1) Chaos theory. Cohen can see order within chaos and just trade. Quote: “When he was building SAC, people would say things about the way he made his money that were not flattering—we heard all those rumors,” says Gary Goldring, onetime co-C.E.O. of Spear, Leeds & Kellogg, the firm that cleared SAC’s trades. “But let me tell you, as his clearing agent, I’ve seen all his records, hundreds of thousands of trades, all of it, and my conclusion is simply that the guy is an artist. He looks at a stock market in chaos and sees order. He was just right over and over and over. I’ve sat and watched him trade, watched him stare at his terminal in silence, and I can tell you, without a doubt, he is the best that ever was at what he does. On the planet.”
2) Passion for poker. Contrary to popular belief, most successful hedge fund traders share this common trait: Trading is a game and they are desensitized to money. Quote: “It’s the same with trading,” he goes on. “I think about the risk. I think about the trade. I don’t think about the money. Poker—that was the biggest determinant in my learning to take risks.”
3) Talented tape reader and pattern recognition. Cohen can put the algorithmic traders to shame since he can intuitively sense how a stock price will move. Algo (Fibonacci) on the other hand is just pure science and highly reliant on systematic trading. Quote: “There’s kind of an art to reading the tape,” he says. “I can’t really explain it; it’s about pattern recognition.” When he began trading, “I’m not looking at anything. Just the numbers on the screen. I couldn’t even tell you what the company did, and I don’t care. I’ve always been intuitive like that. It was always seat-of-the-pants.” He shrugs. “I mean, I’m not exactly classically trained.”
4) Consistent performing hedgie. Cohen is well known for his consistency, with personal compensation of about $1 billion a year, as SAC had registered 20-year CAGR of 30%.
5) Dislikes his nickname Stevie. Stevie, ahem, Mr. Cohen I mean. For all his worth, people still prefer an affectionate nick name for him than for George Soros. Quote: Cohen lets out an audible sigh when the matter of his image is brought up. “Wall Street develops these myths about people, a persona, and things stick, even if you change,” he says, displaying a rare flash of consternation. “I mean, they still call me ‘Stevie,’ and I’m 54 years old. It drives my wife crazy.” He’s right, in a way. After all, it’s hard to imagine anyone calling Soros “Georgie.”
Hat tip to Vanity Fair for an excellent piece on Cohen.