I've been meaning to do a review on Tim Sykes's new book, An American Hedge Fund, for some time now. Tim contacted me this Summer, when he was still in the final draft stages and offered to send an pre-release copy of the book for review consideration. I actually read the draft within a few weeks of receiving it so I should have done this post a while ago, but I didn't feel all that bad when I noticed reviews popping up on just about every other blog I read. Tim has been pretty cool about the whole thing and actually sent me a copy of the final version, this is what I thought...
When I said I read the book in about two weeks of receiving it, that says a lot about my impression. I think I have ADHD or something because its not uncommon for me to wind up reading multiple books at once. Now that I think about it, I'm reading four books right now. Anyways, I read the book quickly because it kept my attention and was easy reading.
I was initially interested in reading the book when I saw Tim's bio on his website. While he was still an undergraduate (1999 to 2002), Tim took a $12,415 Bat Mitzvah gift and turned it into $1.65M. Sure, these were bubble days when every bull was a genius but Tim was a college kid. Can you imagine becoming a millionaire by the end of your Junior year of school? One of my favorite aspects of the book was hearing about how Tim coped with the stresses of trading and money management in the context of college life. He mentioned a painful lesson of sleeping in hungover one morning when he had a big position and his dorm mates huddled around his computer while he executed trades. I started trading during my softmore year of college so I know how tough it is to balance good grades with profits. Timing trades around class was always interesting. I was trading in a different market from Tim and started with less money, but I found a certain satisfaction from hearing what it might have been like if I had blown up like Tim. Clearly, he lived the dream of any young aspiring trader by making a fortune from nothing.
The book is really a two part story with the first part being about Tim blowing up in college and the second part being about his "hedge fund odyssey." I have always envisioned myself starting a hedge fund, so naturally I was interested in hearing Tim's story. The second half didn't resonate as much with me because I don't have any experience with the hedge fund industry, but it was still interesting. He basically turned himself into a hedge fund where he did all the trading and much of the fund's assets were his own. This enabled him to use his audited performance (323% annualized) from 1999 to 2002 to entice accredited investors to invest in him. Of course its more complicated than it seems and there are all sorts of issues with laws that effectively keep the smaller players out of the game. You get to hear about how difficult it actually is to build a hedge fund scratch, especially with zero industry experience. Tim portrays himself as a champion of free speech because he is telling a story about a restricted by law industry and there is some truth to that.
I really respect what Tim is trying to do by talking about his experience in a veiled industry, but it seems to me like there are plenty of hedge fund managers out there who talk about their positions. Without thinking too hard about it, I can think of two cases of managers making their argument for being in positions, and for free online. Amit Chokshi posted about his fund being short CROX before the plunge a few weeks ago, and this guy Zach posts about all sorts of ideas on his blog. So I didn't really buy into the free speech champion stuff as much, although I think he is probably unique in telling the story about how he created his fund.
All around, I did enjoy the book mostly for the story. Hearing about what it was like to make a huge pile of cash in college and create a hedge fund is awesome. While Tim has some good lessons for younger aspiring traders, I don't think it would be all that useful to anyone with 5 yrs or more experience in the markets. That doesn't mean that an experienced trader won't like the book, I just don't think you will be a better trader after reading this book. Other bloggers have compared the book to Reminisces of a Stock Operator (one of my favorite books of all time), but I think they are different kinds of stories, you can really compare them. An American Hedge Fund is great casual summer read for most, and an energizing tale of what hard work and perseverance can accomplish for young traders.
I think the bigger story is in what Tim has done in the online world through networking, but I'll leave that for another day.
3 comments:
This does sound like a dream come true. I may have some interest in reading it some time.
-X
I read Tim Sykes mediocre hedge fund book since I knew him at Tulane, and like him as a person. However, the book is an empty and uninspiring story about how Sykes became a self-absorbed irresponsible stock trader. This book is NOT a “classic” and story is NOT “Rocky-like”(as author Sykes claims). This book is basically like a blog of an average person who got lucky trading stocks and then his luck ran out (which it really should be - blog and nothing more).
Beware of all the phony glowing reviews for Sykes Book. Its the good ole boy network in high gear where authors/investment advisers use the buddy system to give fake good reviews to each other.
Sykes put the term “stock operator” in title in order to confuse all future book searches for Jesse Livermore’s excellent story (Reminiscences of a Stock Operator, by Edwin Lefèvre (1923)). This cheesy trick might help book sales, but needless to say, Sykes has nothing in common with the great trader Livermore.
Sykes comes across like a hyper/immature/video game player-type Trader, which worked for him for a few years; then the law of averages caught up with him. His “return to the mean” continues during the past two years; and his very poor investment strategies are DOWN -37% since Jan 2006. His continuous bad performance throughout 2007 shows that he does not learn from his mistakes; and readers can only cringe while watching Sykes slow motion demise into a worthless snake oil salesman.
Ben S., sounds about right. Thanks for the comment.
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