Alfred Winslow Jones was 49 years old before he started to invest in 1949. Previously, he was sent to Berlin as a vice consul of the United States and met Anna, a famous left-wing anti-Nazi, who was working for the Leninist organization. Jones fell in love with her passion and temperament, secretly married her and became her work assistant. However, the marriage was soon exposed and Jones was forced to leave.

In 1930s and 1940s, Jones kept in touch with the German left wing and American intelligence agencies, and met Hemingway on the way to the front by car after his second marriage, who treated them with whisky.

1948, Jones re-entered the financial field because he was invited to contribute to Fortune magazine, and published Predicted Fashion in March of the following year. The article writes:

Price changes are caused by investors' predictable psychological patterns. Money may be abstract, just a string of digital symbols, but it is also a medium through which greed, fear and jealousy are presented, and it is the reaction of the public.

At this time, two children, plus Jones, who loves luxury taste, decided to start a new magazine, but failed to raise funds and died. So he had to start his investment career with his own $40,000 and his friend's $60,000.

As of 1968, Jones has achieved a cumulative return of nearly 5,000%. The reasons why his fund is regarded as the first hedge fund in the world may be:

1, using multi-space operation strategy;

2. Collect 20% income from investors. Lawyer Valentine noticed that the personal income tax was as high as 9 1% at that time, while the capital income tax was only 25%, so he suggested Jones not to take a fixed performance fee, but to participate in the distribution of fund investment profits. Jones accepted it and explained to investors that he was imitating the Mediterranean. Phoenician merchants always withheld 20% profits from successful voyages and then distributed the rest to investors.

3. Pay is linked to results: successful managers will increase the scale of funds every year, and vice versa;

4. Use the relationship with the broker and use the inside information.

In 1950s, Wall Street was a quiet and simple place, and few students chose financial courses in universities. Harvard's investment course is called "darkness at noon" because it can only be arranged at noon to make room for more popular courses.

Commodity company

1970, Samuelson won the Nobel Prize in Economics. He believes that investment is not easy, and most investment decision makers should be unemployed, work as plumbers or teach Greek, which will help improve GNP. However, if a person has a real point of view, he can beat the market.

In order to spread the risk, he invested in Buffett and Hammer Mavi.

Mawei's childhood experience has long established his independent character and strengthened his determination to make a lot of money without relying on anyone. In Samuelson's eyes, this is a student who is eager for wealth and slightly arrogant.

In the process of research, Ma Wei established a mathematical model about orange juice industry. When the model showed that the price of juice would double, he borrowed money to gamble and he won.

After graduating from Ph.D., Mawei went to work in Beske. When the price of cocoa was much lower than the model forecast, Mawei suggested that the company buy cocoa futures, and then the price was lower.

"Are you sure you know what you are doing?" The boss asked him more than once.

Despite his nervousness, Ma Wei showed confidence and used personal capital to prevaricate the concerns of the CFO.

In the end, the output of cocoa in Africa decreased, and the price nearly doubled, so the ponytail was profitable.

"During that time in my life, I was neither modest nor doubted myself," he recalled.

Encouraged by this, Mawei and Wannathan set up a commodity company with only 13 people and a German shepherd.

However, sophistication does not guarantee success, and profit is only the beginning of a new problem.

Soon after the company's operation, the corn fields in the United States were attacked by "Fusarium wilt", and some experts predicted that the scale of Fusarium wilt would be even larger. Affected by this, corn prices began to rise. After several weeks of research, Mawei found that this was just an alarmist story in the media, so he made a lot of short positions. When the market opened in the second week, the price of corn rose rapidly. Mawei and his friends are trapped. After short covering, the highest position on Tuesday, the company's capital of 2.5 million was only 900,000. The company is dying, and the founder wants to withdraw funds. Four of the company's seven professionals have left their jobs. To make matters worse, Fusarium wilt is indeed a rumor.

This lesson, Ma Wei realized, "Overreliance on data may eventually be a curse, but it will only breed some arrogant people who induce you to establish large trading positions. If you only bet on a stable scale at that time, the result will be completely different. "

The margin of safety comes from the location first, then the suitable object, and finally the price. Crystal flies.

He improved the automatic trading system: from the beginning, risk control was incorporated into the program to prevent overconfident traders from breaking their limits. In addition, he also stipulates that anyone who loses general capital must close his position, leave his post for one month and write an error memo.

"If that dog named Coco can hold on after losing a leg, why can't I?" Mawei made up his mind that the company eventually became one of the most successful trading companies of that era.

Trader Coffler, his success is the end of the heyday of commodity companies.

Financial alchemy

At the London School of Economics and Political Science, Soros studied under karl popper, an Austrian philosopher who came to Britain to escape Nazi persecution. Popper believes that it is impossible for human beings to know the truth, and at most they can only grope for it through constant experiments and mistakes and get close to the truth.

We know far more mistakes than right ones. -Taleb

Soros, with average grades, sold women's handbags in Wales after graduating from college. In the end, he got rid of this hopeless job by seeking junior positions for all the investment banks that wrote to London.

From 65438 to 0969, Soros, who combined Popper's thoughts and financial knowledge, formed a "reflection" complex, and under the protection of bleisch Rowe, launched a $4 million long-short stock selection fund.

Reflexivity

In any situation involving thinking participants, there is an interactive relationship between the participants' thoughts and the actual situation. For example, expectations will affect price performance, and price changes will affect expectations.

1973, Soros and Rogers established the Quantum Fund. By 198 1 year, he had accumulated 1 billion dollars of wealth. At the same time, the company also ushered in its first annual loss, and its management capital was reduced by half from $400 million.

Three years ago, michael steinhardt withdrew from the investment market, and so did Soros.

During the period of 1982-85, the trade deficit of the United States continued to grow, but the dollar continued to appreciate because of the influx of speculative hot money into the United States. Soros judged that the demand for the US dollar will be weak and the US dollar will usher in a reversal.

1In August 1985, Soros, who had returned to the market last year, doubted that this opportunity had come, but he was also worried that the US economic growth would continue to support the US dollar. Despite some doubts, as of August 16, he had established a short position of $720 million with a deposit of $73 million, including taking more yen, marks and pounds.

Three weeks later, there was a floating loss of $20 million.

Soros felt the pressure and decided to stick to it after deep reflection again, but if the market continues to be unfavorable, he will give up half.

The crucial day has finally arrived. On September 22, France, Germany, Japan, Britain and the United States reached a Plaza Agreement to coordinate intervention in the foreign exchange market and push the dollar down.

Overnight, 30 million profits came to hand. The next day, the yen rose more than 7% against the US dollar, the biggest one-day increase in history.

At this time, Soros was very angry because the traders inside the company wanted to close their positions and lock in profits. He growled, you are responsible for this, and the Plaza Agreement gave the signal. Why not buy a lot of yen? On Friday, he increased his short position by $65.438+$70 million, and made an additional profit of $209 million in Japanese yen and marks.

At the beginning of 65438+February, he bought another $500 million in Japanese yen and marks, and increased his short position in dollars by nearly $300 million.

"I took all the biggest market risks," Soros recalled.

What matters is not whether your judgment is right or wrong, but to exert your strength when you are right. Author Soros

The final profit was $230 million.

Because he firmly believed that keeping a diary improved his performance, he said with a smile that the profit he earned was his highest reward as a writer.

Castle investment group

From 65438 to 0986, influenced by Forbes magazine, Ken Griffin became interested in investment. When studying at Harvard University, Griffin set up two funds in his dormitory and installed special satellite communication lines to accept the global market. After graduation, he joined Granwood Capital Management Company and became famous for his outstanding investment performance. 1990, he used the $4.2 million he raised to set up Castle Investment Group, when he was only 22 years old.

In September, 2006, Griffin received an e-mail while pedaling a bicycle, which said, "No Flowers Fund has fallen by 50% in one month".

If you lose half, you are finished. When ——LTCM fell, Ma Dongni said to Meliweiser.

Griffin recalled this sentence and realized that the opportunity had come.

As an expert in convertible bond arbitrage, Nick Mahonis, the founder of the fund, not only hired experts in merger arbitrage and statistical arbitrage, but also recruited some Enron employees after Enron's bankruptcy. He believes that the company has a positive strategy to deal with the changes in different markets. During the three years of poor performance of S&P index, the company performed well, with returns of 22%, 1 1% and 17% respectively.

In 2005, many strategies of the fund did not perform well, and the unhappy Mahoney felt a little relieved for Brian Hunt. The latter used to supervise natural gas trading for Deutsche Bank, but after losing 5 1 10,000 dollars a week in February 2003, Germany fired him. When other traders performed poorly, Hunter's performance was more dependent on Mahoney. After the promotion, Hunter made a profit of $65.438+0.26 billion by betting on the increase in natural gas prices, accounting for the whole year of 2005. Hunter got a reward of $654.38+26 million.

"Energy and persistence change everything." Mahoney has expanded.

In the following year, from June to April, 5438, Hunter earned about $2 billion, but by September, his position lost as much as $6.6 billion. The eternal flower fund fell by 50% in a month.

Griffin arranged about 40 people to handle the acquisition of 50% positions in the company. This transaction, Griffin probably earned $6543.8 +0 billion.

Disappearing advantage

It is only a matter of time before the advantages of every great investor are doomed to disappear.

After Jones and Mawei were brilliant for 20 years and 10 years respectively, their methods were gradually made public, and excellent traders around them also chose to leave and then went into recession.

From 65438 to 0987, the publication of Financial Alchemy made Soros famous in 2000 because he went up a storey still higher.

In the face of the bull market of US stocks that has lasted for seven years, Soros believes that the overvaluation of the market does not mean that he has no possibility of continuing.

However, on June 1987 65438+ 10/9, the Dow plummeted by 22.6%, and US stocks ushered in Black Monday.

According to the normal distribution, the probability of Black Monday is only one of the powers of 10/60, which means that the stock market will not happen once in 20 billion years. Benoit Mandelbrot, a maverick mathematician, pointed out that if the price change is normal distribution, the change of more than 5 standard deviations should only occur once every 7,000 years, but in fact, it occurs once every three or four years.

The quantum fund that shorted Japanese stocks and made more US stocks lost $840 million in a week or so, and the profit in that year changed from 60% to 10%.

According to the London Times, it took Soros 20 years to become a genius, but it only took him four days to become a fool.

Soros made a lot of money when he attacked the pound and Thai baht, and was regarded as a bloodthirsty financial crocodile. However, in the face of similar situations in Indonesia, South Korea and Russia, Soros did the opposite, losing $800 million in transactions in Indonesia and more than one billion in investments in Russia.

When Danbert, Lehman Brothers and Meilin all went bankrupt, Griffin assumed that if Morgan Stanley had only a 50% chance to survive, the probability of Goldman Sachs going bankrupt after Morgan Stanley's collapse was as high as 95%, and the probability of Castle Investment Group surviving was almost zero.

As the stock market plunged, both London and the United States issued bans on short selling of financial companies' shares. The ban led to a sharp drop in demand for convertible bonds, and castles holding a large number of convertible bonds to hedge suffered heavy losses.

"It's a very bad day, and you realize that your 20-year effort has degenerated into a company whose survival you can't control at all. At that time, I would rather use less leverage. " Griffin later said.

Griffin's income in 2007 was second only to Simmons's, and the company's asset management scale was as high as 654.38+03 billion. In 2008, the asset scale rose to $65.438+0.5 billion, and the company with 654.38+0.400 employees had a survival problem. In the next few weeks, the company's flagship fund fell by 55% and $9 billion disappeared.

At the end of 2008, about 1500 funds went bankrupt.

The wheel of history that keeps moving forward

Soros, Robertson and steinhardt came to an end, while Jones, Coffler and Bacon rose, followed by many wizards such as Griffin, Paulson and Simmons.

An uncertain world

The longer you spend on investment, the more you feel that investment is essentially passive. We always want to be more positive and perfect, but the result is addition, subtraction, multiplication and division. Trying to be ever-changing is thankless, clumsy and effective. It may be inevitable and sooner or later to accept this passivity calmly. A lot of tossing (learning and groping) is needed in the initial stage of investment, and it may be best not to toss in the mature stage of investment. -crystal fly swatter

Although history will repeat itself, the future will do whatever it wants, and investment is only about the future.

Munger said that the so-called investment game is to predict the future better than others. How can we make a better prediction than others? One way is to limit your attempts to what you can. If you try to predict everything in the future, you are trying to do too many things. You will fail because of lack of restraint.

Subtraction genius.

If you can only take 100 people and jump on a survival boat to start your next company, who will you take? At Apple's Bai Jie conference, everyone argued with each other and selected 10 things to do in the coming year. Jobs would cross out the last seven works and announce: We only do three.

Private pilot Mike? Flint asked Buffett how to achieve his goal in life. The latter suggests: think and write down 25 goals, find the most important five, and try to avoid paying attention and energy to the other 20 secondary goals.

Think from another angle, always think from another angle.