The Anti-Buffett: Steven Cohen
Brian Stoffel, 17 April 2014
The Anti-Buffett: Why You Should Avoid This Hedge- Fund King’s Tactics Steve Cohen got his start by simply reading the tape. Who is Steve Cohen? Founder of SAC Capital, at one time a hedge-fund with $14 billion in assets Personal wealth valued at $11 billion
It all started when… Steve was a high school freshman in Long Island, and spent his days playing poker. By the time he was a junior, he was making between $500 and $1,000 per night from poker alone! When he was in college… Cohen would sit outside the Merrill Lynch offices in Philadelphia, and watch the stock ticker whiz by. Over time, Cohen believed he could guess the direction of stocks, without knowing anything about their underlying business.
After 14 years at a mid-level brokerage firm… Because of his early success as a stock trader, Cohen was ready to form his own hedge fund He named the fund S.A.C. Capital, and put roughly $12 million of his own money behind the service. He kept 50% of all profits his fund made—which was actually a step down from the 60% he enjoyed at his previous job.
For years, S.A.C. spanked the market, but… Here’s where it gets a little dangerous to try to follow in Cohen’s footsteps. Though he achieved mind-blowing results, he did so as a result of day-trading. Never holding any single position for long at all. In fact, at one point, roughly 2% of all trades on the market emanated from S.A.C. Study after study has shown that, for almost every investor, this is a losing proposition.
