more money than Gods

Jones’s innovation was to see how these methods could be combined without any raciness at all—he used “speculative means for conservative ends,” as he said frequently. By selling a portion of his fund short as a routine precaution, even when the charts weren’t signaling a fall, Jones could insure his portfolio against market risk. That freed him to load up on promising stocks without worrying about a collapse in the Dow Jones index: “You could buy more good stocks without taking as much risk as someone who merely bought,” as Jones put it.28 Whereas traditional investors had to sell hot companies like Xerox or Polaroid if the market looked wobbly, a hedged fund could profi t from smart stock picking even at times when the market seemed overvalued.

• Global macro trading is far more difficult and riskier (capital at loss) proposition than equity investing
• Central bank actions are the key catalysts along with deteriorating macro
• Leverage is the key element which magnifies returns both on positive and negative sides; all currency trades were levered up atleast 15 x
• Soros' strategy is not replicable, enormous amount of risk taking ability putting 40% of capital at risk with high leverage;
• Pound short was famous - Key elements were currency peg which was unsustainable + recessionary conditions in UK i.e. at a time when real interest rates had to be reduced; artificially high exchange rate without a control on monetary policy and Germany was to decrease the interest rates i.e. outsourced monetary policy because of a currency peg
  • Current, greek situation seems ditto 
• Druckenmiller always combined fundamentals with technicals and was good at finding out inflexions in the economy - trend following helped him incur less losses than Julian Robertson (tiger capital )in dotcom meltdown
• Julian Robertson was more fundamental and did not believe in technicals - Equity portfolio was stellar compared to his currency bets which went wrong along with the LTCM crisis
• Some portion short in the portfolio thru futures could save alpha during downturns
• Julian Roberston's strategy is replicable (barring the currency stuff) and is more in-line with fundamental investing - Chapter on him is worth reading
• Paulson MBS short seemed like a one time event and again replicability is questionable
• Each one of the greats played to their temperament