Institutional investing involves changing events, big dollars, and wits sharpened by high stakes. Institutions dominate the current scene and they seem sinister and mysterious to the outsider. Often enough, they even confuse the insiders.

This book is intended as a real-life account of how institutional investors operate-particularly during the present period of dramatic change as institutional investors feel threatened by external forces affecting their lives and work.

The academic has continually considered himself to be the sole underpaid advocate of the rationality of security markets. The investment practitioner, essentially institutional in nature, has considered the academic as a challenger. Lately, the split has been contracting: academics and practitioners are drifting together. I recently spent a day at a university seminar on "efficient markets" where there were perhaps twenty-five participants, half academic and half practitioner. Small though these numbers were, such a meeting would not have taken place five years ago.

The split was caused, in part, by the fantasy that investment practitioners are omniscient. They believe, with some merit, that if the alchemy they perform to turn pencil lead into gold or conventional wisdom into profit were understood, they would all be unemployed. Investment managers have surrounded themselves with elaborate and expensive ceremonials which, although related to good results in the past, seem to have lost their potency. Just as the drought questions the value of the priest’s rain dance, so does a bear market humble the professional investor.