Good Weekend Reading

I enjoyed reading Keith McCullough's Diary of a Hedge Fund Manager: From the Top, to the Bottom, and Back Again.  He takes you on an insider's story along his short career starting as an analyst during the tech bubble and bust, followed by his quick ascension up the hedge fund managing ranks (aka $ managed).  Most of all I enjoyed Keith's conclusion about where the industry is headed - more transparency.

I know old money likes the idea of having all their money taken care of in a far away place and they don't have to think about it, a quarterly letter from their fund saying the money's still there is enough.  However, I think that when my friends grow up to have money that won't be enough.  When you get updates from 500 people you barely know every time you log into Facebook, an update on what your money's doing seems a lot more relevant and hardly too much to ask.

Keith also takes pride in the fact that he never uses leverage, which I think is great considering he's using other people's money.  Of course, you do need a margin account to short stocks - but I assume he means he's never buying on margin or trading options.  I feel fine using leverage with my own money, but it is a choice I'll have to face if I ever managed other people's money.

I'd say the most interesting part of the short novel is after he's fired from his position at Carlyle Blue Wave Partners for being a couple months early in shorting the market in 2008.  After that he's done with the secretive hedge fund world and decides to open up his own independent research firm, open to all institutions and individual investors with a subscription.  I checked out the site, hedgeye.com and enjoyed listening to yesterday's morning call that they have up on their site for free.  The intensity with which this guy follows the markets really comes through on the call.

-- The book was a quick read and I read the entire thing on my iPod Touch in an afternoon after buying it through the Kindle app.  The experience of reading it off the iPod wasn't as bad as one might think.  Nice to get a book instantly rather than waiting three days, and makes me believe in the whole e-reader movement.

The other read was Warren Buffet's annual letter (pdf) that came out today.  I'll try and put up my take on that tomorrow.