I wish there were more interviews to be gleaned from talented hedge fund manager, Paul Tudor Jones. Read more about his profile here: http://www.safehaven.com/article/20401/paul-tudor-jones-ii-master-of-the-marketsWith regards to his comments on tape reading “which is something of a lost art form”, this view is shared similarly by SAC, Steven Cohen SAC Capital’s Cohen Opens Up:
“Considered a gifted “tape reader” with an uncanny knack for predicting stock-price movements, Mr. Cohen said that because of the rise of electronic trading and the way that orders were chopped up, “tape reading is a lost art that today is not very useful.””
The quick review on Paul Tudor Jones approach:
| Read the tape | Critical. Chartist, accumulation, distribution, markup, price, time and volume. |
| Fundamentals | Very Important, but does not dominate. |
| Economics | Macro both domestic and global imbalances are the best source for investment ideas. |
| Market Timing | Tries to determine top and bottoms, rather than the traveling between the two. In short he is a contrian market timer. |
| Money Management | Critical. The stock market game is defensive rather than offensive. Stops losses are both price and time. |
"I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms." ...
"I'm always thinking about losing money as opposed to making money. Don't focus on making money, focus on protecting what you have" ..
The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge
Ninety-percent of any great trader is going to be the risk control. Technical Analysis: .."Made well over half the money that I've made in my lifetime"..Fundamental Analysis: .."Made me the rest"..Which are your better at?: .."Probably technical analysis"..
When trading macro, you never have a complete information set or information edge the way analysts can have when trading individual securities. It's a hell of a lot easier to get an information edge on one stock than it is on the S&P 500. When it comes to trading macro, you cannot rely solely on fundamentals; you have to be a tape reader, which is something of a lost art form.
