the related headaches in managing money? Yes, but there are several reasons why I don't. Although I invest a great deal of my own money in my funds,
the portion of my funds that is managed money represents a
call. [Analogy to an option that has unlimited profit
potential in the event of a price rise, but risk limited to its cost in the event of a decline.] I don't say this to be
flippant, since my reputation among my investors is extremely important to me, but a call is a much better position
than a symmetrical win/lose position.
Is there a practical limit to the amount of money you can manage? In most commodity futures markets, there certainly is. However, in currencies, interest rates, and a few
commodities such as crude oil, there are limits, but they are very high. I plan to very carefully manage the future
growth in the size of funds I am managing.
When you put in orders in markets that are not among the most liquid—in other words, not T- bonds or the major currencies—do you find your orders actually moving the market? They can, but I never bully a market.
Talking about that, one often hears stories about very large traders trying to push the markets up or down. Does that work? I don't think so. It can be done for the short term, but eventually it will lead to serious mistakes. It usually
results in arrogance and a loss of touch with the underlying market structure, both fundamentally and technically. The
traders that I know who thought too highly of their ability and tried to bully the market, ultimately made the mistake
of overtrading and went under.
Without mentioning any names, can you provide an example? There is a recent example of a British trading organization getting into serious trouble after they tried to
corner the crude oil market. At first they succeeded, but then they lost control and crude oil prices fell by $4.
