Book Review: Hedge Funds (An Analytic Perspective)

Hedge Funds: An Analytic Perspective by Andrew W. Lo is a highly technical and intellectual analysis of hedge funds. Mr. Lo has filled his book with many advanced, detailed concepts and statistics about the hedge fund industry. The book is so technical that it reminded me of one of my old college statistics textbooks, filled with complex formulas and mathematical terms.

Warning: This book is not for the average investor (including me). This was the book that I chose to bring with me on vacation. Phrases such as: "Filtered and constrained Sharpe ratio trajectories of tangency portfolios for filtered and constrained mean-variance-liquidity efficient frontiers for 13 CSFB/Tremont hedge fund indexes" is not what I had in mind to read while I sat on the beaches of Long Beach Island, NJ with waves crashing in the background.

I felt like the late Phil Hartman's Saturday Night Live character, "The Unfrozen Caveman Lawyer" while trying to read this book. "My primitive mind can't grasp these concepts", Hartman's character would say. Despite all of the advanced terms, I was able to decipher some of the strategies used by certain Hedge Funds which was interesting.

I would recommend this book for those with a good understanding of statistical analysis or for those with a PhD in statistics or mathematics. However, the average investor, like myself, will find themselves frustrated pouring over pages of strange formulas and terms such as: "Average regression coefficients for multivariate linear regressions".

Comments

[RTJ:]

I have not read the book but as a hedge fund professional, I question the usefulness of such a technical book. Quantitative tools can surely complement qualitative analysis but drawing too many conclusions from a monthly return stream is a farce. No amount of analysis would have predicted what happened to most hedge fund returns in 2008. There is no substiute for common sense but unfortunately too many quants are lacking in this area....

Jul 05 11:07 AM

[Mafeking:]

Remember the old saying "Bullshit baffles brains". It may be applicable here.

Jul 11 04:40 AM

[taojaxx:]

Was that meant to e a review? Did you read more than a couple pages? Looks like the NJ seashore distracted your attention from the equations.

Jul 11 01:56 PM

[Glen Bradford:]

This is probably the worst book review I've ever read in my life.

I can't believe the editor put this on the front page of seekingalpha.

I am currently in PhD classes with fancy titles like:

Combinatorial Optimization and Financial Econometrics.

I'll tell you what, just those two phrases being included in this book imply that it's not worth my time. Sometimes logic and theory is fun. This stuff sounds like EMH balogna.

But, you did write in March that it was time to buy. Kudos.

Jul 12 03:39 AM