Bruce Kovner: Top Market Wizards Trader

Where does Kovner generate profits from? Consider this from Global Macro Funds:

Mr Kovner has reportedly attributed his money making success to “stupid governments”, implying that the policy mistakes of central banks and governments causes disequilibria in financial markets that can be exploited.

Bruce Kovner was also heavily influenced by Michael Marcus (a student of Ed Seykota’s):

Michael taught me one thing that was incredibly important. He taught me that you could make a million dollars. He showed me that if you applied yourself, great things could happen. It is very easy to miss the point that you really can do it.

Starting Out

What kind of risks did Kovner take? How much did he want it? Consider excerpt from The New Investment Superstars:

Kovner borrowed $3,000 on his MasterCard in early 1977 and began trading on his own. He made $1,000 on his first two trades ? copper and interest rate futures. Kovner says his earlier trading experience were the most memorable. The first time he lost control of the trading process was in the soybean market. It is seared into my memory. A shortage developed in soybeans, running his $4,000 position up to $45,000 in six weeks. In a moment of insanity, I discarded a hedge limiting losses if prices turned down, which they did. In a panic, he liquidates his position, escaping with a loss of $23,000. Yet he still had $22,000, five times what he started with. I had a huge gain but lost half before getting out? I lost half the profit in an hour. I closed out the trade and was physically sick for a week. In retrospect that was a very good thing, says Kovner. It helped me understand risk and create structures to control risk.

Background

What is Kovner’s background? Financial World has some insight:

A music aficionado, he has best been known to treat friends to private performances at his New York City home by up-and-coming musicians, often from New York’s famed Julliard School. Six feet two inches tall, with a neatly trimmed graying beard and a professional manner, Kovner grew up in the San Fernando Valley east of Los Angeles, the son of an engineer. When a bad case of writers block stymied his quest for a Harvard Ph.D., Kovner drove a cab to pay the rent, took harpsichord lessons at Julliard and dabbled at a succession of pursuits while seeking this true calling. In 1976 he found it: currencies and futures speculating.

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