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Endpiece: "No Bull"

Michael Steinhardt tells it like it is, from his inauspicious start in Brooklyn to becoming a $400 million man.

On the walls of Michael Steinhardt's midtown offices, you'll see the Michael and Judy Steinhardt Judaica Collection. It includes ornate objects d'art, bric-a-brac of all kinds, including Sabbath spice holders, Hanukkah lamps from Morocco, Polish skull caps (kippot) made from silver and gold threads, a Torah binder and many other 18th and 19th century works of art.

However, you won't see anything related to investing. When you are one of the world's best-known and most successful hedge fund managers, you don't have to decorate your office walls with Wall Street mementos. Everyone knows who you are.

Steinhardt, now in retirement, needs no introduction. A genius and a strong-willed manager, he built a $4 billion hedge fund in his 30-year career before cashing out in 1995 to tend to his fruit trees in Westchester County and to raise money for Jewish causes. A $1 investment in Steinhardt Partners, his flagship hedge fund, in 1967, was worth $481 in 1995, the year he closed it. Steinhardt averaged a 32 percent return for his clients (before management fees) compared with an average 9 percent annual return in stocks. His personal wealth was $400 million.

Imagine being the lucky prime broker who executed his trades. Asked how much he thinks he paid out in trading commissions over the years, his eyes become fixed, his face rather wan as he ponders the question. He had never really thought about the cumulative number before. “Don't know,” he says. Pushed, he offers, “Um, maybe $100 million in commissions?” Then he becomes more certain. “Yeah, easily.”

His personal history is less well known than his financial history. He tells all in his aptly titled autobiography, “No Bull: My Life In and Out of Markets” (John Wiley & Sons).

Steinhardt came from the streets of Brooklyn and was reared by his mother, after his father, a chronic gambler, left home. Steinhardt père would only return from time to time offering young Michael wads of bills. Despite these distractions, Steinhardt excelled at school. He was accepted to the University of Pennsylvania at the age of 16.

Steinhardt first became interested in markets when his father gave him $5,000 worth of Penn Dixie Cement and Columbia Gas System shares for his Bar Mitzvah. He writes: “I was captivated not just because the shares were worth more money than I had ever known, but also because there was something enticing about their value and how it fluctuated…. Fascination with these shares inevitably led to an intense interest in the stock market.”

Steinhardt talks about launching his hedge fund. He provides tricks to shorting stocks and discusses his investment strategies and investing war stories in an eminently readable and interesting way.

His prose can't be called literature, but his writing is somehow appealing and the book succeeds as a direct and candid review of his own life. If you are looking for pointers on how to become a successful hedge fund manager, you'll have to look elsewhere (although there are interesting tidbits for the would-be portfolio manager).

What emerges is a portrait of a demanding man who seems less inspired by money than by a single-minded drive for perfection. He was famously hard to work for, but then he says the stakes were high.

His mind is naturally predisposed to be skeptical; he is the ultimate contrarian (he calls it “variant perception” and devotes a chapter to explaining how he applied this philosophy to his work). The idea is to find the contrarian truth and invest in that idea until it became the accepted “consensus.” Steinhardt was basically on a hunt for Truth, financial and ontological. He still is. And it shows. Some of the most interesting reading is his own description of his battle to believe in God.

He now spends much of his time traveling to Israel and contributing vast sums to non-Orthodox Jewish programs. But he is not religious. When you ask him, “Do you believe in God?” he responds, “No, you?” without having to think. “I've tried to believe,” he says, “but I just can't. I'm an atheist.”

Then why contribute so much money and time to Jewish educational and other programs? “Because there are so few of us in the world and we're losing our distinctive Jewishness,” he says. “And that's bad because we have contributed so much to the world, contributions in far greater proportion to our numbers in the world.”

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