Super Rich: The Greed Game

The luxurious lifestyle of those at the top of the world of finance inspires awe, disgust, and ambition. With the mind boggling salaries of the hedge fund traders in the millions and even hundreds of millions of dollars, it’s no wonder people are growing curious about how they made their money.

Robert Peston, the BBC’s Business Editor, talks with investment bankers, hedge fund managers, and top managers from private equity firms on how the super rich have made their money. It offers an eye opening look into how the big earners operate, and some of the potential consequences of their greed driven pursuit of more and more money and success. 

HEDGE FUND LEGEND: If One Of My Managers Is Getting Divorced, I'll Pull My Money Out-Must Watch Video

The Washington Post has obtained footage of hedge funder Paul Tudor Jones from a panel discussion at the University of Virginia last month with fellow fund managers John Griffin and Julian Robertson

 During the panel discussion, PTJ made some comments that the biggest killers to trading success are divorce and women having babies.  

Here’s what he does when on of his manager’s is going through a divorce: 

“… Like, one of my No. 1 rules as an investor is as soon as my manager, if I find out that manager is going through divorce, redeem immediately.  Because the emotional distraction that comes from divorce is so overwhelming. The idea that you could think straight for 60 seconds and be able to make a rational decision is impossible, particularly when their kids are involved. You can automatically subtract 10 to 20% from any manager if he is going through divorce.” 

Watch the video below: Don’t Miss to WATCH 

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Hendry takes a big bet on China crash

Hugh Hendry, the voluble hedge fund manager well known for his bearish but highly successful calls on the global economy over the past two years, has taken a big position that is designed to profit from a crash in China.

Mr Hendry’s London-based Eclectica Asset Management has constructed a “short credit” portfolio that stands to make gains of 250 per cent for his flagship fund in the event of a slump in China’s growth.

Eclectica is also poised to launch a standalone fund to benefit from the strategy next month, the Financial Times has learned.

The new fund will stand to deliver even larger gains than those for the main fund if successful.

“The investment team and I have carefully constructed a short credit portfolio made up of over 20 single-name industrial, cyclical businesses that have the dubious distinction of suffering from gigantic financial leverage and Asian/commodity overdependence,” Mr Hendry wrote to investors in his monthly letter this week. (more…)

Life Lesson

icecreamboy“Fund Managers ,Future Traders and Day Traders should learn something from this kid!:

A young boy enters a barber shop and the barber whispers to his customer, “This is the dumbest kid in the world. Watch while I prove it to you.” The barber puts a dollar bill in one hand and two quarters in the other, then calls the boy over and asks, “Which do you want, son?” The boy takes the quarters and leaves the dollar. “What did I tell you?” said the barber. “That kid never learns!” Later, when the customer leaves, he sees the same young boy coming out of the ice cream store & says “Hey, son! May I ask you a question? Why did you take the quarters instead of the dollar bill?” The boy licked his cone and replied, “Because the day I take the dollar, the game’s over!”

Cold Truth About Emotional Investing

Consider an excerpt:

WSJ: What do you mean by emotional finance?

PROF. TUCKETT: What we try to do in emotional finance is start with the fact that the future is unknowable. The key thing about uncertainty is that it inevitably generates feelings. Because it matters to you, because your money’s on the line, so to speak, you’re bound to feel emotionally engaged.

WSJ: Some people think pros are more rational than individual investors.

PROF. TAFFLER: Although most of the fund managers we interviewed saw part of their particular competitive advantage as remaining, as they described it, unemotional or rational, in practice they were just as emotional as anyone else when they started to talk about the stocks they had invested in. There were lots of examples where they referred to them almost as if they were lovers.

If you’re entering into an emotional relationship with a stock, an asset or a company that can let you down, this leads to anxiety, which is often not consciously acknowledged. But it’s there, bubbling beneath the surface.

WSJ: The fund managers told stories about their investments. What was the role you found that storytelling played in their decision making? (more…)

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