Preface to the Previous Edition
2008 was an unmitigated disaster for most investors, including unlevered “real money” investors—the focus of this book. Markets around the world, from real estate to equities to commodities to credit, posted huge declines, taking down with them some of the world’s most venerable financial institutions, a wide variety of alternative asset managers (hedge funds, private equity, venture capital, and real asset managers), and a host of real money accounts (pension funds, insurance companies, endowments, foundations, family offices, and sovereign wealth funds). Almost everyone lost money in 2008, and in many cases more than anyone imagined possible.
Anger and confusion linger in the aftermath of the crisis, but are by no means limited to market players. Main Street is reeling as homes and jobs have been lost, savings have evaporated, and many assumptions governing the stability of modern society have been challenged. Governments around the world have responded with all sorts of innovative monetary and fiscal stimulus, generating even more uncertainty about the future. At the same time, the social contracts between governments and their citizens are being called into question as Social Security, health care, and pensions loom as potential financial crises for the taxpayer.
Meanwhile, a full year after the crash of `08, nearly everyone in the markets—from savvy hedge fund managers to small private investors with retirement accounts to policy makers—still ...