LEARN FROM THE GENERALS OF THE MARKETS - PART 54
“I've found that the more focused I am on trading and living a successful life, the fewer groups I actually fit into.” – Louise Bedford
Kenneth Griffin was born in 1968, Florida, USA. He’s an American trader and funds manager. He attended Boca Raton Community High School, and then Harvard University. While at the University, he began to manage some portfolios (as well as focus on his education). His first portfolio was worth $265,000 (including contribution from his granny). He sold short and made gains from the markets in 1987.
As soon as he earned a degree in economics (1989), an investor named Frank C. Meyer was impressed by his trading performance and he gave him $1 million to trade with. Kenneth was able to maintain his success with about 70 per cent profit. Soon, people began to hear of his trading prowess and some were intrigued enough to start investing with him.
He founded his hedge fund firm: Citadel LLC, a Chicago-based investment firm, in 1990. The capital base was $4.2 million. The firm grew quickly. In fact, the business kept up growing year after year and Kenneth grew richer and richer (year after year), until he eventually became a billionaire. He first appeared on Forbes 400 (2003), with a net worth of $650 million. His worth was eventually over $3 billion (some sources even say it has grown more than that). In 2011, he was ranked as the 512th richest person in the world.
In the year 2004, he earned an income of $240 million. He was paid $210 million in 2005, making him one of the 25 highest paid funds managers that year. His firm continued to perform strongly, and he was paid $1.7 billion in 2006, plus $2.6 billion in 2007. In 2011, he collected a salary of $700 million. No wonder he was able to buy the most expensive condo in Chicago for a mere $15 million, in 2012 (it was the most expensive there at the time). Very recently, he was paid close to $1 billion dollars.
At first he avoided the press and rarely gave interviews. But now, he’s more open and he’s taken a glare of publicity. He now talks about his purchases, contributions and political views.
He makes large donations to various individuals and programs: including education, medicine, research and politics. For example, in February 2014, he gave $150 million to Harvard University, so that some students could receive financial assistance in their studies. That was the biggest single donation in Harvard’s history, to date. The financial assistance is based on the needs of students. This would help some students who’ve difficulties in paying for their education.
Kenneth is happily married with 2 kids.
These are some of the lessons that can be learned from Kenneth Griffin:
- Kenneth is a great trader, but without doubt, he got his own weaknesses. All traders have their strengths and weaknesses. The logic is to capitalize on your strengths and minimize/control your weakness. Doing so will push you ahead of the crowd who tend to be undisciplined in most cases.
- The highest paid footballer (C. Ronaldo) in the world is far poorer than the tenth highest paid funds manager in the world. In order word, the highest paid funds manager (David Tepper, for Kenneth is number 5 on the list for the year 2014) is 35 times more paid than C. Ronaldo. A footballer may be more popular because of hundreds of millions of fans and viewers worldwide; yet a funds manager, who trades on his computers in his office, may be far more strikingly rich. Kenneth was not born a billionaire, but he becomes one. His wealth is self-made. You may have been born in a financially humble family, but that shouldn’t preclude you from reaching financial freedom.
- I beg you profoundly; try to be the best trader you can be. Trading is full of challenges that can be overcome. Kenneth’s faced the challenges before and he overcame them. You too can overcome. When you become a successful trader, you can manage others’ money and you’ll be paid handsomely when you make money for others. Your track record will speak for you. The effort to reach consistency in trading may be daunting, but the eventual rewards are huge.
- Note that it took Kenneth many years to become what he’s today; neither does he double his gains overnight. Please map out a long-term plan to make realistic and consistent gains each year. Trading career is a journey of a lifetime.
- Yes, Kenneth’s beginning was humble. He started Citadel with a few million dollars and the firm grew up to become one of the world’s largest hedge funds. The growth was gradual, but it was sure. Don’t despise your little beginning; though it is small. Your latter end shall increase greatly.
- Leverage has advantages and disadvantages. It gives you some power while you’re also exposed to more risk. The trick is to make use of the leverage you’re given in a rational way so that you benefit from it and at the same time, limit the adverse effect it may bring.
Conclude: Please don’t forget that our orders in the markets are expected to bring us some profits in the long run. So there is no need for us to stay glued to our computer, and therefore we’d do well to leave our orders to pan out without being micromanaged. As soon as we control our negativity, there would be recovery, and eventual going ahead.
This article is ended with a quote from Kenneth:
“Capital markets reward you for what you learn that other people have yet to ascertain.”
Learn from the Generals of the Markets: Market Generals