Money Games

Preface to Paperback EditionIn Search of Value

Many successful investors are contrarian. They buy when most sell and sell when most buy. During the Asian Financial Crisis of the late 1990s, when the story of Money Games begins, foreign investors in Asia couldn’t sell fast enough. In 1997, South Korea’s currency, the won, lost nearly two-thirds of its value against the US dollar. Its stock market shrank by 49 percent. In US dollar terms, the Korean bourse had lost more than 80 percent of its value in one single year. The crisis showed no sign of abating the next year—Korea’s GDP contracted by 5.1 percent—when I went to Korea on behalf of Newbridge Capital, the private equity firm I represented, in an attempt to buy a failed bank that had once been the largest in the country. It was the perfect example of a contrarian move.

How did we do in the end? Obviously, I wouldn’t have written a book about it if our investment had been a failure.

In hindsight, our timing was perfect.

But hindsight is 20/20. Truth be told, we were not trying to time the market. I don’t think such a thing is possible because markets are inherently unpredictable. Certain market conditions present good investment opportunities, but private equity investors cannot just wait around for such opportunities to drop into our laps. Good timing helps, but timing the market is not how a firm like Newbridge makes money.

Newbridge Capital was a buyout firm—a private equity investor that seeks a controlling stake in a ...