Founder of one the most successful hedge funds, the $12 billion SAC Capital Advisers was interviewed in a private two-day conference at the Waldorf Astoria in Midtown Manhattan.
While he muses the lesson of 2008: "leverage, concentration, and illiquidity can kill you." its likely he made concentrated positions in his younger days to get where he is today.
We can agree on illiquidity as if there is no one to take the opposite side of a trade, then one won't be able to cash in on a profitable trade in your direction.
Based on his current firm comprised of 100 portfolio managers and 150 analysts, its not surprising if their fund manager puts as much as 10% of their individual fund in their best recommendation.
Stocks are just as much about luck as gambling. Somebody wins, somebody loses. The question comes down to: how much can you risk in order to have the chance of a better life and whether you can live if the trade goes against you.
Cash is a trader's life. Without it, the game is over.
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