Trading Discipline–Go Hard or Go Home

By LC on Mar 31, 2008 in EGO Investment Club

by Eileen The Pirate

This week-end I finally got around to reading the February/March issue of Traders Monthly magazine. What caught my eye in this issue was the fourth annual Trades of the Year - kind of like the Academy Awards for active traders/investors.

The Trade of the Year was John Paulson shorting the subprime market silly, shorting CDOs and eventually generating 3 billion in revenue. John Paulson’s Credit Opportunities LP Fund returned 590% in 2007.

For Long Equity Trade of the Year: Atticus Capital. Three years ago Atticus Capital correctly predicted a copper supply shortfall, and to play it bought a 29 million dollar stake in Phelps Dodge. FCX later acquired Phelps Dodge, Atticus Capital’s Phelps Dodge stake became a position in FCX, and FCX climbed higher throughout 2007 as demand for copper surged. At the end of 2007 Atticus’s original 29 million position had blossomed into a 3.1 billion dollar position in FCX, scoring Atticus a 100 bagger.

I don’t even remember which Hollywood actors won the Academy Awards in 2007. The 2007 trades of the year seem far more interesting. And I have only briefly summarized two of them.

And in conclusion, the lesson from John Paulson: “When you really believe in a trade, go hard or go home.”