Quote from darkhorse:
I can't give you that, but I can give you some food for thought from the big dog (PTJ interview):
"Q: How would you describe your general investment philosophy?
A: I think I am the single most conservative investor on earth in the sense that I absolutely hate losing money. My grandfather told me at a very early age that you are only worth what you can write a check for tomorrow, so the concept of having my net worth tied up in a stock a la Bill Gates, though God almighty it would be a great problem to have, it would be something thatâs just anathema to me and thatâs one reason that Iâve always liked the futures market so much, because you can generally get liquid and be in cash in literally the space of a few minutes. So that always appealed to me because I could always be liquid very quickly if I wanted to. Iâd say that my investment philosophy is that I donât take a lot of risk, I look for opportunities with tremendously skewed reward-risk opportunities. Donât ever let them get into your pocket - that means thereâs no reason to leverage substantially. Thereâs 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.
Q: How do you measure your performance?
A: Youâve got to look at good traders historically. If a trader can on average annually deliver two to three times their worst draw down, then thatâs a very good track record, and Iâd say that thatâs what I try to do. If I thought that for the funds that I managed that 10% would be the worst that I would tolerate in a given year then hopefully Iâd annualize two or three times that and thatâs probably what Iâve done. Maybe a little below that in the â90âs and a little above that in the â80âs.
Q: Whatâs your competitive advantage as a trader?
A: The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge. Because I think there are certain situations where you can absolutely understand what motivates every buyer and seller and have a pretty good picture of whatâs going to happen. And it just requires an enormous amount of grunt work and dedication to finding all possible bits of information.
You pick an instrument and thereâs whole variety of benchmarks, things that you look at when trading a particular instrument whether itâs a stock or a commodity or a bond. Thereâs a fundamental information set that you acquire with regard to each particular asset class and then you overlay a whole host of technical indicators and thatâs how you make a decision. It doesnât make any difference whether itâs pork bellies or Yahoo. At the end of the day, itâs all the same. You need to understand what factors you need to have at your disposal to develop a core competency to make a legitimate investment decision in that particular asset class. And then at the end of the day, the most important thing is how good are you at risk control. Ninety-percent of any great trader is going to be the risk control. "
