Hugh Hendry quotes
From his April
“It is my contention that value does not mix so well with
“I do not think it is logical to try and outsmart the
smartest people. Instead, my weapons are irony and paradox. The joy of life is
partly in the strange and unexpected. It is in the constant exclamation ‘Who would
have thought it?’”
“I attempt to cultivate my own insights and to recognise the
precarious uncertainty of global macro trends. I attempt to observe such things
first hand through my extensive travel (I promise no more YouTube videos), and
seek to understand their significance by investigating how previous societies
coped under similar circumstances. But first and foremost, I am always
preoccupied with the notion that I just do not have the answer. I am not
blessed with the notion of certainty. Someone once said we should think of the
world as a sentence with no grammar. If we do I see my job as putting in the
punctuation. But above all, my job is to
In keeping with this theme, I want define the three
ingredients that I believe make for an outstanding macro hedge fund manager.
These are, in no stringent order:
1. Successful but contentious macro risk posturing.
2. The need to choose the asset class offering the highest
probability of payout should the conviction hold true whilst offering an
asymmetric loss profile should the original premise prove unfounded.
3. A best in class risk technique that stop losses the
narrative and responds early with loss mitigation procedures (i.e. a method of
staying solvent, rational and disciplined under pressure).
I have always figured that the first is the real key. That
success was simply a matter of contentious macro posturing. In other words,
going long very rich risk premium or buying cheap stuff. It is my assertion
that what makes a great fund manager first and foremost is the ability to
establish a contentious premise outside the existing belief system and have it
go on to become adopted by the broader financial community. Bruce Kovner
expressed the idea more eloquently when he said, “I have the ability to imagine
configurations of the world different from today and really believe it can
happen. I can imagine...that the dollar can fall to 100 yen”. I am sure you are
nodding in agreement, except Bruce was saying this when the USDJPY was well
over 200, not today's rate of 80!
That is the kind of guy I want to be when I grow up.”
“Remember, Jesse’s [Livermore] demise was down to [i.e.
because of] his shorting of the stock market. Without a doubt, as our
transition starting in 2007 testifies to, bearish macro calls are better
expressed through the use of fixed income strategies. There is a higher
probability that such bets will pay out should the narrative be vindicated. One
is long, not short, risk premium and the lower volatility enhances the
persistency of the trade.”