Two weeks ago, I had the privilege to talk with legendary hedge fund manager Michael Steynhardtom. When I was about to take his interview, I most wanted to understand his style of trading and trading strategies. Making $ 100,000 to more than $ 48,000,000 over 28 years (after the payment!) By trading on the stock exchange is not something ordinary. Does Steynhardt some unique trading strategy, or the magic system? The answer is - absolutely "No". Is Steynhardt is a financial genius? In my opinion, he is very good. But probably no better than many other traders.
Steynhardta advantage lies in its combination of perseverance in gaining knowledge intensive mental work, which few could survive. It is - its ability to measure themselves and their work every hour, every day, for 28 years. Many of itself would be under such intense pressure. But for some, like Michael Steynhardtu that can withstand it, the results are simply staggering.
If you're hoping to find in the interview, a unique trading system, you will be disappointed - it is not here. In his interview with Michael Steynhardt talk about the general "internal" approach, which is required to reach such heights.
Larry: Tell us in brief about your style of trading. This method of peak-ground "? It all starts with the direction of the market? Right?
Steynhardt: Not all, though, many things begin with the market. But the real philosophy is not the point: Every day should begin with the idea that you're dedicating this part of your life, much of your energy for the day to make money. The results of this day will be measured, because the market provides a great opportunity - almost every measure. Success will be when you succeed, but when there is no failure.
This does not work, the results of which you are measured from the occasional or every year or even every month. Do you measure it every day. If you think about it this way, then you think about the opportunities that arise every day. This may be talking to someone who has more information, or a feeling that something has changed, or something you saw in the newspapers, etc. And you start thinking about how to use these opportunities to add some increment to your overall results based on what you saw on that day. Therefore, with regard to your question, it is not only buying and selling at the bottom to the top, as in philosophy.
This is the use of any opportunities of all kinds and types - from the theoretical to the search for new markets and market instruments, as the score itself is my job. And if the results of my work can be improved in some way, I do it.
Larry: Another interesting point I read in your book, is as follows - You say: "These results have been achieved over the years thanks to the principles of long-term investments that governed my obsessive need to have a monthly, weekly or even daily profits." And then just a 10-page, you write: "Warren Baffett said that if you do not want to have a share in over 10 years, then do not even think about buying it for 10 minutes. I have never held the event for 10 years, but have unique and beneficial ownership of the experience of some very good companies for 10 minutes. " How do you combine these two philosophy?
Steynhardt: I'm not sure that these two are combined philosophy, and often they are in conflict with each other, but the technique that I use, based on my experience as an analyst.
In any case, performing analysis and making certain findings, which are by their nature long term, I come to some conclusions that I will be used for long-term views, and for trade. There may be doubts about whether the long-term perspectives in relevant trade. Perhaps these doubts will be resolved by the fact that there is an element of timing that you are doing. Especially if you are focused on companies or industries, and have a feeling that things are changing, and if you can determine more quickly than others, where those changes are, then, even though these changes are by their nature long term, they often have short-term impact.
Larry: The timing happens instinctively and intuitively?
Steynhardt: To some extent - yes, and if I asked myself the question - why I was able over a long period of time to do the best market deals than most people? - I would have replied that it was a matter of intuition. Then another question - what is intuition? - And I think that intuition is a generalized, unconsciously based on the experience of the phenomenon, which leads to decisions about what is best for your business, as compared to the other.
Larry: What does it mean and how different perceptions of a particular trader can use it? If you have taught me to use a different perception of my own trade, what would it mean?
Steynhardt: If you have a belief in something that differs from the general consensus, and your belief is correct, then you can almost always do this profit. In other words, to be more specific: If you believe that in 2002. inflation of 5% or 6%, and the whole world thinks that it will be 3% and you find yourself right, you can almost always do at this money. If you think the dollar is going to collapse next year because the U.S. economy will weaken, and Japan for the first time is going to grow and you find yourself right, you can do at this money.
Larry: But how can I be more right than everyone else?
Steynhardt: This brings us to the issue in which you asked about the long view of things. This is the application of energy, intelligence and analysis of larger areas, which may lead to better conclusions. Some people may deny it. Some may call into question your, mine or someone else the ability to predict some macro-economic developments ahead, given the current level of information dissemination. They are certainly right - today is much harder to outpace the other. But on the other hand, if you devote 100% of your energy on studying in Japan (for example), the result of these efforts, you would have a better understanding of Japan, or feel the changes come faster than others, which would create an appropriate opportunity for you.
Larry: This is a kind of intellectual game?
Steynhardt: Yes, that's it.
Larry: If I came to you and said - "I want to start a business with hedge funds. I want to achieve what you have achieved." What would you advise me?
Steynhardt: I would say that the sooner you start. I would advise you to ask yourself questions like - "What I am really worried?", "I feel themselves really comfortable when I do certain things?". You know, many people in this business really love to convince people to do certain things. Many like to deal in securities. Many like to carry out research. There are various things you can do. I really love to be right. This is what I worry about all these years. That is, firstly, you must know yourself and the things that really make you happy. In order for you is important to be right, to make the correct judgments, because, without it you will not have enough perseverance, and without perseverance, you are unlikely to attach the necessary energy to become better than others.
I think a professional job on the stock exchange - as a competitive enterprise, and you should be mindful of the fact that there are legions of faceless people who try to do the same thing that you are doing and trying to outsmart the market. To do this, you must be a better, faster, pressure, etc., etc., etc. Therefore, I would have started to do in life as soon as possible.
Larry: But it is a philosophy that applies not only to be a hedge fund manager, as in any business.
Steynhardt: Probably so. The only difference, if it is, is that in this business you can measure the results of each day or each hour, simply by pressing a computer key. You can not say - "You know, I would have been an excellent year, if it were not for September 11."
Everything is measured in numbers and as soon as you accept the fact that these figures are a full assessment of your work, you must live with that.
Conclusion
Here is your formula for how to turn $ 100,000 into $ 48,000,000 using the style of Michael Steynhardta:
1.Vy trying to get an advantage at the expense of knowledge.
2.Vy doing for 30% of annual income each year for 28 years.
3.Zatem you partition the figure on the quarterly and monthly plans to accomplish its work, calculated at 28 years.
4.I then you apply the incredible perseverance to carry out these plans every hour, every day, every week, every month, every year over 28 years.
based on tradingmarkets.com
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