The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Sunday, January 16, 2011

What is the best peforming hedge fund strategy? Global Macro

While on the summer break, I have read Steven Drobny's excellent new book, Invisible Hands, and re-read his first effort, Inside the House of Money. There are some truly world-class interviews with the best brains in the business, and I would thoroughly recommend both books. A couple of the guys in the latest book are scary-smart. One thing that becomes obvious via the public analysis is that far and away the best performing (and relatively low volatility) hedge fund strategy over time is the cycle-independent 'global macro' stream, which I like to think of as 'economic risk arbitrage'. It is cycle-independent in the sense that it does not have a directionally 'long' bias like almost all other investment approaches--ie, these guys truly have opportunities to exploit market inefficiencies in both the boom and bust phases of the cycle. In the next few posts I am going to excerpt some of the more insightful quotes. Here is a chart comparing different investment strategies over time (apologies for the resolution).

at 9:08 PM