IRB Media

Please note: This is a companion version & not the original book. Book Preview: 

#1 The dollar is weak today, but that doesn’t mean it will be weak forever. Over the long term, currency processes tend to be fairly stable and mean-reverting. The dollar is a First World country with a weak currency.

#2 The author went back and looked at his portfolio, and noticed that any position he had that was euro-bullish and dollar-bearish was going to be reversed, because everyone at the table was already bearish on the dollar. He was able to see when the paradigm was going to shift.

#3 A paradigm shift in finance is what happened with the subprime market and the spillover it has had in other markets. People assumed that because something was rated triple-A, it was money-good, when in reality, that was not the case.

#4 The attractiveness of a trade depends on the historical data used to evaluate it. If you use historical data from a time when people weren’t actively doing the trade, and then suddenly everyone is doing it, the behavior of the trade will be different.

Summary of Anonymous Hedge Fund Manager's Diary of a Very Bad Year

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