Book Review - An American Hedge Fund by Timothy Sykes
Category Book Review
I was recently contacted by Timothy Sykes (of Wall Street Warriors fame) asking if I was interested in receiving an advance copy of his book An American Hedge Fund. Always interested in something a bit different than what I'd normally read, I took him up on the offer. What I found was an entertaining read of the stock market boom and bust through the eyes of someone who was turning a small amount of money into a million dollar hedge fund. There's also plenty of insight and commentary on the world of stock trading and equity markets, as well as how they are regulated...
Sykes is basically a day trader who was able to use stock charts and such to move in and out of positions on a very short-term basis. After four years (1999-2002) of doing this (and turning himself into a millionaire), he decided to start his own hedge fun called the Cilantro Fund. While still a one-man-band, he traded during the day and tried to make contacts and get investors by night. Much of his phenomenal success came during the dot.bomb era, when he took up shorting microcaps. But trying to interest significant investors while still staying within the laws of the SEC isn't easy. It was a catch-22... You need large investors to build your fund asset base, but you need a large fund asset base to attract large investors. The story of his fund's performance and trials take place from 2003 to the current, and isn't nearly as rosy as the first four years of managing his own money. But it's there that he learned a lot about himself, the market, and the Byzantine laws that nearly lock out a newcomer to the world of hedge funds.
The last chapter of the book (chapter 15) is where you get the wrap-up of why he feels there's the need for significant changes in the SEC when it comes to investing in hedge funds. The chapters leading up to that are a first-person narrative of his ups and downs, his high moments and low points during the ride. While I was reading through the book, I kept seeing a person who was trying to figure out who he was and what he wanted. Part of Sykes wanted to be "normal", to have a social life and interact like regular people. But the other part was addicted to the score, the opportunity to make thousands or tens of thousands of dollars, often in a matter in minutes. It was also revealing that knowing what to do and actually doing it are two different things. His stated strategy, which was generally successful, was often overridden by his ego or greed, usually leading to larger losses and bigger gambles to make it up. It wasn't hard to see how someone could become addicted to that lifestyle, much like gambling at Las Vegas based on your own charts and systems (neither of which are fool-proof).
This is definitely worth reading if you've ever dabbled in day trading, or wondered about the motivation behind those who do. At the same time, you'll get a glimpse of a part of the market that most of us are not even aware exists...
NOTE: As of 11/09/2007, comments have been shut off on this post. A few individuals crossed the line in my opinion, and I don't care to cater to them. I gave warning on an earlier comment...
I was recently contacted by Timothy Sykes (of Wall Street Warriors fame) asking if I was interested in receiving an advance copy of his book An American Hedge Fund. Always interested in something a bit different than what I'd normally read, I took him up on the offer. What I found was an entertaining read of the stock market boom and bust through the eyes of someone who was turning a small amount of money into a million dollar hedge fund. There's also plenty of insight and commentary on the world of stock trading and equity markets, as well as how they are regulated...
Sykes is basically a day trader who was able to use stock charts and such to move in and out of positions on a very short-term basis. After four years (1999-2002) of doing this (and turning himself into a millionaire), he decided to start his own hedge fun called the Cilantro Fund. While still a one-man-band, he traded during the day and tried to make contacts and get investors by night. Much of his phenomenal success came during the dot.bomb era, when he took up shorting microcaps. But trying to interest significant investors while still staying within the laws of the SEC isn't easy. It was a catch-22... You need large investors to build your fund asset base, but you need a large fund asset base to attract large investors. The story of his fund's performance and trials take place from 2003 to the current, and isn't nearly as rosy as the first four years of managing his own money. But it's there that he learned a lot about himself, the market, and the Byzantine laws that nearly lock out a newcomer to the world of hedge funds.
The last chapter of the book (chapter 15) is where you get the wrap-up of why he feels there's the need for significant changes in the SEC when it comes to investing in hedge funds. The chapters leading up to that are a first-person narrative of his ups and downs, his high moments and low points during the ride. While I was reading through the book, I kept seeing a person who was trying to figure out who he was and what he wanted. Part of Sykes wanted to be "normal", to have a social life and interact like regular people. But the other part was addicted to the score, the opportunity to make thousands or tens of thousands of dollars, often in a matter in minutes. It was also revealing that knowing what to do and actually doing it are two different things. His stated strategy, which was generally successful, was often overridden by his ego or greed, usually leading to larger losses and bigger gambles to make it up. It wasn't hard to see how someone could become addicted to that lifestyle, much like gambling at Las Vegas based on your own charts and systems (neither of which are fool-proof).
This is definitely worth reading if you've ever dabbled in day trading, or wondered about the motivation behind those who do. At the same time, you'll get a glimpse of a part of the market that most of us are not even aware exists...
NOTE: As of 11/09/2007, comments have been shut off on this post. A few individuals crossed the line in my opinion, and I don't care to cater to them. I gave warning on an earlier comment...
| Permalink |
