Tudor

Paul Tudor Jones, who is famous for his prediction about Black Monday 1987 is a founder of Tudor Investment Corporation known as Tudor Asset Management and a chairman and CEO of Tudor Group of Company. A firm whose seeds he sworn in 1980 at Greenwich with $300,000 is now a leading asset management company hit the worth of $3.3 billion recently as of March 31, 2011. Tudor organization comprises of 300 employees, operating in Greenwich, Connecticut and additional operations in Boston, Surrey (U.K.), London and Washington, D.C. Tudor Investment Corporation was not only Paul’s best shot, in 1987 his anticipation about market crash was his major success too. Tudor charges management fees 4% per annum of asset under management and 23% of the profits which is much higher than the market which is 2% per annum of asset under management and 20% of the profits. Tudor Investment Corporation, which is an affiliation of Tudor Group, is an active trader in global equity, venture capital, debt, and currency and commodity markets and it manages up to $10 billion in client capital including private equity funds. His firm takes broader and opportunistic approach when it comes to invest in the market like make some handsome amount of money when market takes turns. He earned title of THE MACRO TRADER due to his diversified investment methodology in including global macro trading, equity investment, event driven strategies and his technical trading system. He created FINEX, the financial futures divisions of the New York board of trade with his colleague Hunt Taylor. Paul also worked as a chairman of the New York Cotton Exchange in August 1992.

Investment Philosophy:

Jones natural reluctance for loosing money made him a conservative investor in market; he only goes for such options which definitely give him back. He doesn’t believe on the concept of taking risks in business, his 4% aum is self evident of his investment strategy. He believes the key of success is how good you are at risk-controlling, for him a good trader should be a 90% risk controller. He hits the market when small investments are usually overlooked by a normal player’s eyes, his strategy of going for small investments with low risk profiles pays him great amount of reward. He always plays at defensive end and makes good money when market takes turns, good money management near to him a sole key to flourish. A good stock player should have sound mind to judge what’s market swings are and that’s how Jones got an edge in market, when market slower down its pace he immediately liquidates the trade. To him all the risk-susceptible open holes should be closed so that you can not lose what you have, and go for high reward paying opportunities. His aggressive trading style prompts him to think about losses first and that’s how he complies the most fundamental principle of business which is ‘recognize future losses now but recognize gains when it happens’. In his firm his all capital has tied up which made him to be a liquid person rather of stock owner, he believes owning stock for a longer span risks your complete investment. His ability of foreseeing losses has benefited him a lot and gave him worldwide fame on the anticipation of Black Monday 1987’s market crash; he doubled or tripled his money up to $100 million.

Manager Biography:

Mr. Jones was originally from Memphis, Tennessee and did his high school from Memphis University School. After completing his high school he graduated from the University of Virginia with Economics as a major. Besides studies in 1976, he started his career as a commodity broker on the trading floor in New York. He then went to Harvard Business School, but soon realized that what is taught in this school is not the knowledge that he wants to get. So he abandoned the idea of further education and asked for support and advice from his cousin William Dunavant, owner of the Dunavant Enterprises which is the one of the largest world’s cotton merchants, he set up meeting for Paul with a commodity broker Eli Tullis.Tullis hired Jones and specialized him in the field of trading in cotton futures at New York Cotton Exchange, Tullis taught him how to tackle emotional highs and lows of trading. Till 1982 he traded like a champion and developed a great amount of his customers as an independent trader. Meanwhile, he established his own firm Tudor Investment Corporation in 1980 which has now become one of the biggest asset management companies. First five years of Tudor Investment Corporation yielded at 100% per annum but later in 1986, reduction in his earning up to 0.8% upset him and he considered it as his bad year. Till 1993, he faced a strong competition in market but on entering in 1994 he suffered heavy losses, customers withdrew money from funds and assets were gone liquidated, but to his surprise Tudor Investment not only survived rather also earned a profit of 9%. As a result Paul Tudor has established his reputation in market as a best trader and a master of money management. Later, his Black Monday’s anticipation labeled him as a talented money maker.

From 1992 to 1995 Mr. Paul has also worked for New York Cotton Exchange as a chairman. In 2007, he failed to trade the real estate meltdown which has started at the start of 2007 and caters almost whole world, he stated in his interview “I missed the subprime opportunity of 2007. It rankles me every time I hear the term.” (Home made money guide). In 2008 Tudor Investment’s Boston based US equity division was spun off by its managing director James Pallotta as Raptor Global but later in 2009 Raptor Global announced that it was winding down operations. After a careful examination of 2007’s crisis he was in search of most liquid asset which utterly pays him back, in seek of boom he went for gold. He was of the belief that enormous injection of money in economy due to lose monetary and fiscal policy caused this hyper-inflation which resulted in market crisis. In order to take a step in improvising market condition and mitigate future losses he started investing in gold.

He is also involved in charitable work and a founder and a Director of Robin Hood Foundation, a charitable foundation, and is a Director of the National Fish and Wildlife Foundation and The Everglades Foundation. In addition, Mr. Jones is currently Chairman of Everglades Foundation and Bedford-Stuyvesant’s Charter School for Excellence.

Famous Trades:

Known by the prediction of market crash, Paul Tudor’s name hit the list of top ten great traders. He made $100 million by his most accurate forecast. It’s reported in the last quarter he acquired shareholding of 15 big corporations out of which MetLife, Inc. and Microsoft are his big shots.

Quotes:

“I’d say that my investment philosophy is that I don’t take a lot of risk, I look for opportunities with tremendously skewed reward-risk opportunities. Don’t ever let them get into your pocket – that means there’s no reason to leverage substantially. There’s no reason to take substantial amounts of financial risk ever, because you should always be able to find something where you can skew the reward risk relationship so greatly in your favor that you can take a variety of small investments with great reward risk opportunities that should give you minimum draw down pain and maximum upside opportunities.”

“I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms.”

“I’m always thinking about losing money as opposed to making money. Don’t focus on making money, focus on protecting what you have”

“And then at the end of the day, the most important thing is how good you are at risk control. Ninety-percent of any great trader is going to be the risk control.”

“You adapt, evolve, compete or die.”

“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.”

“A Malthusian population explosion intersecting with globalization. We have encouraged all 7 billion of the world’s inhabitants to live like Westerners, and now that they have taken the bait, we are realizing it is impossible on this small Earth. The first big hit has been to the environment; the next, which we are witnessing, is to energy prices, and it is leading to food shortages and eventually more famines. Governments are only starting to address the problem, and the planet’s most inventive and powerful economy, America’s, is leading only from the rear, if at all, given our present administration.”