1949 Alfred Winslow Jones was 49 years old before he started to invest. 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 into her passion and temperament, secretly married her and became her assistant at work. However, the marriage was soon exposed and Jones was forced to leave.

During the thirties and forties, Jones kept in touch with the German Left Wing and the American Intelligence Agency at the same time, and met Hemingway on the way to the front by car after his second marriage, who treated them with whiskey.

1948, because of being invited to contribute to Fortune magazine, Jones once again entered the financial field, and published "Predicted Fashion" in March of the following year. The article wrote:

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 launch a new magazine, but failed to raise funds and died. As a result, 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 5000%, and the reason why his fund is regarded as the first hedge fund in the world may be:

1, use the long-short operation strategy;

2. Collect 20% of the 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: avoid taking fixed performance fees, but participate in the distribution of fund investment profits. Jones accepted it and explained to investors that he was imitating the practice in the Mediterranean area. Phoenician businessmen always detained 20% of the profits from successful navigation and then distributed the rest to investors.

3. Linking salary with results: Successful managers will increase the scale of funds every year, and vice versa;

4. Use the relationship with brokers and take advantage of inside information.

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

Commodity company

1970, Samuelson won the Nobel Prize in Economics. He believed that investment was not easy, and most investment decision makers should be unemployed, working as plumbers or teaching Greek, which would help improve GNP. However, if a person has real opinions, he can beat the market.

To spread the risk, he invested in Buffett and Harmo Mawei.

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

While studying, Mawei established a mathematical model about the 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 that predicted by the model, Mawei suggested that the company buy cocoa futures, and then the price was lower.

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

Despite her nerves, Mawei still showed a confident look and used econometric terms to prevaricate the CFO's concerns.

In the end, Africa's cocoa production decreased and the price nearly doubled, so Mawei made huge profits.

"During that time in my life, I was neither modest nor self-doubting." He recalled the incident and said.

Encouraged by this, Mawei and Wannathan established a commodity company, which only has 13 people plus 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 field in the United States was 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 in the media, so he made a lot of short positions. When the market opened the next week, the price of corn rose rapidly. Mawei and his friends were 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 seven professionals in the company have left. 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 only breeds some arrogant people who induce you to establish large trading positions. If you only bet a steady scale at that time, the result will be completely different. "

The margin of safety comes from the position first, then the right object, and then 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 through their limits. In addition, he also stipulates that anyone who loses general capital must close his position and leave for a month to write a memorandum of mistakes.

"If that dog named Coco can persevere after losing a leg, why can't I?" Mawei was determined, and the company eventually became one of the most successful trading companies of that era.

Trader Coffler, whose 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 human beings can't know the truth, and the most they can do is to grope for it through constant experiments and mistakes and get close to the truth.

We know far more wrong things than right ones. -Taleb

Soros, with average grades, sold ladies' handbags in Wales after leaving college. In the end, he got rid of this hopeless job by seeking a junior position for all the investment banks that wrote to London.

1969, Soros, who combined Popper's thoughts and financial knowledge, formed a "reflection" complex, and launched a $4 million long-short stock selection fund under the protection of bleisch Luo.

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.

1982-85, the U.S. trade deficit continued to grow, but the dollar kept appreciating because speculative hot money poured into the United States. Soros judged that the dollar will have weak demand and the dollar will usher in a reversal.

1In August 1985, Soros, who had returned to the market last year, doubted that this opportunity would come soon, but he was also worried that the US economic growth would continue to support the US dollar. Despite some doubts in his heart, as of August 16, he established a position of 720 million short dollars with a deposit of 73 million dollars, 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 another deep reflection, but if the market continues to be unfavorable, he will give up half.

The crucial day finally came. On September 22nd, France, Germany, Japan, Britain and the United States reached a Plaza Agreement to coordinate intervention in the currency market, which pushed 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 will be responsible for this, and the Plaza Agreement gives a signal. Why not buy a lot of yen? On Friday of that week, he had increased his short position by10.07 billion dollars, and made an extra 209 million dollars in yen and marks.

/kloc-in early February, he bought another $500 million in Japanese yen and marks, and increased his short position in dollars by nearly $300 million.

"I took on all the biggest possible market risks." Soros recalled.

What matters is not whether your judgment is right or wrong, but to give full play to your strength when you are right. By Soros

Finally, it made a profit of $230 million.

Because he firmly believed that keeping a diary improved his performance, he laughed and said that the profit he made was the highest reward he ever got as a writer.

Castle investment group

1986, 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 entered Granwood Capital Management Company and became famous for his excellent 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 his bicycle, which said, "The No Flowers Fund has fallen by 50% in one month".

If you lose half, you are finished. -When ——LTCM collapsed, 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 the collapse of Enron. He believes that the company has active strategies to deal with changes in different markets. In the three years of poor performance of the S&P index, the company has performed well, with returns of 22%, 1 1% and 17% respectively.

In 2005, many of the fund's strategies did not perform well, and the unhappy Mahonis felt a little relieved on Brian Hunt. The latter used to supervise natural gas trading for Deutsche Bank, but after losing $510 million in one week in February 2003, Germany fired him. Hunter's performance is more dependent on Mahonis when other traders don't perform well. After the promotion, Hunter made a profit of1260 million dollars by betting on the increase of natural gas prices, accounting for the profit of the whole year of 2005. Hunter got a reward of 1.26 million dollars.

"Energy and persistence change everything." Mahonis has swelled.

In the following year1-April, Hunter made another $2 billion, but by September, his position had 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% of the position of the company. This transaction, Griffin probably earned 10 billion dollars.

Disappeared advantage

It is 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 the excellent traders around them also chose to leave, and then went into recession.

1987, the publication of Financial Alchemy made Soros famous in by going up one flight of stairs.

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 it is impossible for him to continue.

However, on 19871October 19, 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 10/0, that is to say, 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 situation that the change is greater than 5 standard deviations should only appear once every 7,000 years, but in fact, it appears once every three or four years.

The quantum fund, which shorted Japanese stocks and made more US stocks, lost $840 million in about one week, and 60% of the profit in that year became a loss 10%.

According to the London Times, it took 20 years to make Soros a genius, but it took only 4 days to make him 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 took the opposite action, losing $800 million in Indonesian transactions and more than one billion in Russian investment.

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

With the stock market plummeting, both London and the United States have issued bans on shorting the stocks of financial companies. The ban caused the market demand for convertible bonds to plummet, and the castles that held a large number of convertible bonds to hedge suffered heavy losses.

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

In 2007, Griffin's income was second only to that of Simmons, and the company's asset management scale was as high as13 billion. In 2008, the asset scale rose to15 billion US dollars, and the company with 1400 employees had problems in survival. 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

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

An uncertain world

The longer you spend on investment, the more you feel that investment is essentially passive. We always want to be more active and perfect, but instead, we end up adding and subtracting. Trying to be ever-changing is thankless, clumsy and constantly repeating what is effective. It may be inevitable and sooner or later to accept this passivity calmly. It takes a lot of tossing (learning and groping) 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, it will do whatever it wants in the future, and investment is only about the future.

Munger said that the so-called investment in this game is to predict the future better than others. How can you make better predictions than others? One way is to limit your attempts to those areas where your ability permits. If you try to predict everything in the future, you are trying to do too many things. You will fail because of lack of restrictions.

A genius at subtraction.

If you could only take 100 people and jump on the survival boat to start your next company, who would you take? At the Apple Baijie conference, everyone argued with each other and screened out 10 things to do in the next year. Jobs would cross out all the last seven pieces and then announce: We only do three pieces.

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

Think the other way, always think the other way.