Paul Tudor Jones spoke to students

http://forumserver.twoplustwo.com/30/business-finance-investing/paul-tudor-jones-spoke-our-class-today-327300/

We had the opportunity to have Paul Tudor Jones speak to our Financial Trading class today.

He had some interesting things to say, and I thought I'd share them with you. I'll just quote/paraphrase some of the things he said and let the discussion evolve if anything is of particular interest.

"If anyone in the world was stranded on a deserted island, and they could only have access to one form of trading, either all the fundamental information in the world, or the access to charts for technical analysis, I would say that, and it's not even remotely close, people would be foolish not to choose technical analysis every day of the week and twice on Sunday."

"I can't think of a single circumstance in which I will ever hire a trader who says he bases his decisions on fundamentals. I've been burned too many times by these guys who think they are smarter than the market."

He was ranting pretty hard core against fundamental traders. He was saying they run such a huge risk of going broke because the fundamentals can change without them knowing it, and they will average down too many times due to the market being oversold, too much value on the table, etc.

"All the major busts and meltdowns in the history of Wall Street have developed from owning a super reversal portfolio."

A super reversal portfolio is one he defines as opposite the trend in regards to the 200 day moving average and the 25 day moving average. So long something that's below both the 200 day moving average and 25 day moving average, or short something above those trend lines.

"Using that [fundamentalist] mentality...that may have worked in the past, but it's insane to average down in the greatest liquidation of the biggest credit bubble in history, especially considering the S&P is trading at 1.7x book. In the Great Depression it traded at 0.4x book and in the 70's it traded at 0.8x."

He says he more of less lives by 3 rules:

1. 1) The trend is your friend
2. 2) Losers average losers
3. 3) 5 to 1, ie only risk your money when there is a 5 to 1 payoff for that specific trade.

The last interesting thing I can recall: He shat upon Warren Buffett, saying he may be one of the greatest investors in history, but he has absolutely terrible risk management skills to be entirely fully invested and long at this current juncture. He also called into question his ability to profit in a bear market, citing that he started investing in 1972, one of the greatest times in history to start investing.