Smart Money Investing Strategies: How Market Prices Are Determined - Essential Guide for Traders & Investors | Perfect for Stock Market Analysis & Portfolio Management

Efficiently Inefficient breaks down the primary ways by which hedge funds (and conventional money managers) attempt to generate positive returns for their investors. It provides an overview of the hedge fund industry by going into the mechanics of the industry and then follows with detailed descriptions of the different strategies employed. Immediately after the Table of Contents, the author provides the gist of the book in three simple tables. These tables provide a very efficient overview of the main topics in each section of the book.In a nutshell the book could be outlined as:Part IThis section has five chapters which provide an overview of the theoretical aspects of investing. It covers an overview of the hedge fund industry in chapter one followed by a brief explanations of the “greek” alphabet of performance measurement in chapter two. The remaining chapters discuss issues in back-testing, perspectives on risk management followed by discussion of trading costs and leverage.Part IIPart II of the book discusses the three primary equity strategies which the author has broken down as Discretionary Equity Trading, Dedicated Short Bias and Quantitative Equity Investing. This book outlines the theoretical principles of each of these primary strategies and ends each respective chapter with an interview with a respected practitioner of the strategy. Discretionary Equity investing is what would probably be familiar to most investors. It is the Graham & Dodd realm of investing. The next chapter on Dedicated Short bias gets into the thesis, details and complications of short selling and ends with an interview with noted short seller James Chanos. The final chapter in this section gets into Quantitative Equity investing. Arguably, this is the chapter that hones in on what has been in the investing limelight in recent years as it discusses investing in factors such as value, momentum, size and volatility as well as statistical arbitrage. A lot of the material in this chapter relates to the recent interest in “smart beta.” The interview that concludes this chapter is with Cliff Asness whose firm is also the author’s employer and one of the leaders in creating smart beta products.Part IIIThis section of the book gets beyond the realm of equity security selection into larger asset allocation picture. Included here is a chapter on Global Macro Investing which ends with an interview with arguably the most famous global macro manager ever, George Soros. A chapter on managed futures follows with discussions of trend-focused analysis and an interview with David Harding of Winton Capital.Part IVThe final section of the book has separate chapters on Fixed-Income Arbitrage, Convertible Bond Arbitrage and a final chapter on Event-Driven Arbitrage. As with the other chapters, each ends with an interview with a noted practitioner of each respective strategy. In these chapters, the author interviews Nobel Laureate Myron Scholes, hedge fund managers Ken Griffin and John Paulson.Pedersen’s book could be used as a supplementary text for a college or MBA program but it does not read pedantically like a college text book. While some math appears, it is kept to a decent minimum. The clear and concise discussion of the theoretical basis for each strategy is followed nicely by an interview with a practitioner in that space. The interviews do follow in the spirit of books by John Train and Jack Schwager (albeit briefer) and help in providing color to each chapter. Arguably Pedersen’s work provides an efficient and very readable survey on the state of the investing environment today.