Hedge Fund Market Wizards by Jack D. Schwager.
Summary: The first rule of about traders is never to believe anything that a trader says. If there exist methodologies that can ‘beat a market’ then in divulging this info is not in the best interests of those who are profiting. Hedge Fund Market Wizards is the latest in a series of market wizard books and consists of a series of interviews with hedge fund managers who have been identified as successful. The criteria for success is high returns relative to risk. So, depending on your view of markets, this is either an interesting group to interview, or an interview of a bunch of guys who have won more than their share of large number of coin tosses.
Rating: I like books that interview ‘experts’ in fields as they give one a feel for the culture of the field. Coders at Work by Peter Seibel, for example, is the one book I read before becoming a software engineer that really gave me an idea about what coders thought about. Similar this book’s biggest virtue is that it provides a cultural guide to the what hedge fund managers think about. There is a diversity of different hedge fund styles that are discussed. Schwager does a good job pulling out people’s views, but as the first sentence of this post says, the traders themselves divulge a varying amount about their actual techniques. Still one gets a sense for how they think, and their approach to the world of markets. I particularly like the interviews of Jaffray Woodriff and Edward Thorp (the later invented card counting in blackjack). Likely the portions of the interview that were most interesting were those discussing risk control, with a majority of managers taking on fairly strong stoping methodologies for trading. Another interesting part was the stress associated with managing others money. Recommended if you want to get a glimpse into the culture of hedge funds.
Speculation: LOL, yep. Also I have deleted my own speculation, as if it is correct, then…well…you know 😉
In a numerical sense, at a federal level, you are less well represented today because you are a smaller proportion of a representative’s flock. One thought is that we need another layer of representation, in which you have more say at this level, but which then aggregates upwards. While the end result is essentially the same in terms of representation, the impact you can have on a larger chunk of representation is greater, in that the lower layer must be more responsive to your demands. In a sense this is what state governments do, but largely because the constitution cedes orthogonal concerns to the states, the issue under federal guidance don’t directly aggregate from states. In Infomocracy democracy is practiced on a small scale, each person in an very small area votes for their local government. In the story various political parties arise which, in some sense, represent another layer of government, and then there is a final penultimate layer of who controls the supermajority of all these small democracies. Some quick back of the envelope calculations show that this jumps many levels to the highest level in a way that doesn’t have good even scales at each level. In a world where voting is easy and at such a small scale, aggregation could also be quite transparent, so that more layers of representation could be supported, and indeed a base level of the multiplicative factors could be set in stone and more or less layers adjusted as needed. Computers are good for added layers of abstraction, could this contribute to better political hierarchies?