Hedge Fund Readings

[Spicymoose]

I just got a job working at a hedge fund, but I have absolutely no experience in the finance world. Upon starting, there are some specific programing tasks that I will have to do, but they will gradually be training me in to a financial position.

I have a general idea about what a hedge fund does, but don't really know any specifics. This hedge fund is rather new, with around $200M and 8 people, but the manager was running an extremely succesful fund in NY. Can anyone recommend any good books that might help me learn more about what I might be doing, or good technique books? I know I will be getting trained on the job, but I was hoping to get a little jump start.

Thanks,
Spicymoose

[hawk59]

what do you invest in, what strategies?

[Perplexity]

Assuming that you didn't misrepresent your background, you should probably just ask your future boss / coworkers.

[PuppyFridayYall]

Curious. Could you give us some insight into how you got this job? What are your responsibilites etc? Sure many would be interested.

Jake

[edtost]

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what do you invest in, what strategies?

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yea, you're going to have to be more specific about what the fund does in order to really get any helpful advice on becoming familiar with it.

[DcifrThs]

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what do you invest in, what strategies?

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yea, you're going to have to be more specific about what the fund does in order to really get any helpful advice on becoming familiar with it.

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i think it's pretty clear OP is a few steps behind that concern.

i think he wants to know what hedge funds do, how they make money for clients, how they make money for themselves (management company) & the like. then OP can learn about what strategy the fund employs and start learning finance.

OP, i'd read some basic finance stuff...like present value, the effect of compounding on returns & standard deviation (and obviously how to correctly calcuate those things...this is something i see people mess up all the time), how to price a bond, how to (very basically) price a stock, what a futures contract is, what a forward contract is, how they are employed, what leverage is (and the difference between accounting & economic leverage), how to construct a portfolio (like what is the goal of portfolio construction? what are the tradeoffs, what are the limits that exist that prevent typical investors from optimally constructing their portfolio?), how to calculate portfolio expected standard deviation (i.e. in risk space taking into account correlations)

once you get through all that (it's a lot but you'll need it probably) you can get deeper into some other stuff and start getting a feel for how they all play in together. i'd recommend then learning about currencies: what is purchasing power parity? is it a good way to trade currencies? why or why not? what is the balance of payments? how does that work in the currency market? what is a currency board? what is a pegged currency & how is it managed? how does currency forward pricing work? what is the effect of productivity & other economic indicators on spot & currency level & relationship?

then look at commodities: is there an expected return for passively holding a long futures portfolio of commodities? why or why not? what is the correlation of gold to the US dollar? why? how do commodities correlate to bonds? equities etc. ? how do they fit into a portfolio?

then you can dig into things like inflation linked bonds (widely overlooked in many sectors of portfolio construction): what are they? how long have they been around? how do they correlate to nominal bonds? equities? commodities?

afterwards, you can try to piece together how they would all fit in a passive portfolio (long only, no alpha... which reminds me, learn the difference between alpha & beta or active management returns & passive holding asset class returns). think about the effect of leverage on each of those securities & why it would be a good idea to use it on things like IL bonds & nominal bonds? how would leverage be obtainable in the IL bond market since futures don't exist there? (i.e. learn what repurchase agreements are)

i think those are the basic ideas you'll need to become familiar with in addition to the more basic questions before that. simultaneously you should get into what your fund does & why it does it. who is their competition? who are your clients? what are their needs? how does your fund go from research to execution? how do they take their clients' guidelines/limits into acct?

hope this helps you gain some direction.

Barron

[edtost]

barron,

i think you underestimate how hard it would be to really grasp all the concepts in your post in anything approaching a reasonable amount of time.

[jaydub]

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barron,

i think you underestimate how hard it would be to really grasp all the concepts in your post in anything approaching a reasonable amount of time.

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Which is why the choices are:

A) Banstick. Bad due to account age.
B) Ignore. Bad due to derelict nature of forum.
C) Educate. No chance on OP but perhaps others could learn.

J

[DcifrThs]

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barron,

i think you underestimate how hard it would be to really grasp all the concepts in your post in anything approaching a reasonable amount of time.

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lol, i just started making an outline and got carried away.

most important for OP i think is passive vs. active investing & function & management basics of hedge funds since thats where OP is goin...

sorry about that.

Barron

[Humble Pie]

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Can anyone recommend any good books

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Fooled by Randomness.