The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money, Revised and Updated

Chapter 10

The Equity Trader

“The Equity Trader” started trading in middle school and has been passionate about markets ever since. A soft-spoken but aggressive trader, his first forays in the markets were with mutual funds, after which time he joined an equity-focused prop desk before finally starting his own hedge fund. Although he primarily trades individual stocks, he also trades futures, currencies, credit, commodities, and options.

The Equity Trader has evolved from a priced-based, technical trader to a more fundamental, theme-based trader as his business has grown and matured. Nevertheless, he can aggressively trade around core positions, which remains one of his hallmarks. Being in the markets all the time keeps him sharp, he says.

When I met the Equity Trader, he told me that he was worried about the interview. A few years earlier, he explained, he had done an interview and proceeded to get killed in the subsequent months. Superstition seemed incongruous with the analytical, risk-obsessed process he employs in the markets.

Although he remains a stock trader, the Equity Trader combines his bottom-up fundamental work with a robust understanding of the macro environment, something that he implements to change the shape of his book aggressively in various environments. He now employs a large team of risk takers, and interviews hundreds of people a year for a small number of slots, preferring to take on people with specific traits that he can mold over time rather than those ...