Wednesday, July 18, 2012

Colm O’Shea quotes

A few quotes from the book Hedge Fund Market Wizards by Jack Schwager, from his interview with Colm O’Shea:

“I turned bearish when money market liquidity dried up in August 2007. Declining housing prices [2006] were the impending storm clouds, but it started raining when money markets stopped working. Most people, however, didn’t notice. Fundamentals are not about forecasting the weather for tomorrow, but rather noticing that it is raining today.”

“The great trades don’t require predictions. The Soros trade of going short the pound in 1992 was based on something that had already happened—an ongoing deep recession that made it inevitable that the U.K. would not maintain the high interest rates required by remaining in the ERM. Afterward, everyone said, “That was incredibly obvious.” Most of the great trades are incredibly obvious.”

“Equity markets would eventually notice, but being short equities is a hard trade because they might still keep going up for a long time. After a bull market that goes on for years, who is managing most of the money?..... Because the bulls control most of the money, you should expect the transition to a bear market to be quite slow, but then for the move to be enormous when the turn does happen.”

“I think implementation is the key in everything. Implementation is more important than the trade idea behind it. Having a beautiful idea doesn’t get you very far if you don’t do it the right way.”