Book review: Diary of a Hedgehog by Barton Biggs

I will confess that before I was given this book to review I had never heard of Barton Biggs but I discovered that in 1965 he co-founded one of the first hedge funds in the US. He then joined Morgan Stanley in 1973 where he remained for 30 years becoming a top strategist and their first research director. When he left Morgan Stanley in 2003, at age 70, he founded with two other Morgan Stanley partners, hedge fund Traxis Partners where he worked until his death in July last year.

Mr Biggs is best known for promoting the growth of emerging markets such as China before many others became interested in them. He warned investors away from Japanese shares in 1989 before they collapsed and in 1999 he argued that technology stocks were vastly overvalued and would plummet.

This book represents various extracts from his investment diary which details his in-depth analysis, thoughts and projections covering the economic turbulence from July 2010 up until May 2012, shortly before his death. As it says in the introduction to the book, he kept this diary because “its value comes from reading your thoughts and emotions later in the context of events and seeing where you were right and wrong”, but only based on the diary being written “in the heat of the moment, in the fire and agony of the time, not retroactively or retrospectively”.

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Did I enjoy the book? I really wanted to and there were some interesting investment philosophies and investment strategies discussed but to be frank in general I found it very US-centric and in parts, I am sorry to say this, a little boring (but then I will confess that I do not enjoy reading autobiographies, much preferring thrillers).

At just more than 200 pages it is not a long book and, as I have already said, there are some potential gems in there. I particularly liked the quote from Jack Bogle, founder and retired chief executive of The Vanguard Group, which is included in the conclusion: “We must base our asset allocation not on the probabilities of choosing the right allocation but on the consequences of choosing the wrong allocation.”

For me the book represents a salutary first-hand account of a particularly difficult period in investing history and reinforces the fact that, to quote Mr Biggs himself: “There are no relationships or equations that always work. Quantitatively-based solutions and asset allocation equations invariably fail as they are designed to capture what would have worked in the previous cycle, whereas the next one remains a riddle wrapped in an enigma.”

If I was giving marks out of 10 this book would, for me, be a six.

Published by John Wiley & Sons