"Ah, but a man′s reach should exceed his grasp, or what′s a Heaven for?"
A Hedge Fund Tale of Reach and Grasp is a is the account of the rise to power and fall from grace of hedge fund manager Joe Hill. Written by Barton Biggs, the tale is embedded in the actual events and stock market history of our era.The story is pure fiction, but the ebb and flow of the markets is made vivid by charts and figures. There is nothing fictional about the bull market, the speculation, the bear raids, and the collapse that followed. A Hedge Fund Tale of Reach and Grasp also tells of the stress, the odd relationships, and often bizarre personalities in a large investment management firm. It is about greed, ostentation, success, and how the participants in the bubble leveraged their lives and careers, as well as the price they paid, which many are still paying.
Chapter 1: Big Neck, Virginia 5
Chapter 2: Arizona Union 17
Chapter 3: New York and the Firm 33
Chapter 4: Onward and Upward 51
Chapter 5: Crisis and Confrontation 67
Chapter 6: Moving On 91
Chapter 7: Bridgestone 107
Chapter 8: Revenge of the Geeks 123
Chapter 9: Life Its Own Self 143
Chapter 10: The Halcyon Years 159
Chapter 11: Dinner at the Perots 181
Chapter 12: Big Decisions 193
Chapter 13: The Years of Milk and Honey 209
Chapter 14: The High Probability of the Improbable 223
Chapter 15: 2008: Annus Horribilis 247
Chapter 16: The Age of Malevolence 279
Chapter 17: The End of the Affair 297
About the Author 319
Hedge funds were the gold rush of the past 20 years and, like all bubbles and manias, ended with a bust that destroyed many of the egomaniacs and most of the latecomers, and even took out some solid citizens. The immense wealth accumulated in a few years by mostly young hedge fund managers—who haven’t hesitated for a moment to spend it ostentatiously and often rudely—has generated great animosity and envy from everyone else. It’s a tale worth exploring, says Biggs, because it is littered with compelling stories of triumph and tragedy—and offers a myriad of cautionary lessons for all of us.
The story traces the career of Joe Hill, an imaginary character whose path from rags to riches to perdition personifies the arc of the lives of so many hedge fund professionals Biggs has known. Growing up in rural Virginia, Hill develops a powerful will to win that accounts for his personal intensity and toughness, but also his loneliness. Struggling to find a career on Wall Street, he takes a modest job at an investment company. After being initiated into the insidious politics and relationships of office life, he quickly discovers that the stresses of high-performance investing require toughness and a thick skin to survive.
When Hill finally makes it to the upper echelon of the hedge-fund world, he finds out that the environment and stress become comparable to an infantry unit in combat or life on a destroyer in the North Atlantic in World War II. Ultimately, Hill loses everything, not just his career but the love of his life as well. He walks away from it all and, physically exhausted as well as demoralized, never returns to the investment world. Profoundly bone-weary and lonely, Hill is still looking for someone or something to come home to. Readers ask themselves whether it was the great financial catastrophe or his excessive reach and grasp that was the cause of his ruination, the randomness of the markets or hubris spawned by greed.
As the narrative unfolds, readers will come to understand:
- The unique character traits successful investment managers must have
- The extraordinary stresses hedge-fund managers must endure and how it affects—and sometimes ruins—their careers and private lives
- Why big institutions are turning to low-volatility, market-neutral strategies
- The challenges hedge funds face now and going into the future
- Where the big investment firms and investors are putting their money
Professional investors, especially hedge fund types, must have more than superb analytical and judgmental skills, tremendous intensity, and a dollop of luck. To survive and be successful, they must also profoundly comprehend that they are going to be vulnerable to and enslaved by extreme mood swings and terribly susceptible to hubris. Both can be mortally dangerous not just to their investment health but also to the well-being of their most intimate life relationships. Joe Hill learns these lessons the hard way.
A Hedge Fund Tale is a modern hedge-fund tragedy: the story of what happens when a good man’s reach exceeds his grasp. As F. Scott Fitzgerald so succinctly put it, “Show me a hero and I will write you a tragedy.”