The splashiest new home in the Hamptons sits perilously close to the ocean dunes of Sagaponack, hard by Gibson Beach. In early June, workers were racing to finish the huge main house with its bulbous wings for its owner, hedge-fund billionaire David Tepper, 55. The next big storm may sweep it away, but Tepper, who made his fortune buying distressed stocks, has already rebuilt once, after razing the mansion that stood here before. He can do it again.

All along the ocean dunes, from Southampton to East Hampton, Wall Street money is back in action, doing what it wants to do. Embattled hedge-fund mogul Steve Cohen has decided his new, $60 million home, on Further Lane, needs to be larger—seven bedrooms and 10,000 square feet are not enough.

As for Courtney Ross, widow of media mogul Steve Ross and founder of the Ross School, in East Hampton, she’s put her 5.4-acre Georgica Pond property up for sale at $75 million and plans to spend the next few years on a boat—studying the environment.

It wasn’t always like this. Barely a mile away from Tepper’s folly lies the hidden and overgrown compound of 86-year-old writer Peter Matthiessen. He is the only writer ever to win National Book Awards for both nonfiction—for The Snow Leopard—and fiction, for Shadow Country. When he bought those six acres, in 1959, Sagaponack was a farming community of small wood-frame houses and fields that rolled down to the sea. The early wave of New York City dwellers who came here were artists and musicians and writers. They first found these towns in the 1950s and 60s—before they were the Hamptons. Now, half a century later, only a few of the writers remain, friends for decades.

After co-founding The Paris Review, Matthiessen came out to fish and hunt with pals he’d made in the Coast Guard. For several years, he worked as a scalloper and haul-seine fisherman, writing mostly on bad-weather days. He palled around with artists who’d settled nearby—chiefly Jackson Pollock—and did his share of drinking but also duck-hunting. “I had farmer friends who kind of adopted me and took me into their gun club.”

Other writers followed: Truman Capote, George Plimpton, Kurt Vonnegut, E. L. Doctorow, and more. Rents were low, houses cheap. Along with the year-round beauty of the fields, the isolation was what drew them. “From Labor Day to Memorial Day it was absolutely dead silent,” recalls Matthiessen. “I loved it, and I got a lot of work done. But it was very tough on our wives.”

Capote, too, came to escape the social lures of Manhattan, recalls his old pal writer Dotson Rader. Now “the very people we went out to escape are the ones living in the McMansions today,” he says.

A Beach of One’s Own

Hardly anyone had a pool or tennis court, but Arthur and Joan Stanton did, and the Stantons loved writers. He’d made a fortune importing Volkswagens to the U.S.; she was a former actress, the first Lois Lane on the radio series The Adventures of Superman. The Stantons’ East Hampton house became a literary salon. A sign on the tennis-court fence read, OH PLIMPT!, for George Plimpton’s decorous outbursts to chide himself when he hit a bad shot. Irwin Shaw (The Young Lions) was Arthur Stanton’s best friend, but that didn’t keep him from trying to seduce Stanton’s wife, Joan. “How can you make a pass at your best friend’s wife?” Joan hissed at him one night. Shaw shrugged. “Who else do you meet?”

The climax of any evening at the Stantons’ was the Camouflage Game. “You disguise items in a room to look like what they’re not,” explains Jane Stanton of her parents’ favorite pastime. “And then you give your guests a list of 20 items. The first to identify them all gets a prize.”