collusion that has changed thousands of lives forever-as well…

Who am I?

As an experimental social psychologist, who has conducted years of empirical research on bullshitting behavior and bullshit detection, I’ve found compelling evidence that the worst outcomes of bullshit communications are false beliefs and bad decisions. I’m convinced that all of our problems, whether they be personal, interpersonal, professional, or societal are either directly or indirectly linked to mindless bullshit reasoning and communication. I’m just sick and tired of incompetent, bullshit artists who capitalize by repackaging and selling what I and other experimental psychologists do for free. It’s time the masses learn that some of us who actually do the research on the things we write about can actually do it better.    


I wrote...

The Life-Changing Science of Detecting Bullshit

By John V. Petrocelli,

Book cover of The Life-Changing Science of Detecting Bullshit

What is my book about?

Bullshit is the foundation of contaminated thinking and bad decisions that leads to health consequences, financial losses, legal consequences, broken relationships, and wasted time and resources. No matter how good we think we are at detecting bullshit, we’re all susceptible to its unwanted effects. While we may brush it off as harmless marketing sales speak, it’s actually much more dangerous. It’s how Bernie Madoff swindled billions of dollars from experienced financial experts with his Ponzi scheme. It’s how Mao Zedong’s Great Leap Forward resulted in the deaths of 36 million people from starvation. 

But with doses of skepticism and commitment to truth seeking, you can build your critical thinking and reasoning skills to evaluate information, separate fact from fiction, and see through bullshitter spin.

A Demon of Our Own Design

By Richard Bookstaber,

Book cover of A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation

I started working at Depository Trust Company in New York in September 1987 – a month later the “Black Monday” stock market crash happened! At the time, it was very difficult to see exactly what caused it. “When you are up to your neck in alligators, it is hard to remember why you drained the swamp!” This book explains how Wall Street banks hatched all those alligator eggs by hiring MIT math-whizz-kids and turning them loose without explaining the simplest thing about the stock market to them. One of the errors in their models was that they did not take bank holidays into account when calculating the time value of stocks and option prices.

A Demon of Our Own Design

By Richard Bookstaber,

Why should I read it?

2 authors picked A Demon of Our Own Design as one of their favorite books, and they share why you should read it.

What is this book about?

Inside markets, innovation, and risk Why do markets keep crashing and why are financial crises greater than ever before? As the risk manager to some of the leading firms on Wall Street-from Morgan Stanley to Salomon and Citigroup-and a member of some of the world's largest hedge funds, from Moore Capital to Ziff Brothers and FrontPoint Partners, Rick Bookstaber has seen the ghost inside the machine and vividly shows us a world that is even riskier than we think. The very things done to make markets safer, have, in fact, created a world that is far more dangerous. From the…

Who am I?

My entire career has been spent in finance. From life insurance to central banks, from stock exchanges to post-trade clearing and settlement, this is all I’ve ever done. My college degrees include BSBA in Business/Marketing, MBA in Management, and PhD in Economics. In addition to knowing what a lot of people know about finance, I also worked inside the “black box” of the Federal Reserve System and depository trust and clearing corporations (in 4 cities, on 2 continents). Therefore, I know more about the plumbing of stock market infrastructure than most people who have careers (and education) as long as mine.


I wrote...

Lessons Not Learned: 10 Steps to Stable Financial Markets

By Susanne Trimbath,

Book cover of Lessons Not Learned: 10 Steps to Stable Financial Markets

What is my book about?

This book shows that the theoretical framework for regulating financial systems available since at least 2001 could have prevented the systemic failure in the United States that led to the collapse of global credit markets in 2008. Step by step the book guides you through what could have been done to prevent the crisis and what investors can do to protect themselves from the next one. It concludes with a key idea for making financial services businesses stand out from the crowd, ensuring future success. For each step, the reader will find: legislative and regulatory background on existing rules; academic research on the theory behind each step; and the facts and data connecting each missing step to the financial crisis of 2008.

Book cover of The Billionaire's Apprentice

This is actually two books in one – and I very much liked the way Anita Raghavan braided them together. Half of it is a fast-paced, detail-rich account of an insider-trading ring that involved some terribly senior people who really should have known better. But because so many of the characters (both rogues and prosecutors) were South Asian success stories working in the U.S., Anita also opened my eyes to the contributions and temptations that are felt throughout the Indian and Sri Lankan communities. So interesting!

The Billionaire's Apprentice

By Anita Raghavan,

Why should I read it?

1 author picked The Billionaire's Apprentice as one of their favorite books, and they share why you should read it.

What is this book about?

Just as WASPs, Irish-Catholics and Our Crowd Jews once made the ascent from immigrants to powerbrokers, it is now the Indian-American's turn. Citigroup, PepsiCo and Mastercard are just a handful of the Fortune 500 companies led by a group known as the "Twice Blessed." Yet little is known about how these Indian emigres (and children of emigres) rose through the ranks. Until now...The collapse of the Galeon Group--a hedge fund that managed more than $7 billion in assets--from criminal charges of insider trading was a sensational case that pitted Preet Bharara, himself the son of Indian immigrants, against the best…

Who am I?

My first job after college was at The Wall Street Journal, working evenings as a copyreader. It was thrilling to enter a big-league newsroom, but torture to be confined to putting tiny headlines on even tinier stories. Then at age 23, after a whirlwind staff shuffle, I started writing the paper’s premier stock-market column, “Heard on the Street.” Daylight had arrived. For the next 11 years, I covered finance. I met billionaires and people en route to prison. It wasn’t always easy to tell them apart! My writing career has widened since then but sizing up markets – and the people who rule them – remains an endless fascination. 


I wrote...

Merchants of Debt: KKR and the Mortgaging of American Business

By George Anders,

Book cover of Merchants of Debt: KKR and the Mortgaging of American Business

What is my book about?

What’s the key to making it big on Wall Street? Yes, being really smart, really well-connected, or incredibly driven does help – but it’s not the only path. Instead, subtler factors let a few people climb faster and higher than all the rest. This book, Merchants of Debt, delivers the ultimate how-they-did-it biography of KKR and its founders. It captures the allure and the alarm of the whole private equity movement, as seen in the rise of legendary takeover financiers George Robert and Henry Kravis. You’ll enjoy the drama, and you’ll learn a new set of skills (“How to talk to banks,” etc.) that can transform your own career.

Tap Dancing to Work

By Carol J. Loomis,

Book cover of Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2013

Carol Loomis has edited Buffett’s widely read Letter to Shareholders for many decades. She is also an outstanding journalist who was a writer and editor at Fortune for 60 years. Her book is a compilation of many of her interviews with Buffett over the years, with some additional commentary. As the book subtitle indicates, the book covers “practically everything” in a conversational format so it is sort of a quasi-biography of Buffett.

Tap Dancing to Work

By Carol J. Loomis,

Why should I read it?

1 author picked Tap Dancing to Work as one of their favorite books, and they share why you should read it.

What is this book about?

Tap Dancing to Work compiles six decades of writing on legendary investor Warren Buffett, from Carol Loomis, the reporter who knows him best.

Warren Buffett built Berkshire Hathaway into something remarkable - and Fortune had a front-row seat

When Fortune writer Carole Loomis first mentioned a little-known Omaha hedge fund manager in a 1966 article, she didn't dream that Warren Buffett would become the world's greatest investor. Nor did she imagine that she and Buffett would be close friends.

As Buffett's fortune and reputation grew, Loomis used her unique insight into his thinking to chronicle his work, writing scores of…


Who am I?

I’m an investor from three perspectives or dimensions. First, I manage money for individuals and institutions as Chief Investment Officer of Beacon Trust, a $4 billion registered investment advisor based in NY/NJ. Second, I teach MBA classes in investing at Rutgers Business School, Columbia Business School, London Business School, and Hong Kong University (HKU) Business School. Third, I write articles and books on investing, including The Art of Investing: Lesson’s from History’s Greatest Traders and Buffett’s Tips: A Guide to Financial Literacy and Life. I’ve personally met Warren Buffett on four separate occasions and think he is an excellent role model from both investing and personal perspectives.  


I wrote...

Buffett's Tips: A Guide to Financial Literacy and Life

By John M. Longo, Tyler J. Longo,

Book cover of Buffett's Tips: A Guide to Financial Literacy and Life

What is my book about?

Finance is a language like any other: the more fluently you speak it, the further you travel. If you want to improve your financial literacy, what better teacher could you have than Warren Buffett? Often described as the greatest investor of all time, Warren Buffett started his investment firm with $100 in the 1950s and went on to become the centibillionaire we know today. Along the way he’s reaped huge profits for fellow investors in Berkshire Hathaway and remains one of the most sought-after and closely watched figures in the business world.

In Buffett’s Tips, award-winning professor and professional investor, John M. Longo, working with his son, demonstrates just how by translating decades of Buffett’s writings and media appearances into a 100 straightforward tips and strategies for enhanced financial literacy and independence.

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