Hedge Fund Market Wizard - Stock Operator

Steve Clark - Omni Global Fund
1) Price is irrelevant; it is size that kill you. If you are too big in an illiquid stock, there is no way out.


Martin Taylor - Nevsky Fund
1) Buying low-beta stocks is a common mistake investor make. ...You have negatively asymmetric returns.

2) I believe that if you're trading very volatile instuments and you are completely out of the market when it reverses, then you will never get back in again. I will have some net long exposure even when I am bearish.

3) The High volatility of emerging markets leads to a bias of managers making poor investment decisions, such as panicking out of positions near the bottom and jumping into positions near the top because they are afraid of missing the move

4) Half to three-quarters of our shorts are stock index futures....We only short bad companies that can't be taken over because they are owned by the government or their own pension fund.

5) Charts are very important...If the stock is very overbought, it won't stop me from buying, but I will start with a small position because there is a larger chance of a correction

Tom Claugus - GMT
1) I felt that the fundamental underpinnings of the company were completely different from the way it was being priced.

2) Being short in a rising market is very difficult from an investor relations standpoint.

3) The number one risk factor for me is leverage.

Joe Vidich - Manalapan Oracle Capital Management
1) If you have a stop order in the market, it means that one price will dictate the outcome. That is a bad concept. You can, however, use mental stops, which are essentially evaluation points.

2) The right way to manage risk is to monitor your positions and to have a mental point at which you reevaluate the position.

3) I scale out, and I also scale in. The idea is don't try to be 100 percent right.

4) "if you buy a stock at 40 that you think would be fully priced at 80..." I would sell it at 75 on the way down rather than at 80 because I might be giving up much more on the upside than the difference in selling it a little bit lower.

5) The critical risk controls are being diversified and cutting your exposure when you don't understand what the markets are doing and why you are wrong.

Kevin Daly - 
1) I think that it's easy to avoid value traps. The trick is to stay away from companies that can't grow their cash flow and increase intrinsic value.


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Market Wizards

Bruce Kovner
1) The first rule of trading, there are probably many first rules, is don't get caught in a situation in which you can lose a great deal of money for reasons you don't understand.

2) I don't trade simply on technical information. ....I can't hold a position unless I understand why the market should move.

3) Technical analysis tracks the past; it does not predict the future....Technical analysis reflects the vote of the entire marketplace and , therefore, does pick up unusual behavior...Studying the charts is absolutely crucial and alerts me to existing disequilibria and potential changes.

4) Tight congestions in which a breakout occurs for reasons that nobody understands are usually good risk/reward trades.

5) Whenever I enter a position, I have a predetermined stop. The position size on a trade is determined by the stop, and the stop is determined on a technical basis....I always place my stop beyond some technical barrier.

6) First of all, a loss of money itself slows me down, so I reduce my positions. Secondly, in the situation you described (still believe in the fundamental analysis underlying the trade, assume will try it again), the change in the technical picture will give me second thoughts

7) What I am really looking for is a consensus that the market is not confirming

8) What makes you different from the average guy? .... For myself, I can think of two important elements. First, I have the ability to imagine configurations of the world different from today and really believe it can happen. I can imagine that soybean prices can double or that the dollar can fall to 100 yen. Second, I stay rational and disciplined under pressure.

Paul Tudor Jones
1) I will keep cutting my position size down as I have losing trades. When I am trading poorly, I keep reducing my position size. That way, I will be trading my smallest position size when my trading is worst.

2) Don't ever average losers. Decrease your trading volume when you are trading poorly; increase your volume when you are trading well.

3) If you have a losing position that is making you uncomfortable, the solution is very simple: Get our, because you can always get back in. There is nothing better than a fresh start.

4) I have always been a swing trader, meaning that I believe the very best money is to be made at the market turns.

5) When I trade, I don't just use a price stop, I also use a time stop.

Stanley Druckenmiller
1) I never use valuation to time the market. I use liquidity considerations and technical analysis for timing.

2) The way to build long-term returns is through preservation of capital and home runs.

3) Whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.