INSIGHTS INTO THE MINDSET OF SUPER TRADERS – Part 18
“The trading game is not won in the strategy one selects.
The trading game is won in the mind.” – DbPhoenix (Source:
Trade2win.com)
Name: Michael Steinhardt
Date of birth: December 7, 1940
Nationality: American
Occupation: Funds Manager and philanthropy
Career
Michael was born to an American Jewish family. His dad was a
notorious gambler who was his son’s first client. He provided the seed money
for Michael to start his investment career.
Michael Steinhardt attended the University of Pennsylvania.
After graduating in 1960, he worked for a brokerage firm. He started his own hedge
fund in 1967, with some partners. One source reports that his fund averaged an
annualized return for its clients of 24.5%, after a 1% management fee and a
"performance fee" of 15% (early in his career, later 20%) of all
annual gains, realized and unrealized, nearly triple the annualized performance
of the S&P 500 Index over the same timeframe.
Because of his continuous success in the markets, Michael
was investigated for allegedly trying to manipulate the short-term Treasury
Note market, because his firm personally made $600 million from trading
Treasury. The case was settled after a fine of $70 million was paid.
His fund sustained a loss in the year 1994 but enjoyed good
returns in the year 1995. This shows that even great speculators can’t always win.
But unlike short-sighted speculators, they don’t quit because they know things
would soon turn out in their favor.
Michael closed his fund in the year 1995 and returned the
capital to his clients. He came out extremely affluent and liquid.
In the year 2004, he came out of retirement and started
working for WisdomTree Investments (formerly known as Index Development
Partners). He’s chairman of that company; whose worth increases by about 10%
per month, with $18.3 billion under management.
The company suffered some losses in the years 2007 and 2008 as a result
of the credit crunch that ravaged the financial world then. Nevertheless, the
company has recovered and moved ahead.
Because of his Jewish ethnicity, Michael Steinhardt loves
Jewish causes, donating generously to several Jewish causes, programs and
events he believes in. He also donates generously to other political, academic
and humanitarian causes.
Michael was married in 1967, He’s 3 children. In the year
2001, he released an autobiography titled: “No Bull: My Life in and out of
Markets.”
Insights
- Michael mastered
several markets instead of just one market. He traded stocks, currencies,
bonds, and options, using small and big timeframes. He’s a trend-follower.
You can also master more than one investment vehicle.
- According to
him, make all your mistakes early in life. The more tough lessons early
on, the fewer errors you make later. Always make your living doing
something you enjoy.
- You need to
study the markets and gather lots of information so that you can sense
major shifts in the trend. You
can’t know everything, however. So you need to make your trading decisions
with incomplete information. You will never have all the information you
need. What matters is what you do with the information you have.
- Trust your
intuition always – though that doesn’t mean you can always be right. When
you’re eventually right, the thought of having made a profit would be so
satisfying.
- Before your risk
your money, make sure the reward is high enough to justify the time and
effort you put into the investment decision.
- Michael
Steinhardt used fundamentals when trading, though his positions were
short-term. He did an enormous amount of trading, not necessarily just for
profit, but also because it opens up other opportunities. He got a chance
to smell a lot of things. Trading is a catalyst.
Conclusion:
“There’s no way to know in advance if a business idea is a good one. For
instance, Google started around 1996 but didn’t make a dime of money until around
2001,” says James Altucher. He also says… don’t be afraid to test, fail, test,
fail, try again, repeat, improve, test, fail again, and keep improving. The way
to keep improving? Keep coming up with ideas for your business and for other
new businesses. How true are these statements about when it comes to trading!
This piece is ended with a
quote from Michael Steinhardt:
"One dollar invested with me in 1967 would have been
worth $481 on the day I closed the firm in 1995, versus $19 if it had been invested
in a Standard & Poor's index fund."
Source: www.tallinex.com
What Super Traders Don’t Want You To Know: Super Traders
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