15 lessons from top hedge fund managers.docx

7/28/2019 15 lessons from top hedge fund managers.docx

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http://www.businessinsider.com/life-lessons-from-hedge-fund-managers-2013-2?op=1

15 Life Lessons From Top Hedge Fund Managers

The hedge fund industry is full of some of the brightest people in the world who are immensely successful in trading and investing.

While they can definitely offer some valuable advice about investing, they are also full of bits of wisdom about life in general.

We've included a round up of life lessons, principles and advice from a few of the brightest fund managers out there.

Paul Tudor Jones: Shame can be a lifetime companion for which you better prepare

yourself."

Vimeo

Backstory: Right after college, PTJ was working for prominent cotton trader Eli Tullis in New Orleans. After a night of

partying in New Orleans, he fell asleep at his desk and was fired. But he earned a lesson from it.

"Today, I will put my work ethic up against anybody's on Wall Street. Failure will give you a tattoo that will stay with

you your whole life, and sometimes it's a really good thing. One other side note, to this day, I've never told my

parents that I got fired. I just told them wanted to try something different. Shame can be a lifetime companion for

which you better prepare yourself."

Source: Commencement Speech to the Buckley School in 2009

PTJ: 'Everything happens for a reason.'
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Julia La Roche for Business Insider

"So here is the point: you are going to meet the dragon of failure in your life. You may not get into the school you want

or you may get kicked out of the school you are in. You may get your heart broken by the girl of your dreams or God

forbid, get into an accident beyond your control.But the point is that everything happens for a reason. At the time it

may not be clear. And certainly the pain and the shame are going to be overwhelming and devastating. But just

as sure as the sun comes up, there will come time a time on the next day or the next week or the next year,

when you will grab that sword and point it at that dragon and tell him, 'Be gone, dragon. Tarry with me and I will

cut your head off. For I must find the destination God and life hold in store for me!'"

Source: Commencement Speech to the Buckley School in 2009

Glenn Dubin: Failure is inevitable

YouTube
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3/20

"...you will experience failures both in your personal life and career. I hope you wont fail as spectacularly as I did and

get rejected on your first 29 job interviews, but some failures in life are inevitable. Work through them and, most

importantly, learn from them."

Source: Stony Brook University

Dubin: You must be able to adapt. Things will change.

Wikimedia Commons

"...regardless of whether your goal is to become a teacher, doctor, engineer or business person, to be successful long-

term to be at the top of your game you must constantly evolve and adapt to your surroundings. There is one

constant in life that you can count on: Things will change."

Source: Stony Brook University

Leon Cooperman: Family is the most important.
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BloombergTV

"There is nothing more important than family, the root for you and care about you the most. So stay close to your family

under all circumstances."

Source: Roger Williams University

Cooperman: Learn to be a good friend.

Youtube.com

"It's great to have friends, but you have to know how to be a friend. Be trusting, friendly and supportive of your friends.

Extend yourself whenever you can."


Cooperman: Don't do anything that you wouldn't want to see printed in the papers.
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5/20

Flickr/NS Newsflash

"Never do anything in life if what you did appeared on the front page of the Wall Street Journal or the New York Times

that you would be embarrassed. Live your life as an open book, and that's the best way to."


Cooperman: Share you financial success with those who are less fortunate.

"When you've achieved financial security and success share with others less fortunate than yourself."


James Simons: Do something new.
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6/20

Gert-Martin Greuel

"One thing I've always done is do something new. I love to do something new and I don't like to run with the pack. For

one thing, I'm not such a fast runner. So if you're one of npeople all working on the same problem in different places,

well me, I know I'd be last. I'm not going to win that race. But if you could think of new problem or a new way of

doing something and other people aren't all working on it at the same time. Maybe that will give you a chance.

So do something new."

Source: MIT

Simons: Work with the best people you can.

Jiheffe via Flickr
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"Collaborate with the best people you possibly can. When you see a person, get to know a person, who seems like a

great guy or great gal to work with on something, try to find a way to do it because that gives you some reach and some

scope and it's also fun to work with terrific people."

Source: MIT

Simons: 'Be guided by beauty.'

Miss America 2012

Ethan Miller / Getty Images

"Be guided by beauty. I really mean that. I think pretty much everything I've done has had an aesthetic component, at

least to me. You might think building a company that's trading bonds, what's so aesthetic about that? What's aesthetic

about it is doing it right. Doing it right. Getting the right kind of people and approaching a problem and doing it

right. And if you feel like you're the first one to do it right, and I think we were, that's a terrific feeling and it's a

beautiful thing to do something right. It's also a beautiful thing to solve a math problem or create some mathematics

that people haven't' thought of before. Be guided by beauty is not such a bad principle."

Source: MIT

Simons: 'Don't give up.'
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8/20

krbloomervia Flickr

"Don't give up. At least try not to give up."

Source: MIT

Ray Dalio: You have to know your weaknesses.

Peretz Partensky on Flickr

"I don't think that there's a problem if people have weaknesses and they know they have weaknesses. The greatest

barrier that people have in their own personal evolution is not understanding their weaknesses and running into them all

the time."

Source: 7th Annual Hedge Fund Industry Awards

Dalio: Mistakes and problems are good because it's part of the process.
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YouTube/Magicman25uk

"In my opinion, I love mistakes. I love problems. Because I think all of that is part of hte process. I have a ski instructor

who taught Michael Jordan how to ski and every time he would make a mistake he loved it. He realized that mistakes

and problems are part of the process. He was an ordinary basketball player. Became the world's greatest basketball

player because he evolved. He allowed himself to appreciate the mistakes."

Source: 7th Annual Hedge Fund Industry Awards

Dalio: There's no correlation between money and happiness.

YouTube

"It was interesting that took a course and studied happiness in all different societies. It was interesting that he found out

there's no correlation between money and happiness. The thing that there was the most correlation was community.
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10/20

The people have a sense of community. Those who had a sense of community were happiest. I think that's true. It rings

true for me."

Source: Greenwich Town Party

Now let's learn something from another top fund manager..

Read more:http://www.businessinsider.com/life-lessons-from-hedge-fund-managers-2013-2?op=1#ixzz2PvL6T1AL

15 Brilliant Insights From Hedge Fund

Superstar Kyle BassRead more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvLN6Ao0

Hedge fund superstarKyle Bass, the founder and principle ofHayman CapitalManagement, has certainly been doing his homework onsome of the most pressing issues facing the global economy.Bass, who describes himself as a "realist," has a pretty negative outlook on the eurozone and Japan and the possible implications herein the U.S.

"Don't believe these governments when they tell you that everything is going to be fine when they are going to solve the problems...They can never tell you what they are about to do," he said during the AmeriCatalyst conference last month.

"Develop your own opinion. Go look at these numbers. Don't listen to me," he told the audience. "The key is to do your own work."

We recommend watching thefull hour-long video. In the meantime, we've pulled out some key insights from the Texan hedge fundmanager.

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvLu8fkA

How long of a road do we have?
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11/20

terren in Virginia via Flickr

"I think we have... let's say the political elite think we have 10 years -- I think we have 3-5 and it'spredicated on the acceleration on what happens in Europe and Japan," Bass said.

"I hope that's right."

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvLyKUEI

The silver lining...

Wikimedia Commons

"The silver lining, in my theory, our politicians, our people in the Fed and the Treasury, they all have front row seats to what's about tohappen in Europe and Japan. It takes a crisis of that kind of magnitude to shake us to our core to change the path that we are on.Politically, the path isn't going to be changed."

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvM28MKW

The psychology is more important than the quantitative analysis.
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12/20

Xhanatosvia Flickr

"We have been conditioned to believe there is always this savior out there," Bass said. "There's an optical backstop designed to makeeveryone believe countries can't default."

"It's where we stand to day on Greece on Italy. I think it's really important to think through that psychology," he said. "Those optics arestarting to come into question."

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvM6rcTE

Unabated free trade is problematic for the U.S.

AP images

"I think unabated free trade is problematic for the country that the highest living standards and wages in the world," Bass said. "Call mecrazy."

"You think you can import the good and leave the bad behind -- their standards and wages -- that's not the case."

That's because in the U.S., he explained, we are starting to see permanent job loss.
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13/20

"The Fed is just starting to recognize this," he said. "When you ask the Fed, the Fed presidents, they all think that it's less than 100basis points. I'd say it's hundreds of basis points."

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvMAFkpK

If there is any growth in the U.S., it will be very slow.

By wwarby on Flickr

"We're not going to grow," he said. "If we grow, we are going to grow very slowly."

Since Europe is in a prolonged state of deleveraging, he explained, the U.S.'s hope is to grow at 1 to 1.5%.

"It's my assertion is our only hope is to plod along."

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvMDervD

"If you think a 50% default in the private sector is what's going to save Greece, you're out of yourmind."

Wikimedia Commons
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14/20

"What does solvency mean to you? What is debt sustainability as we define it today"

"I define it in a very numerical way, the same way as the ratings agencies define it, having a sustainable debt load means that you arenot spending more than 10% of your central government revenue on interest, but Greece spends 16% of central government revenueon interest alone."'

"Does anyone know what Greeces on-balance sheet financing cost is? Forget their market rates. What does it really cost them today

for their weighted average cost of capital on balance sheet? Does anybody know? Thats interesting."

"We all know theyre in trouble, but no one looks at the numbers. They borrow at 4.4%. Their two-year money is at 100% and their 10-year money is at 27%. They borrow at 4 and theyre spending 16% on interest. For those of you who think that a 50% default in theprivate sector is whats going to save Greece, youre out of your mind. It is a full write down of what the Troika doesnt own."

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvMGL5we
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15/20

The bottom line is the bill is due today.

wrestlingentropy via flickr

Bass said policy only buys time, but the bottom line is the bill is due today.

"It's due in Europe today, due in Japan tomorrow and due in the U.S. the next day," he said. "Those days are separated by years ofcourse and no one wants to admit it."

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvMIhWaY

The UK and France are both in trouble, according to Bass.

youtube

Bass said when you looked at a host country's banking system such as Iceland, it didn't take a genius to figure out it was going to blowup.

"Regulators weren't paying attention to the size of the host country's banking systems in relation to the sovereign's ability to maintainlosses," he said.
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16/20

According to Bass' estimates, the UK is in "big trouble" and France is in "huge trouble" just as the EU as a whole is.

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvMNOpot

Why he's so focused on Japan, Ireland and countries like that.

AP Images

"Some economies are much more productive than others," Bass said. "Japan has no natural resources. They import all their inputs."

"When you use central government tax revenue, it's a better measure... Some of the countries are in this scenario where their debt is40x their Central government revenue and it just takes a tiny move to literally detonate them. That's why we are so focused on Japan,Ireland and countries like that."

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvMPhpyK

So now what? Individual investors need to be "much more conservative."

"If you're an individual what you should do is to be much more conservative than you think you need to be," Bass said.
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17/20

"The return of capital is much more important in the next few years than the return on capital," he said, adding that, "We are notprogrammed to think that way as Americans."

That's because we all think the central bank and the government will fix everything and make it right.

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvMS7gFa

Investors should be more in cash.

Flickr - bredgur

"I think in the environment that we are talking about, the U.S. dollar will be fine int he short to medium term and if we are right aboutEurope and Japan."

He thinks people should be more in cash.

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvMU4QVS

Individual investors should own "productive assets."

Bass suggested individual investors hang on to "productive assets" and be less invested in financial assets.
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18/20

By productive assets he said he means real, productive things such as oil wells, apartment buildings, etc.

"I'm not saying you won't suffer mark-to-market losses there if we're right about deleveraging, but at least it will keep up withdebasement of currency overtime.

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvMWM1gu

He recommends people buy a little bit of mortgage insurer MGIC.

MGIC

Bass, who famously bet against the subprime mortgage market, recently disclosed in anSECfiling that Hayman snapped up a stakeMGIC Investment Corp-- the largest mortgage insurance company in the U.S.

"We own almost 5% of MGIC," he said. "I think you can see that the pig has moved through the python in terms of U.S. housinglosses."

"We believe that everyone paints the MI's with a brush that they are all going the way of the Dodo. MGIC has a pretty big positiveequity positions. They will be one of the last one's standing," he said.

Bass said if people are looking for somewhere to put their money he recommended buying a little bit of MGIC.

"I think it's worth 3-10x over the next five years," he said, "Even at a runoff, it's worth north of three bucks."

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvMZvzDE

On why he owns so much gold...
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19/20

Brian Giesen

"My opinion is very simple as a fiduciary... to the extent that you own gold and you are going to own it a long time --it's not a trade. Itcosts us about 90 basis points a year to roll it through financial futures contracts," he said.

"And then we went and looked at the COMEX. The COMEX at the time they had about $80 billion in open interest between futures andfutures options. In the warehouse they had $2.7 billion of deliverables. So $80 billion in open interest -- $2.7 billion in deliverables.Were gonna own it a long time. You're on the board, as a fiduciary, what do you do? Thats an easy one. You go get it. So you go takea billion of $2.7 billion and you let them worry about the rest."

"When I talked to the head of deliveries at COMEX NYMEX, I was like, 'What if 4% of the people want deliveries?' He said, 'Oh Kyle,that never happens. We rarely ever get a 1% delivery.' And I asked, 'Well what if it does happen?' And he said,'Price will solveeverything' And I said, 'Thanks, give me the gold.'"

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvMfEoDy

He thinks social unrest will continue to grow.

Robert Johnson Business Insider

According to Bass, the anti-corporate Occupy Wall Streeters have a case.
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20/20

"I think the social unrest is going to continue to grow. I wouldn't discount the Occupy Wall Street model."

"What on earth were we doing investing U.S. government taxpayer money into bank equities?" he said. "That was the biggest bozo no-no in the last debacle we went through."

"If we really had a capitalist model, we'd have bankruptcy," he said.

Read more:http://www.businessinsider.com/americatalyst-kyle-bass-2011-12?op=1#ixzz2PvMjgEix
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