Go 'Inside the House of Money'

Although many are calling for the death of hedge funds, we have been here before, notably in 1970 when Carol Loomis of Fortune wrote a piece entitled "Hard Times Come to the Hedge Funds." In 2000 the death knell was sounded once again for global macro hedge funds, ironically just as they began to come into their own after the dot-com crash.

Hedge funds will once again survive the current crisis, but in a much slimmed-down form. There are talented money managers out there that can produce outsized profits year in and year out. There just aren't 10,000 of them. The future of hedge funds will most likely include fewer funds, more transparency and smaller asset bases, with successful managers focused on risk management, using liquid instruments to trade in a more volatile world. Illiquid, "long-term" positions will go the way of private equity.

Inside the House of Money offers a time capsule's look at the preoccupations of global macro managers during the "Great Moderation," some of whom have become huge winners, while others have gone out of business. Reading about the lead-up to the current crisis, albeit with perfect hindsight, helps put the financial calamities of 2008 in perspective. As investors globally try to navigate the minefield ahead and the hedge fund industry returns to its roots of the 1980s and 1990s, the updated and revised Inside the House of Money is worth a read (or a reread) to help understand the world ahead.