As someone who never watches CNBC, I have to start by saying - Maneet Ahuja is hot!
With 60+ Amazon reviews on trading and investing books from yours truly, this is the first to comment on an author's appearance.
But have you seen that dust-jacket photo? Wow.
This is both praise (of the approving male variety) and bemused tongue-in-cheek criticism. One would normally not expect a financial journalist to present herself in a low-cut cocktail dress and smoky eyeshadow, brow seductively raised, giving the camera a "come hither" look.
Okay fine, but does this have anything to do with the book? Indirectly, yes.
The Economist calls Alpha Masters "a homage to hedgies" and, after making reference to Ray Dalio's meditation habits, observes that "Ms. Ahuja seems to be in a trance herself, in thrall to the glamour of her subjects." There are hints of seduction here, if only of the power and success variety.
Besides the CNBC credentials, it is easy to see why these hard-to-access guys granted lengthy interviews in the sanctum of their private offices. (We know this because we are not-so-casually told as much.) Much of the narrative in Alpha Masters reads like a cross between press release and Hollywood screen play, with a dash of romance novel thrown in. Sex is the "primal driver" - to quote the Bill Ackman interview - and were I a bona-fide Alpha Master, I would be happy to have a pretty twenty-something painting my word portrait too.
Let it be said I snickered a lot - "fawning" is a fair descriptor of the prose in certain places - and found one or two sections downright appalling. The Paulson interview was sanitized to the point of uber-blandness; occasional large chunks were pure chronological filler; and what in the world was that horrible, non-sequitur post-script by Myron Scholes? It was as if they threw it in to say: "Hey look, we've got a Nobel Laureate up in here..."
Part of this criticism stems from the extremely tough benchmark Alpha Masters must be judged against. Jack Schwager's four-part "Market Wizards" series, and Steven Drobny's "Inside the House of Money" and "Invisible Hands," represent true excellence in trader interviewing. "More Money Than God," by Sebastian Mallaby, is also brilliant in the reverse-engineered methodology analysis of its subjects... and Alpha Masters does not hold a candle to these. There is, shall we say, a lack of penetrating insight - if you'll forgive the Freudian overtones - that permeates the book.
So what was good about Alpha Masters? Well, the back stories were quite entertaining, with genuine nuggets of wisdom here and there. I had always wanted to know more about the life and career origins of Ray Dalio, David Tepper, and Dan Loeb in particular.
For me, the takeaway was a more fully crystallized sense of the intense courage of conviction great hedge fund managers possess - not in a particular investment, but in the process itself, and the ability to consistently execute. There is a self-assuming boldness... it takes a certain deep-seated chutzpah, or testicular fortitude if you will, to say: "You know what? The way I see the world is right, and the way I operate is right; therefore, I will express my view in size." Running money is not for timid souls. One of the Alpha Masters keeps an anatomically explicit reminder of this truth on his desk.
(Females can have testicular fortitude too, by the way; it is the visceral essence of the expression, not the biology, that counts.)
As the book confirms, I believe this is one of the true separators between the mediocre, the good, and the great when it comes to money management: A deep, unshakeable confidence - preferably justified by talent, training, and experience - that you are born to play the game at its highest levels. Shrinking violets need not apply: All the warnings that markets are too hard, too competitive, too efficient etcetera, are for lesser mortals to heed.
After all, even if one fully embraces the weak form of efficient market theory, somebody has to be the mythical "smarter player" actively moving markets toward a more efficient configuration (and earning profits in the process).
There is an ancient joke regarding two economists walking down the street. One says "Look, a hundred dollar bill!" And the other says "Impossible - someone would have picked it up." Yet even for diehard EMHers, that "someone" has to logically exist - and would presumably run a hedge fund, as the compensation scheme is so hard to beat.
In season four of Breaking Bad, Walter White tells Skyler: "A guy opens his door and gets shot, and you think that of me? No. I am the one who knocks."
To put it in similar terms, these are the guys that knock.
Confidence is no guarantee, of course. Misplaced confidence (aka hubris, foolishness, stupidity etc) is a recipe for disaster, as all too many failed practitioners learn the hard way.(Loeb underscores this point, equating faith in bad process to Russian Roulette. Paulson underscores it too, though not on purpose.)
And yet, dangers aside, a solid measure of testicular fortitude (again regardless of gender) simply must be present - or deliberately cultivated over time - for a legitimate shot at long-term market success. Call it a necessary, though not sufficient, condition.