Book Review: A Demon of Our Own Design (2 of 2)
| Aug 23rd, 2007 | Filed under: Hedge Fund Regulation, Institutional Investing | By: Alpha Male |
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Yesterday, we posted the first half of our AllAboutAlpha review of Richard Bookstaber’s new book A Demon of Our Own Design. Today, we post part 2 of that review.
Author is a walking history book(staber)
Richard Bookstaber, author of A Demon of Our Own Design is apparently also an avid student of history. Under the somewhat provocative heading Why Tulip Mania Wasn’t Crazy, he includes a comprehensive account of the Dutch Tulip Bulb Bubble that debunks some of its popular misconceptions. (Did you know that the higher quality bulbs continued to be worth a fortune even after the crash? Read: Yahoo!, Amazon.com, Google).
He provides a brief history of accounting from the birth of modern accounting in 15th century Venice to the birth of US GAAP in the 19th century to serve railroad expansion. (His conclusion: today’s accounting brings a woefully inadequate set of rules to the modern capital markets.) Finally he uses the example of 13th century England’s property right laws to paint a picture of a world without liquidity. Hedge funds, he follows, provide a critical service as de facto market makers.
Today’s Hedge Fund Industry
Opting to focus on the bigger picture, Bookstaber only addresses the hedge fund industry during the waning chapters of the book. He bristles at attempts to define alternative investments and suggests, as we do on this blog, that hedge funds aren’t that different from traditional long-only funds anyway:
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