What has been your worst drawdown percentage wise? My records were just evaluated for a money management deal. Over my entire career as a full-time trader,
based on month-end data, my biggest drawdown was 3 percent. I had my worst two months around the birth of my
two children, because I was worried about whether I was going to get the tennis ball in the right place in Lamaze
class.
My philosophy has always been to try to be profitable every single month. I even try to be profitable every
single day. And I've had some extraordinary runs—over 90 percent of my months have been profitable. I'm
particularly proud of the fact that, in virtually every year, I didn't have a losing month before April. I probably don't
make as much money as I could because of that, but I'm more concerned about controlling the downside.
You start off every year with a clean slate? That's my philosophy: January 1, I'm poor.
Do you trade smaller in January? Not necessarily. It is just that my attention is greater.
Do you take your losses more quickly in January? No, I always take my losses quickly. That is probably the key to my success. You can always put the trade
back on, but if you go flat, you see things differently.
Greater clarity? Much greater clarity because the pressure you feel when you are in a position that is not working puts you in
a catatonic state.
Getting back to managed money, I wonder, after years of making plenty of money trading on your own, what possible motive could you have for bothering with managing other people's money? I felt that I was getting a little stale, and this presents a whole new challenge. Also, after October 1987,1
realized that downside risk can't be adequately measured. The way to get more personal leverage is with an outside
pool of money.
How much money are you going to be managing? I don't want to be specific about the amount, but I'm only taking on one or two large pools of money. I don't
want to deal with multiple investors, even though I'm certain I could raise a great deal more money if I went with a
public underwriting.
The more people you have involved, the more potential headaches. For example, when I met a large fund
manager, he asked me how many employees I had. I told him, "None." He told me he had seventy. When he wants to
quit, it will be more difficult because he'll have their lives in his hands. I don't want that kind of pressure.
