..Novogratz, co-CIO of Fortress Macro Funds ... Novogratz suggests what institutional investors hate to hear and what many managers I spoke to for this story wouldn't say on the record: He's smart. "It's hard to teach young traders this," he says, referring to macro investing. "You're either good at it or you're not." Most asset managers won't say they're smart -- at least, not in public -- because their investors want to hear about a formal investment process that can be taught and repeated. They want alpha to be sustainable. Of course, if the process of delivering can be easily documented, other can -- and will -- copy it, and returns should go down over time...The quote is from the ten page Institutional Investor article "Is Alpha Dead? Beating the Market Has Become Nearly Impossible", if interested follow the vbounded link.
Compare/contrast our 2009 post "Paul Tudor Jones Interview at Institutional Investor":
Last July we visited Mr. Jones in "Paul Tudor Jones on Oil". Here's the Alpha Magazine introduction:
Paul Tudor Jones II founded Tudor Investment Corp. in 1980 at the age of 25. Since then this extraordinary investor has never suffered a losing year. His old-school macro approach is built on what he calls tape-reading, which involves analyzing price trends and riding momentum — with an uncanny knack for balancing risk and return — rather than obsessing over the fundamentals, as less intuitive or less self-confident traders might. Jones’s core belief is that often prices move and trends unfold only because of investor behavior (in this he and George Soros are similar). Business schools, Jones laments, are sometimes too steeped in teaching economic postulates and market theory. Through his Robin Hood Foundation, he pours millions of dollars into antipoverty and education programs in New York City. The Memphis-born manager, who began his career as a cotton trader, first made a name for himself in 1987, when he called the market crash and rode a heavy short position in stock index futures to a 201 percent gain. Today he oversees more than $18 billion in assets. Tudor’s flagship BVI Global Fund has returned roughly 23 percent annually since its 1986 inception.Although I haven't researched it, I believe he did end up breaking that "Never a losing year" string last year. He's still one of the best in the business. Here's the interview:
What’s so special about macro hedge fund managers?Finally we have 2012's "Friedrich Engels: Global Macro With an Emphasis on Commodities":
I love trading macro. If trading is like chess, then macro is like three-dimensional chess. It is just hard to find a great macro trader. When trading macro, you never have a complete information set or information edge the way analysts can have when trading individual securities. It’s a hell of a lot easier to get an information edge on one stock than it is on the S&P 500. When it comes to trading macro, you cannot rely solely on fundamentals; you have to be a tape reader, which is something of a lost art form. The inability to read a tape and spot trends is also why so many in the relative-value space who rely solely on fundamentals have been annihilated in the past decade. Markets have consistently experienced “100-year events” every five years. While I spend a significant amount of my time on analytics and collecting fundamental information, at the end of the day, I am a slave to the tape and proud of it.Is it possible to teach someone to be a tape reader — what some might call a trend follower or technical analyst?Certain people have a greater proclivity for it because they don’t have the need to feel intellectually superior to the crowd....MORE
Sunday will be the 117th anniversary of Engels' death. Here's some stuff he thought about, in addition to co-writing The Communist Manifesto:
...The minor panic in the money market appears to be over, consols and railway shares are again rising merrily, money is easier, speculation is still pretty evenly distributed over corn, cotton, steam boats, mining operations, etc., etc.
But cotton has already become a very risky proposition; despite what is so far a very promising crop, prices are rising continuously, merely as a result of high consumption and the possibility of a brief cotton shortage before fresh imports can arrive. Anyway I don't believe that the crisis will this time be preceded by a regular rage for speculation; if circumstances are favourable in other respects, a few mails bringing bad news from India, a panic in New York, etc., will very soon prove that many a virtuous citizen has been up to all kinds of sharp practice on the quiet....MORE
