Hedgehogging

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 about for that matter. It's interesting to note that the Professor in question lost his shirt along with about 98% of all other investors at the time.I went back to taking my basket of books and hit the beach in Hawaii. Reading by the shore as the surfers made the morning waves is a great way to try to re-connect with what's going on. If you do decide to go to the beach, Barton Bigg's book would be right up there near the top of the list for your enlightenment. Every page is choked full of wisdom by a man who has paid the price with his own cash for that wisdom.Are there other books that you should take to the beach with you along with this one? You bet there are. Take Graham and Dodd's Security Analysis. There are several editions. Warren Buffet has read this book probably 15 times from cover to cover in his lifetime. As you know, Benjamin Graham was Buffet's professor at Columbia University.Edwin Lefevre's Reminiscences of a Stock Operator may be the greatest book ever written about trading. I first read it as a teenager, and I still re-read it every couple of years. It never gets dull, and every time I go through it, I find things I have never seen before. It's that extraordinary. You need to own it, and own the knowledge that's in it as well.Read Bernard Baruch's "My Own Story". Baruch is to the first fifty years of the 20th century what Warren Buffett is the second half of the century. Both were unequalled investors. Each was the premiere investor of his time.If you have an institutional bent to you, try David Swensen's book on "Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment Management". Swensen is the man who ran the Yale endowment for the last twenty years, bringing it back from the ash heap of history to being the number one college endowment in performance for the last generation. No mean achievement when you consider he was up against every professional money manager in America.Let's talk about some of the concepts you are going to learn from Barton Biggs in this wonderful book called Hedgehogging:· You learn about Robert Wilson, the man who shorted Resorts International and lost $100 million for his efforts. Biggs is polite, he doesn't mention the real names of most of the players. He doesn't want to embarrass anyone, but if you have been in the market long enough, you know who is talking about.· Morgan Stanley's Breakers Hedge Fund Conference- Biggs is not a professional writer, but his writing is brilliant. In this section he discusses attending a conference of hedge fund participants, and aspiring players. His descriptions of these people by itself is worth reading the whole book. Listen to this sentence, "Former investment bankers exchange distinguished lies with portly ex diplomats, permanently deformed by self-importance." (P 50) He uses language like this throughout the book, and it's a joy to read.· There's dinner with Fayez Sarofim where Biggs describes a man who is Buffett's equal in brainpower, and the techniques he uses to amass multiple fortunes. "My favorite holding period is forever," says the master.(P70)· He discusses with his father, a great investor in his own right, entering the brokerage business. The father hands him a copy of Benjamin Graham's Security Analysis, and says, READ IT. Biggs reads it, underlines it, annotates it, and goes back to his father. The father pulls out a new copy and says DO IT AGAIN. This is how you learn, and the information you learn is priceless. P81· Biggs tells you what to read, "It is better to read The Economist from cover to cover once a week than the Wall street Journal every morning." P108· The public never learns. Jesse Livermore the greatest trader of the early 20th century said, "Buy Low-Sell High," but Biggs expands upon the theme. "The public instead does just the opposite. It buys high and sells low, partly because the mutual fund industry has an overwhelming incentive to sell what is easy to sell, and what is easy to sell is what has just been hot." P121· Biggs' description of the secular bear market of 1969 - 1974 (P127) is the best description I have ever read of a history that I lived through. He's got it down pat. He captures the emotionality, the flavor of the times. You feel the heat, the pain, and the agony of not being able to sell, of stocks going down day after day with no volume. Every MBA kid making a million a year in the market right now, and I have hired plenty of them, should be forced to memorize sections of this book, because they are going to pay for their lack of knowledge of history with the market value of their client's accounts.· He teaches you an understanding of private equity (very big right now, probably getting bigger). He goes into the law of large numbers and why these funds cannot continue to bring in the returns that they have been showing for the last 10 plus years. If you are in the market you need to understand what Biggs is talking about. This is priceless information, and he's giving it to you for the price of a book. P142· He gives a scholarly presentation of the concept of the Fibonacci's number series, and its impact on the market. It's a brilliant, easy to understand presentation (P163), but even better is his analysis of GROUPTHINK, and its impact on the market.(P169) Professor Irving Janis of the University of Michigan is the father of Groupthink; but his book is out of print. Bigg's analysis of the process is the best thing out there. It will not only help you in the market, but it will help you understand how we got to where we are in Iraq as well.In the whole book, I only caught one error, and that's because Bigg's knowledge, and his breath of knowledge is so astounding that he relies on memory in most instances to do his writing. When you do this, sometimes you can be faulty in your memory. He simply recalled a book whose author he did not name, as being written by a famous professor at MIT. The book was about the innovator's dilemma. The author was from Harvard, not MIT, and Christensen authored it.Here's the bottom line. If you could find ten books like this, you would be better off owning the knowledge in them, instead of getting yourself an MBA in finance from any of the top business schools in this country. A book like this is that important, that influential, and that informative. You would have to own the knowledge in this book, not just read it casually. You would need a pen to underline, to take notes, to write in the margins, to make this knowledge yours, and then with some experience, you would become AN INVESTOR. Good luck, and I say that respectfully.Richard Stoyeck

Imagine Liar's Poker, by a less uncouth guy who made it to the top. A view of Wall Street and investing by a legendary strategist, big picture guy, and essayist, who has had a front row seat on Wall Street for a generation. Now, who am I to criticize someone who worked for Alfred W. Jones in the first hedge fund, was made one of 30 partners at Morgan Stanley back in the 70s, and built one of the great research departments and money management franchises from scratch? Well, since this is the Interweb and everyone's a critic, here goes anyway. When Biggs says he's disconcerted to be at the Breakers in Palm Beach grubbing for money with all the other twerps, it's hard to tell if he's being humorous or he's been breathing the thin air at the top of Morgan Stanley a little too long. When he says "You should buy a picture because you love looking at it, not as a divisifier [sic]", it feels like he's phoning it in and not bothering to reread it. Sometimes the book is a bit like your old uncle who won't stop telling war stories, some fascinating, sometimes a bit out of touch. But highly recommended for anyone who wants to get a feel for the culture of the wealth-steeped, brutally Darwinian yet sometimes reality-challenged hedge fund / money management business.

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 of respect for the most influential economist in the most part of the 20th century, the last chapter had an inexpressive language, as if written in a hurry and because it was an obligation to be there. I am sure this is not Barton Biggs's last book. He will write another one, and something tells me he will want to totally dedicate himself and produce something he knows he is capable of.This is a great book. If you read it, you will want to come back to re-read slowly a particular chapter that got your attention first time. Totally recommend it.

As someone who has an interest in finance (I have an MBA) but has never really worked directly in it, I found this an interesting read about the world of hedge funds and corporate investing. The material is interesting, and the book has solid insights about the structure of the industry, broad classes of investment strategy and motivations and personality of the people involved. I would imagine it would be very useful to anyone wanting to work in the professional investing industry or anyone employing / placing funds with such funds.However, for me as an outsider, the book is structured as random musing and anecdotes rather than a structure documents and so any insights you garner from the book are generally formulated yourself rather than put forward in a crisp manner by the author.

This book is more a collection of personal observations about entering the hedge fund industry and anecdotes from a long career in stock broking rather than an up and down guide to the hedge fund industry. Anyone looking for the latter may be somewhat disappointed. However, Barton Biggs has been around a long time and has put together an interesting collection of market tales. To his credit he is also big enough to admit that he has called it wrong on a number of occasions - I was in Indonesia in the early 90s when he called a buy on that country, in the middle of a bear market. On one point I wold take issue with him. He glosses over the fact that most hedge funds returns, after fees, are no greater than the average mutual fund. Those that do offer superior returns are either closed end or effectively closed through high minimum investment levels.But an entertaining book none the less.

Who you are playing against??..it is an important book...retail investor who is a geek and has gumption is ahead of mutual funds and hedge funds.. he just needs to have patience and show gumption...

I have read it twice and am preparing to read it for the third time. Barton Biggs belongs to the white shoe brigade and belongs to an era of Wall Street that's contemporary to the Beatles and their fringe hair styles. Among other things This is a very good satire on the hedge fund industry. If nothing else this book will teach you about the virtues of frugality, something that Americans have never heard of.

Barton presents a very philosophical perspective of investing that is often overlooked by many. A must read for all who wish to dive deeper into the behavioral aspect of all those involved in the most "sophisticated" of hedge funds known to exist.You will find both, historical and empirical data to back the explanations and concepts that this book conveys to the reader. I high recommend!