Reblog: Lessons From a Trading Great: Paul Tudor Jones
From Jack Schwager’s Market Wizards:
October 1987 was a devastating month for most investors as the world stock markets witnessed a collapse that rivaled 1929. That same month, the Tudor Futures Fund, managed by Paul Tudor Jones, registered an incredible 62 percent return. Jones has always been a maverick trader. His trading style is unique and his performance is uncorrelated with other money managers. Perhaps most important, he has done what many thought impossible: combine five consecutive, triple-digit return years with very low equity retracements. (I am fudging slightly; in 1986, Paul’s fund realized only a 99.2 percent gain!)
Jones has succeeded in every major venture he has tried. He started out in the business as a broker and in his second year grossed over $1 million in commissions. In fall 1980, Jones went to the New York Cotton Exchange as an independent floor trader. Again he was spectacularly successful, making millions during the next few years. His really impressive achievement though was not the magnitude of his winnings, but the consistency of his performance: During his three and a half years as a floor trader, he witnessed only one losing month.
It’s been 25 years since Paul Tudor Jones (PTJ) was featured in the original Market Wizards. He has since maintained his all-star track record. According to the New York Times, as of mid-2014, PTJ’s flagship fund averaged long-term annual returns of around 19.5%. And what’s even more impressive is that he didn’t have a single losing year over those 25 consecutive years — a feat unheard of in the hedge fund industry.
To follow is an examination of this legendary fund manager, whose trading style resembles that of a street fighter and whose gut-instinct for market turns are unparalleled.
