More Money Than God by Sebastian Mallaby Summary

More Money Than God chronicles the rise of hedge funds from their origins in 1949 to their pivotal role in modern finance. Sebastian Mallaby combines gripping narratives of iconic investors like George Soros and Julian Robertson with analysis of hedge funds' impact on markets, crises like the 2008 crash, and their potential to stabilize economies. The book argues that these "obsessive, charismatic oddballs" drive financial innovation.

Finance professionals, investors, and anyone interested in economic history will gain insights from this book. It’s ideal for readers seeking to understand hedge funds’ strategies, their role in crises like the 1997 Asian financial collapse, and the psychology of legendary traders. Academics and policymakers will also appreciate Mallaby’s research into market dynamics and regulatory challenges.

Yes. Hailed as a New York Times bestseller and recipient of the Loeb Prize, the book offers a balanced yet critical exploration of hedge funds. Mallaby’s deep research, engaging storytelling, and contrarian argument—that hedge funds could be Wall Street’s salvation—make it essential for understanding modern finance.

Mallaby contends that hedge funds, despite their risks, enhance market efficiency by correcting mispricings and absorbing shocks. He highlights their outperformance during crises (e.g., the 2008 crash) and critiques excessive regulation, arguing that their flexibility and innovation often outpace traditional banks.

Soros emerges as a central figure, exemplified by his 1992 bet against the British pound (“Black Wednesday”), which earned $1 billion. Mallaby details Soros’s theory of reflexivity—how market perceptions shape reality—and his mixed legacy as a philanthropist and speculative force.

Mallaby explains how funds like John Paulson’s capitalized on the subprime mortgage collapse, profiting from short-selling toxic assets. Conversely, he critiques their role in amplifying systemic risk, as seen in the Long-Term Capital Management collapse, but argues they were less culpable than banks.

The book emphasizes adaptability, rigorous research, and contrarian thinking. For example, Paul Tudor Jones predicted the 1987 crash by analyzing historical patterns, while Renaissance Technologies leveraged quantitative models to decode markets. Mallaby warns against herd mentality and overleveraging.

While acknowledging concerns about inequality and opacity, Mallaby counters that hedge funds’ profit-driven incentives align with market stability. He contrasts their transparency with banks’ hidden risks and argues that their speculative bets often expose underlying economic flaws.

Key events include the 1994 bond market crisis, the 1997 Asian financial collapse, and the 2008 subprime meltdown. Mallaby also details lesser-known episodes, like Amaranth Advisors’ 2006 energy trading disaster, to illustrate the perils of unchecked risk-taking.

Mallaby argues that banks’ reliance on leverage and government bailouts contrasts with hedge funds’ self-funded, performance-driven model. He praises funds like Caxton Associates for avoiding taxpayer-funded rescues during crises, unlike "too big to fail" banks.

Mallaby, a Pulitzer Prize finalist and CFR senior fellow, brings decades of financial journalism and deep research. His prior works, like The Man Who Knew (on Alan Greenspan), and access to industry insiders lend authority to his analysis.

The book’s insights into speculative bubbles, algorithmic trading, and regulatory debates resonate amid today’s AI-driven markets and cryptocurrency volatility. Mallaby’s warnings about financial complacency and innovation cycles offer timeless lessons for investors.