Hedge Fund Clips

Treasury Secretary Scott Bessent on sizing positions off your chip stack:

"I tend to trade in thirds."

"Where's your P&L in the year? Then a lot of times we'll keep adding if the P&L is good."

"One of the world's greatest stock picker, Warren Buffett: rule number one, don't lose money. Rule number two, don't forget rule number one."

"It's really this idea you earn the right to take a risk, whether it's backgammon or you're at a poker table or playing bridge. How is your chip stack?"

"If you walk in and say, all right, I'm bringing $10,000 to the poker table and that's it, then you're going to bet differently."

"I do that as a discipline, reset the chip stack."

Ex-Balyasny PM Ying Hua on why hedge funds are finance's purest meritocracy:

"There's only one thing that matters: your P&L at the end of the year. It's a place where all the superficial on-paper stuff does not matter."

"I've seen people get to a good P&L track record before they got to a top one, and they may not come from a target school, and be able to make it."

"In banking, a lot of things that are not truly P&L driven, it's much more about who you know, what school you graduated from, how you carry yourself. None of that really matters at a hedge fund."

"You just have to be right. You just have to make money."

"There's only one other job I think that's like that. That's sales. There's only one number that matters."

Ex-Two Sigma quant Omer Cedar on why he expects 10 times as many hedge funds in five years:

"I see more hedge funds, not fewer, because the barriers to entry to build a hedge fund are falling pretty fast."

"The barrier to entry involves having some kind of process that you are comfortable with, maybe with a couple of digital agents that help you build that out."

"You need to meet some regulatory standards, and a lot of compliance engines are now all automated, so they're actually reducing the cost of reporting and analytics to the regulators."

"I could be wrong, but I would go out on a limb and say that if you count the number of hedge funds you have today and in five years, I wouldn't be surprised if you have ten times the number."

Citadel's CEO Ken Griffin on the most common mistake investors make:

"They invest in areas outside of their expertise. They assume that because they can do something well they can do something else really well. And it's just not that simple."

"Michael Jordan could have been a great football player. He's not going to be to football what he was to basketball."

"A lot of people that get in trouble in their careers investing extrapolate from their success in one area to another."

"You and I have both seen firms that look like ours wander into different investment strategies and different asset classes and often have a very difficult time because it's not the same skills."

"The nuances matter."

Saba Capital's founder Boaz Weinstein on losing $1.8 billion in 2008:

"What goes with the number 1.8 billion dollars is what was the denominator."

"When you lose, it's really about what was the percentage loss."

"So the loss that we had there was 18 percent. But that doesn't make it easy."

"I remember being called to the Fed the weekend of Lehman Brothers, and I stayed there all night on Saturday."

"I remember that was the first time I really lost money, and I went through a couple of weeks where, I never said this before, actually had night sweats."

"I was sweating uncontrollably from the stress of having given back about half of our year's gain."