1. Christian Siva-Jothy On Idea Generation
No one gets paid for originality – you get paid for making money. I am happy to take other people’s good ideas and run with them, as long as I understand exactly why I am in the trade.
2. Dwight Anderson On When To Increase Your Position
What did you learn from Julian Robertson? – One thing that Julian did very well, which we do poorly, is pay up when fundamentals start to develop as anticipated. A trade he used to like to talk about was Citibank in 1990 and 1991. He bought it at 10 and it went to 20. When one of his analyst wanted to sell the position, he doubled it instead, because he felt it was cheaper at 20 then that it was at 10. When he first bought it, there were real estate problems that were resolved by the time it got to 20, so it was clear that City wasn’t going bankrupt. It ended up going to 100, split adjusted.
3. Scott Bessent – Pressure to give investors what they want can compromise any trading style.
The biggest mistake I made was not taking the advice of Robert Wilson: “If you have as much money as I’ve read you do, you are an asshole if you manage anybody’s money except your own. To go up 100%, you have got to be willing to go down 20%, and you cannot go down 20 with other people’s money”
4. Yra Harris on Patience
Anytime something is too good to be true, I now recognize that it probably is and that it’s there for a reason because someone knows more than me. Where I used to rush in, I now step back and wait for a move to develop. I don’t feel I have to be at the start of every move anymore.
Money is always going somewhere no matter what, so I Just have to stay attuned. But I am more patient in letting moves develop before I get in. As I’ve gotten older, my patience has improved.
Recognizing when you are right is as hard for some people as recognizing when you’re wrong. I find it comical to see people cut their profits and run their losses, but happens all the time.
“Traders have a very hard time buying something at a greater value than what they just took profit on, so they look for a proxy or relative value.” – as a result they miss on the real move.
All the crap rallies at the end of a bull market, which is how you know it’s near the end.
6. Jim Leitner
Options take away the whole aspect of having to worry about precise risk management. It’s like paying for someone else to be your risk manager. Meanwhile, I know I am long XYZ for the next six months. Even if the option goes down a lot in the beginning to the point that the option is worth nothing, I will still own it and you never know what can happen.
7. Jim Rogers- Human Nature
I don’t know if the markets are smart enough to say “Let’s test the weak hands,” but history has repeatedly shown that sort of thing happens. It is human nature…The smart money always loses money shorting bubbles because they cannot comprehend that it could go as high as it does.
8. Dr. Andres Drobny: Talk Is Cheap
I also learned early on that talk is cheap in the markets. Everybody runs around with a view, but what leads to success is not having a view but coming up with a direct trade idea.
Source: ST & Inside the House of Money: Top Hedge Fund Traders on Profiting in the Global Markets, Steven Drobney, Wiley 2006