In Part 1 we covered what alternative investments are and how hedge funds are structured. Now we get into the fun stuff. How do hedge funds actually make money? What strategies do they use? And how does leverage turn a 10% market gain into a 23% return?
Chapter 1 opens with a warning. If you’re new to hedge funds, you will get overwhelmed. There’s a lot of terminology. There’s a lot of moving pieces. But Mirabile does a good job laying the foundation here. Let’s walk through it.
So I picked up this book called Hedge Fund Investing: A Practical Approach to Understanding Investor Motivation, Manager Profits, and Fund Performance by Kevin R. Mirabile. And honestly, it’s one of those books that sounds intimidating but actually breaks things down pretty well.