Paul Samuelson’s Secret (on the origin of hedge funds)…

In a 2011 article, economics columnist David Warsh provides a fascinating narrative (see “Paul Samuelson’s Secret” for the PDF version) concerning the late MIT economist and Nobel Laureate Paul Samuelson’s involvement in one of the earliest and most influential hedge funds ever, Commodities Corp. Along the way, Mr. Warsh also manages to provide a rich conceptual framework and intellectual history for understanding how important developments in finance theory which were largely pioneered by the likes of Professors Samuelson and Fama (e.g., the notion that financial markets are informationally efficient which in turn implies that stock prices follow a random walk) have influenced the evolution over time of financial markets and institutions. Mr. Warsh also liberally references Sebastian Mallaby’s book entitled “More Money Than God: Hedge Funds and the Making of a New Elite”, which he refers to as a “…very interesting book about the origins and recent history of the hedge fund industry”.

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