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A rollicking way to get Street wise
By David Wells
Published: September 9 2004 05:00 | Last updated: September 9 2004 05:00

Judging a book by its cover may be considered ill advised, but in the case of Andy Kessler, his books really do what the title says they will.

Kessler's first book, Wall Street Meat - My Narrow Escape from the Stock Market Grinder, described his time served as an equity analyst in the 1990s. The cover featured a bull with a diagram of butcher's cuts labelled "Jack Grubman, Frank Quattrone, Mary Meeker, Henry Blodget and me!" superimposed. His latest, Running Money: Hedge Fund Honchos, Monster Markets and My Hunt For the Big Score, describes his time as a hedge fund manager during the internet/telecommunications bubble that popped in 2000. The cover again features a bull, resembling even more closely the famous bronze statue on Wall Street.

The new title is catching. One can just hear Wall Street denizens who have read the required titles - Liar's Poker, Den of Thieves and Barbarians At the Gate - asking each other if they have read Running Money yet.

But the most helpful part of the title is in parentheses - "a Wall Street education". Kessler's book is both a description of his own Wall Street education and a stab at educating the reader about subjects including not just Wall Street but also Silicon Valley and, yes, managing a hedge fund.

Running Money is part memoir and part textbook. The author was lucky enough in his career to have had good seats to an interesting part of recent economic history. He was also smart enough to take notes and he is talented enough as a storyteller to make it worth revisiting that heady time at this early stage.

Educated to be an electrical engineer, Kessler worked a stint at Bell Labs and ended up an equity analyst for Morgan Stanley covering technology companies. Then, with Fred Kittler, an ex-JP Morgan money manager, he ran Velocity Capital, a hedge fund based in Silicon Valley which they wisely disbanded by August 31, 2001.

Kessler is a breezy, conversational - often sarcastic - writer. His prose is perfect for reading on an aeroplane. Pretend you are sitting in first class having the type of surprisingly interesting, getting-to-know-you conversation that Kessler had with a rich man from Switzerland who not only invested in his hedge fund, but taught him how to run it as well.

Like a summer blockbuster film, you will enjoy the time if you go into the book knowing what you are getting into. This is not a how-to guide to running a hedge fund, nor is it a record of the booming Silicon Valley of the 1990s, or a sombre textbook on how to arbitrage the yen and the dollar or analyse quantitative data. It is a description of a rollicking ride through a crazy time lived well.

Kessler is good with an anecdote. He name-drops well, can tell a joke, and loves pop cultural references. My favourite involves an anecdote that discusses the John Cusack film The Sure Thing to explain to two uninterested young MBA types that "the only thing for sure is that there is no sure thing". He also includes references to MTV's hit show Punk'd and classic television programmes such as The Addams Family and The Munsters.

While his dialogue can be a little forced or pedantic, it is also his own recollection, not an exact rendering, and is used in ways that are convenient for the story at hand or which help readers not familiar with Wall Street (which in his book includes hedge funds) to understand its often funky jargon. A college kid interested in Wall Street who thinks a cagger keeps beer cold will quickly learn it is shorthand for compound annual growth rate.

Said student will also get references to market timing, company flotation shenanigans and other tomfoolery.

Some chapters, such as "Pressure Drop" and "Shrink, Integrate", read like the economic and history textbooks you wished you had when you were in high school. They also read like another classic of the financial services genre, Liar's Poker.

Kessler has surely learned a trick or two from Michael Lewis, author of Liar's Poker and, more recently, Moneyball. In fact Mr Lewis has reviewed Kessler favourably and Kessler, who makes reference to Liar's Poker in Running Money, also, in the acknowledgments page, writes: "Michael Lewis gave me words of encouragement over the years and a path to follow." Kessler does not match Mr Lewis for writing style, but his book is just as much fun as Liar's Poker because he shares its author's curiosity.

Early on in his book, in a chapter called "Hedgies", Kessler writes: "It was what I didn't know about that always seemed more interesting." He goes on to say that when he started managing a hedge fund, despite years spent meeting other managers, he did not have the "foggiest idea what they really do".

You will not know much about what they do at the end of the book either. But you will know what he did, and will be the richer for it because Kessler's book teaches an important lesson that is as applicable to hedge funds managers as it is to anyone: the secret of success lies in discovering things you do not know.

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