Who is Paul Tudor Jones?
He is a Wall Street legend, once ranked as the second living trader by CNBC, and the first is the famous George Soros. Jones began his financial career in the middle of 1970, starting from trading cotton, with a remarkable record. Established his own Tudor Fund in 1984, starting from 1.5 million U.S. dollars, and by the end of 1992, the total fund increased to 6 billion U.S. dollars. There are many classic battle cases.
For example, on October 19, 1987, the "Black Monday" stock market crashed. When most investors suffered heavy losses, the Tudor Fund reaped 62% of the gains. At the end of 1992, there was a crisis in European currencies. Hundreds of millions of dollars in profits in a few months. Of course, the most legendary thing is not these classic cases, but his long-term stability. According to the New York Times, as of mid-2014, the Tudor Fund had no loss for 25 consecutive years, and the long-term average annual yield was 19.5%. .
This is a miracle in the hedge fund industry. Long-term stability is the root of his legend. And his long-term stability comes from early lessons. In 1979, he operated fiercely, losing two-thirds of his funds when he appeared on the market, and even suspected that he was not suitable for being a trader. This incident taught him what many traders could not do in their entire lives: Yesterday’s profit was history, starting from zero every day, and losing no more than 10% per month. This is one of the most important concepts of his trading: the most important thing to do is to defend, not attack. He determined the stop loss in advance so that he would not be out of the game. The following passage can fully reflect his trading philosophy: In 1987, Michael Glyn directed a documentary in which Paul Tudor Jones mentioned: "What you want is always Under your control, never hope so.
Always trade, the most important thing is always to protect your assets. This is why most individual investors or traders lose money, because they do not focus on losing money This matter. They need to focus on the risks faced by their own funds, focus on the amount of risky funds faced in any investment, instead of spending 90% of their time paying attention to how much money they will make in the fast-growing big cake in the future If they can do this, they will be very successful investors. "The search for asymmetry should be what every top investor has pursued throughout his life. Jones is no exception. That is, the ratio of profit to risk we often say. If the ratio of profit to risk is 5:1, this means that as long as you get it right once, you won't lose money. Jones has been looking for a variety of different trading opportunities, looking for such asymmetric opportunities. In addition, Jones’ strategy likes to make money when trends change. Once he finds such a change, he will enter the market or sell. He also developed his detachment skills. For the market, he is very cold. Anything that has happened, in his eyes, is history that does not need to be entangled anymore. He once said: "I really don't care about the mistake I made three seconds ago. I only care about what I will do next. I want to avoid any emotional attachment to the market." So, as such a successful legend, why should I buy? Bitcoin? There are two most important reasons why Paul Tudor Jones should buy Bitcoin: asymmetric investment opportunities and risk hedging.
Asymmetric investment opportunities
This is what Jones has been doing before: seeking asymmetric investment opportunities. In today's world, Bitcoin is a rare asymmetric investment opportunity. Asymmetric investment opportunities mean two things: *Investment means risks. Since it is an investment opportunity, Bitcoin also has risks. *Asymmetry means that the probability of return is higher than risk in terms of its return-to-risk ratio. Jones invests 1% of his personal assets. For him, it is in line with his defensive style. This asset will not cause him a big loss. But if Bitcoin succeeds, it can generate huge benefits. For his worth, 1% of assets is at least tens of millions of dollars.
Risk hedging
According to media interviews with Jones, there is another very important willingness to accelerate Jones's decision, which is the current drastic changes in the macro economy. The world economy had already shown signs of a downward trend in 2019, and the 2020 epidemic has caused the macro economy to face a difficult situation that is rare in a century. Paul Tudor Jones is a macroeconomic investor. Like Dalio, he is most concerned about macroeconomic changes. The reason is simple, because their investment income is directly related to the macro economy. Now, since February this year, trillions of dollars have been issued to the market. This is an unprecedented speed and change. For these macro investors, facing this kind of future uncertainty, it is very important to hedge risks. They thought of gold, national debt, some stocks, currencies, etc., but at the same time, Bitcoin has also entered the vision of these macro investors. Jones believes that the best strategy for maximizing revenue is to have the fastest horse. During the period of substantial currency issuance, he bet on Bitcoin.
According to Bloomberg's report, its Tudor BVI Fund may hold single-digit bitcoin futures in its capital. Considering the size of its fund, this is a very large amount, and it is also representative. This is the first big fund to embrace Bitcoin. Jones believes that he is not a fan of robust currencies or cryptocurrencies. And he owns Bitcoin more because of the advent of the digital currency era, and it has accelerated with Covid-19. In addition, the recovery after the epidemic will be different from the recovery of historical financial crises. The Federal Reserve allows banks to make more aggressive lending. In the short term, the prices of goods and services will not rise, but in the long run it will not be able to stop the trend of inflation. It will not be easy for the Fed to raise interest rates in the future to absorb these large amounts of triggered currencies. At the same time, government and corporate debt is rising rapidly, making it even more difficult to digest them. At the same time, Jones said that he is still a believer in gold.
And Chamath Palihapitiya, who is also an investment tycoon, commented on Paul Tudor Jones’ practice as follows. In an interview with CNBC, he mentioned that it is difficult to find asset types that are not related to other assets like Bitcoin, and Paul. The reason why Tudor Jones pays attention to Bitcoin is because in the current economic situation, he must find a hedge asset to protect himself.
It can be seen from the above: Bitcoin in their eyes is a hedge asset in response to macroeconomic changes. Therefore, there is no need to raise Bitcoin's position in the eyes of these Wall Street bigwigs. For them, it is just a hedgeable asset. But at the same time, it also shows that Bitcoin is no longer the original Wu Xia Amon, and has begun to enter the vision of these bigwigs and institutions, so that they cannot ignore the existence of Bitcoin.
