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Alfred Winslow JonesAlfred Winslow Jones (1901-1989), known as the father of the hedge fund industry, was born in Melbourne, Australia to American parents, and they brought him to the United States with them when he was four. Jones graduated from Harvard University in 1923, then worked as a purser on a passenger liner. In the early 1930s he became vice consul at the U.S. embassy in Berlin, Germany. Later he received a doctorate in sociology at Columbia University for a thesis about attitudes toward corporate property (see corporations) in Akron, Ohio. He became an associate editor at Fortune magazine in the early 1940s, and his work in that capacity gave him the idea to try his own hand at investing. Jones' idea was to eliminate market risk by taking off-setting positions -- selling some stocks short while taking a "long" position (i.e. buying) others. The sold and the bought stocks would have equal total value, so market-wide moves up or down would be a wash on the total value of such a portfolio. The crucial question, then, would not be the direction of the market but whether the manager had picked the right stocks for each half of this straddle. Jones, Alfred
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