This is not a trading system, it is a chart-heavy tour of how the hedge fund industry is organized and what each strategy family actually does. Read it to learn the vocabulary and the org chart, not to learn how to trade.
The one idea
Wilson runs a family-office and capital-introduction firm, and the book reads like an onboarding manual for that world: what a hedge fund manager's day looks like, who the portfolio managers, traders, settlements staff, and CFO actually do, and how a fund grows from a $1 to $10 million startup into a shooting star ($300 million to $1 billion AUM) into a titan like Bridgewater managing over $100 billion. That life-cycle framing, plus a chapter on capital raising, is the closest thing the book has to a throughline.
The middle third works through strategy families one at a time: long/short equity, global macro, event-driven, fixed income, convertible arbitrage, quantitative and algorithmic trading, managed futures, and credit and asset-based lending. Each chapter defines the strategy, names its risk factors, and usually includes an interview with a manager running that book. The quant chapter is the most concrete: it walks through Bollinger-band pair trading, MACD, and statistical arbitrage with actual formulas.
The last stretch covers fund of funds and multi-strategy structures, then an appendix of Bloomberg terminal function codes and a quiz-answer key. This is a Bloomberg Press title built for people studying for an interview or building a due-diligence checklist, not for someone trying to replicate a specific edge.
What it actually teaches
The book has no single trading system, so here is how a reader actually gets value from it, broken into the four things it hands you per strategy.
IDENTIFY THE STRATEGY FAMILY
The book sorts hedge funds into eight buckets: long/short equity, global macro, event-driven, fixed income, convertible arbitrage, quantitative/algorithmic, managed futures, and credit/asset-based lending, plus fund-of-funds and multi-strategy wrappers on top. Before evaluating any fund, place it in one of these buckets, because the risk factors and jargon that matter change completely from one to the next.
TRACE THE RETURN MECHANIC
For quant and long/short strategies the book gives a real worked example: a pair trade where an investor buys $1,000 of Dell and simultaneously shorts $1,000 of Hewlett-Packard, sized to match notional value rather than share count. Its default mean-reversion rule uses Bollinger bands: enter when the price ratio of the pair moves 2 standard deviations from its 20-day moving average, exit when it reverts to that average. For momentum, it gives Gerald Appel's original MACD settings: a 12-day and 26-day moving average spread, signaled by a 9-day moving average of that spread.
MAP THE SPECIFIC RISK
Each strategy chapter names a concrete constraint. Long/short funds are not bound by the 130:30 long/short ratio that regulates traditional mutual funds, so they can run heavier short exposure, and prime-broker rehypothecation of pledged securities is capped by the SEC at 140 percent of the loan amount (as of 2013, per the book). Futures traders get real margin math: one WTI crude contract needs $4,950 of margin to control $90,000 of notional oil (about 18:1 leverage), and a one-cent move in a NYMEX gasoline contract swings $420, or roughly 7.6 percent of the $5,500 margin posted.
CHECK STRUCTURE AND TERMS
The book flags what determines whether a strategy is investable at all: management and performance fee levels, high-water marks, lockup periods, and for CTAs the split between systematic and discretionary approaches (systematic strategies managed $260 billion industry-wide at the end of 2011, per BarclayHedge, cited in the book). For distressed debt it gives the payoff shape directly: a bond bought at 10 cents on the dollar that recovers to 40 cents on 1 percent of fund capital returns about 3 percent to the fund before fees, against a 100 percent loss of that 1 percent if the company stays in bankruptcy.
What it looks like Monday morning
A reader finishes this book able to sit through a fund's pitch deck and correctly place it in a strategy bucket, ask about its leverage ratio and lockup terms, and understand why a convertible-arbitrage fund's risk profile has nothing in common with a global macro fund's. That is a due-diligence vocabulary upgrade, not a trading edge. Nobody should open a brokerage account differently on Monday morning because of this book; the practical use is preparing for an allocator meeting, an interview at a fund, or a conversation with a wealth manager pitching a hedge fund allocation.
| Example | Setup | Result |
|---|---|---|
| WTI crude futures margin | $4,950 margin controls one contract at $90/barrel ($90,000 notional) | About 18:1 leverage ($90,000 / $4,950) |
| Distressed debt recovery | 1% of fund capital in bonds bought at 10 cents on the dollar | Recovery to 40 cents returns about 3% to the fund before fees; bankruptcy loses the full 1% |
Both figures are illustrative examples from the book, not live market data; margin requirements especially change constantly.
Markets have a way of remaining illogical longer than an investor can remain solvent.Richard C. Wilson, Visual Guide to Hedge Funds
Where it fails
- It is not a method book wearing a method book's clothing. The brief asks what this book exists to deliver as a system, and the honest answer is: nothing sequential. It is a strategy encyclopedia with interviews stapled in. A reader hoping for a repeatable process, the way a technical-analysis or valuation book delivers one, will find fragments (the Bollinger-band pair trade, the MACD defaults) but no assembled trading plan, no backtested track record, and no risk-sizing framework tying the pieces together.
- The numbers are already dated in ways that matter. The 140 percent rehypothecation cap is explicitly sourced 'as at 2013.' The margin figures for WTI crude ($4,950 per contract) and NYMEX gasoline ($5,500 per contract) reflect 2013-2014 exchange requirements and are meaningless today; margin schedules move with volatility regimes and get reset by the CME constantly. The BarclayHedge CTA performance comparison only runs through 2012. None of these numbers should be quoted as current without checking a live source.
- Every worked example and interview shows a winner. David Einhorn's Lehman short, the LTCM cautionary tale (used as the one acknowledged loser), and every named Industry Insight manager (Gargoyle, Abbey Capital, Lexington Asset Management, Crescent Capital) are framed as credible, successful operators. There is no chapter walking through a strategy that quietly failed for structural reasons the manager didn't see coming, aside from the single well-worn LTCM story that every hedge fund book already tells.
- It assumes you are already inside the industry, not learning to trade from home. The capital-raising chapter assumes you run a fund with $8 million to $30 billion in assets and need placement agents, CRM systems, and third-party marketers. The daily-operations chapter assumes a staff of traders, controllers, settlements clerks, and a CFO. A solo retail trader gets almost nothing actionable from roughly half the book; it is written for aspiring fund managers, allocators, and family-office staff, not for someone managing their own account.
- The due-diligence chapter that would matter most is thin. Investor selection criteria get one chapter (pages 11-19 by the book's own pagination) built mostly around AUM tiers, a Stavetski interview naming $200-300 million as a 'sweet spot,' and a single case study of one favored manager. There is no checklist, no red-flag list, and no framework for the kind of fraud detection (a Madoff-style structure, for instance) that the book only mentions in passing in the index.
Who it is for
Buy it if
You are prepping for a hedge fund interview, building a due-diligence vocabulary as a wealth manager or allocator, or you just need a fast, well-illustrated primer on how the different hedge fund strategies differ from each other. The Bloomberg terminal cheat sheet in the appendix is a genuine bonus if you have terminal access.
Skip it if
You are a retail or independent trader looking for a strategy to execute, or you already work inside a hedge fund and know this material. The worked formulas (Bollinger pair trading, MACD) are covered in more depth and with less padding in dedicated technical-analysis books, and the margin and fee figures are a decade stale.
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