Lessons From The Best Trader- Michael Steinhardt
Investopaper
Michael Steinhardt is an American hedge fund manager. He is regarded as one of the top traders. Founding Steinhardt Partners in 1967, he generated an average 24.50 percent annual return from 1967 to 1978, after deducting management and performance fee. He retired and closed his hegde firm in 1995. However, he made a comeback in 2004 by leading ‘Wisdom Tree Investments’. As of 2018,, Wisdom Tree had 41.80 billion dollars assets under management.
Here are some of the trading lessons (quotes) from the experienced trader Michael Steinhardt.
Lessons (Quotes) From Michael Steinhardt
A good trader has to have three things: a chronic inability to accept things at face value, to feel continuously unsettled, and to have humility.
Do not make small investments. If you are going to put money at risk, make sure the reward is high enough to justify the time and effort you put into the investment decision.
The hardest thing over the years has been having the courage to go against the dominant wisdom of the time to have a view that is at variance with the present consensus and bet that view.
Good investing is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake.
I do an enormous amount of trading, not necessarily just for profit, but also because it opens up other opportunities. I get a chance to smell many things. Trading is a catalyst.
When your views are truly contrarian, they are inevitably uncomfortable. Courage and the ability to withstand pain are required.
The balance between confidence and humility is best learned through extensive experience and mistakes.
Be intellectually competitive. The key to research is to assimilate as much data as possible in order to be to the first to sense a major change.
The markets are always changing, and the successful trader needs to adapt to these changes.
Anyone who thinks he can formulate a success in this market is deluding himself because it changes too quickly. As soon as a formula is right for any length of time, its own success carries the weight of its inevitable failure.
Just as outright euphoria is often a sign of a market top, fear is for sure a sign of a market bottom. Time and time again, in every market cycle I have witnessed, the extremes of emotion always appear, even among experienced investors. When the world wants to buy only treasury bills, you can almost close your eyes and get long stocks.
Make good decisions even with incomplete information. You will never have all the information you need. What matters is what you do with the information you have.
