In baseball, players toiling in the minor leagues strive to reach “The Show”—the major leagues. Six years into my career, I reached the trading industry’s equivalent.
I had just turned 30 years old, and I finally felt like I knew what was going on in the world. I finally had a clue, no, more than a clue, I knew what was happening, and why.
I was about to discover how wrong I was.
Sure, I had a clue as to what and why the markets did what they did, but I had no clue about how to manage money, and more specifically, how to manage risk.
At Moore Capital Management, risk aversion was the rallying cry, coming first, long before more mundane things such as macrofundamental analysis and technical considerations. Of course, those mundane things also were critical and we expended a tremendous amount of energy tracking down specific information points when constructing bigger-picture secular macrothemes.
A primary talent within Moore Capital was our ability to envision what-if scenarios. We spent endless hours discussing potential nuances and applying them specifically to the dissection of economic data.
What if the payroll number comes out 100,000 jobs stronger than expected ?
What if the payroll number comes weaker than expected?
We were constantly playing what-if scenarios for every imaginable future event, from as many angles as possible. We contemplated all the possible outcomes, created a few nearly impossible outcomes, and then discussed at length how to react ...