Paul Tudor Jones is known for his macro trades, especially his bets on interest rates and currencies. He correctly forecast the 1987 stock market crash and shorted the Japanese bubble in 1990.
Tudor founded the macro hedge fund Tudor Investment Corporation in 1980, which focuses on quantitative investing in fixed-income, currencies, equities, and commodities, with a recent focus on Bitcoin as an inflation hedge.
In a recent interview on the 'Invest Like The Best'podcast, Tudor revealed he would study how the greatest fortunes in the world were made in his early trading days. He found that most wealthy investors were making money by riding a trend for the longest time.
Tudor said investors can achieve this in multiple ways. They can own a company like Bill Gates or Steve Jobs or become a value investor like Warren Buffett.
When discussing the difference between trading and investing, Tudor said his BVI fund has a minus 0.12 correlation with the S&P 500 over four decades, where 100% of returns are alpha. That's trading in contrast to Buffett being in the right place and the right time to catch bull market cycles to stay invested for the long term, Tudor said.
Tudor once viewed Buffett's success in a skeptical way, believing he got lucky with the timing. 'I used to just sit there and rail on Warren Buffett year after year after year,' he said.
Over time, Tudor understood how Buffett built acompounding machineat Berkshire Hathaway, which changed his perspective about Buffett's time-tested value investing principles.
'Warren, if you happen to hear this, I'm deeply apologetic. You are the OG of compound interest,' he said in the podcast.
Tudor believes a successful investor will have the composure to see through decades of market volatility while preserving and growing capital. Ultimately, it is about a belief system.
'I was just thinking, why couldn't I be Warren Buffett? Just believe in America, and when you're down 50%, who cares, because America's gonna bring you through,' Tudor wondered. 'I feel like I've been a right guard in the NFL for 50 years, fighting in the trenches every day.'
Source: International Business Times UK
