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The cover of Efficiently Inefficient

Efficiently Inefficient

Lasse Heje Pedersen

How do hedge funds and other investors make money in markets that are efficient enough to be hard to beat, yet inefficient enough to reward effort?

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At a glance

Author
Lasse Heje Pedersen

Why read it

  • You will understand how liquidity spirals form when leveraged investors hit funding problems and everyone runs for the exit
  • You will learn why investors demand higher returns on securities that suffer in liquidity crises
  • You will stop looking for a strategy that always wins, and ask instead why a strategy has made money over long periods

Who it is for

  • A finance student comparing efficient markets theory with trading practice
  • A pension or endowment analyst choosing among hedge fund styles
  • A retail investor wondering whether active managers earn their fees

Contents

  1. The Main Themes in Three Simple Tables
  2. Preface
  3. WHO SHOULD READ THE BOOK?
  4. Introduction
  5. I. EFFICIENTLY INEFFICIENT MARKETS
  6. II. GLOBAL TRADING STRATEGIES: OVERVIEW OF THE BOOK
  7. III. INVESTMENT STYLES AND FACTOR INVESTING
  8. Part I: Active Investment
  9. Chapter 1 Understanding Hedge Funds and Other Smart Money
  10. Chapter 2 Evaluating Trading Strategies: Performance Measures
  11. Chapter 3 Finding and Backtesting Strategies: Profiting in Efficiently Inefficient Markets
  12. Chapter 4 Portfolio Construction and Risk Management
  13. Chapter 5 Trading and Financing a Strategy: Market and Funding Liquidity
  14. Part II: Equity Strategies
  15. Chapter 6 Introduction to Equity Valuation and Investing
  16. Chapter 7 Discretionary Equity Investing
  17. Chapter 8 Dedicated Short Bias
  18. Chapter 9 Quantitative Equity Investing
  19. Part III: Asset Allocation and Macro Strategies
  20. Chapter 10 Introduction to Asset Allocation: The Returns to the Major Asset Classes
  21. Chapter 11 Global Macro Investing
  22. Chapter 12 Managed Futures: Trend-Following Investing
  23. Part IV: Arbitrage Strategies
  24. Chapter 13 Introduction to Arbitrage Pricing and Trading
  25. Chapter 14 Fixed-Income Arbitrage
  26. Chapter 15 Convertible Bond Arbitrage
  27. Chapter 16 Event-Driven Investments

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