John W. Henry
If one theme summarizes Henrys philosophy, it is the knowledge that one cannot predict anything. Henry is a long-term follower. His philosophy is based on the premise that market prices, rather than market fundamentals, are the key aggregation of information needed to make investment decisions. He says, The markets are peoples expectations, and these expectations manifest themselves as price trends. We live in an uncertain world. One cannot predict the future of anything. In an uncertain world, identifying and following trends may be the only reasonable investment approach over the long term. Henry feels that a mechanical approach has more value since no scientific approach or solid testing can be applied to discretionary trading. Henry says that when he first researched the markets in the 1970s, he was looking for a methodology that would work through many market conditions. His research showed that long-term approaches work best over decades. There is an overwhelming desire to act in the face of adverse market moves. Usually it is termed avoiding volatility with the assumption that volatility is bad. However, I found avoiding volatility really inhibits the ability to stay with the long-term trend. The desire to have close stops to preserve open trade equity has tremendous costs over decades. Long-term systems do not avoid volatility, they patiently sit through it. This reduces the occurrence of being forced out of a position that is in the middle of a long-term major move.”
John Arnold
In 2005, a different hedge fund, Amaranth Advisors LLC, had bet billions on natural gas, anticipating prolonged shortages following Hurricane Katrina. Unfortunately, prices failed to move and the fund was soon sitting on $6.5 billion in losses. At the same time, Arnold had made around $1 billion betting the opposite, generating 317% in returns in 2006 for investors.
After prices had bottomed out towards the end of 2006, Arnold bought up Amaranth Advisors’ losing position in natural gas in a trade that rapidly turned around between 2006 and 2008. Then, in 2008, he foresaw the looming collapse in natural gas prices and nearly doubled his money again by taking a short position in the commodity
Jay Gould
Before becoming very wealthy from the railroad industry, Gould devised a commodities scheme that he hoped would make him millions of dollars. The plan was to corner the gold market (the gold standard was still in effect at the time) in order to increase the price of wheat, thereby increasing freight business on his railroads.
Gould began buying gold in August of 1869 in an attempt to drive prices higher and succeeded in raising them some 30% by September. Unfortunately, the government caught on to what was happening, sold $4 million worth of gold, and prices plummeted within minutes, but not before Gould made out with an estimated $10-$11 million in profit
Louis Bacon
In 1990, Bacon created More Capital Management LLC and Moore Global Investments using $25,000 that he inherited from his family. The latter fund became famous after returning 86% during its first year, thanks to a decision to short the Japanese Nikkei just before the market collapsed and purchase oil contracts ahead of Saddam Hussein’s invasion of Kuwait.
By 2010, Bacon was worth an estimated $1.6 billion, with Moore Global Investment Fund worth an estimated $7.4 billion. He bases most of the fund’s decisions on global trends in inflation, economic growth, central bank policy, and national politics.
Paul Tudor Jones
In 1980, Jones founded the Tudor Investment Corporation, which was focused on global equity, venture capital, debt, currency and commodity markets. While he got his start in commodities, Jones became famous for predicting Black Monday in 1987, when he reportedly tripled his firm’s money thanks to some very large short positions in the market.
Tudor Investment Corporation has since evolved into a leading asset management firm focused on a wide array of asset classes. Jones himself has been ranked number 330 on the list of the world’s wealthiest individuals.
Jim Rogers
In 1998, Rogers started his own commodity index fund that rose 165% by 2007 with $200 million invested. During that same year, he wrote a book, entitled Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market, discussing his investment strategies and how to capitalize on the commodities market.
While the commodities market has since cooled off, Rogers continues to be a regular guest on financial news programs, including Fox Business News and CNBC. He continues to believe that agriculture will become the next major commodity to see a dramatic rise, betting heavily on the sector during the latter part of 2012.
Richard Dennis
Profits like those for Dennis came with heartburn. He was down $10 million in a single day that year before bouncing back, a roller-coaster ride that would have made mere mortals lose serious sleep. Yet Dennis cockily said that he slept like a baby during all that volatility.
His moneymaking style was about mammoth home runs and many smaller strikeouts. If there was a “secret,” he knew that you had to be able to accept losses both psychologically and physiologically. Still, 1986 was a long time ago, and memories dull when an old pro starts talking about the benefits of taking “losses.” During his heyday in the 1970s, 1980s, and mid-1990s, Dennis was described in a number of ways by those who knew of him. There was Dennis the legendary floor trader, Dennis the trading system’s trading guru, Dennis who started funds with investment bank Drexel Burnham, Dennis the philanthropist, Dennis the political activist, and Dennis the industry-leading money manager.3 He was a difficult man to stereotype, and he liked it that way.
Paul Rotter
He became known as “The Flipper” because of his unique trading style on the Eurex exchange that involved placing a huge order on the opposite side of the market that he really wanted to take. Then when other traders tried to jump in to take a ride with the big position, he would withdraw the order and take the opposite side of the trade to suck in all the bad trades and scalp a few ticks. Rotter was despised by many traders who blamed him for their losses.
Bill Lipschutz
Today, Bill is a well known forex trader in the financial sector. He is known to have made over $300 million in a single year from trading on the forex market alone.
George Soros
John R. Taylor, Jr.
John is the proud owner of FX concepts, a currency managing firm, and operates it successfully to this day. He is also considered a pioneer of computer-aided forex trading systems, developing forex models for effective online trading.
Stanley Druckenmiller
He returned to Duquesne in 2000 and now works full-time there; he has also started a non-profit organization dedicated to educating people of all ages.
Andrew Krieger
Andrew moved on to work for Soros Management Fund in 1988, later switching to Northbridge Capital Management. He is also involved in philanthropic work, having donated over $350,000 for a relief fund for the 2004 tsunami victims
John Paulson
John Key
To be continued