Wall Street Legend No 29 - Paul Tudor Jones

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Paul Tudor Jones II (born September 28, 1954), is the founder of Tudor Investment Corporation, which is the management company for his various private investment partnerships, also referred to as hedge funds.

As of March 2010, he was estimated to have a net worth of USD 3.2 billion by Forbes Magazine and ranked by them at #297.

Jones was born in Memphis, Tennessee. For elementary school, he attended Presbyterian Day School in Memphis before attending Memphis University School for high school and then University of Virginia, earning an undergraduate degree in economics in 1976 as well as a welterweight boxing championship.

In 1976, he started working on the trading floors as a clerk and then became a broker for E.F. Hutton. In 1980, he went strictly on his own for two and a half profitable years, before he 'really got bored'. He then applied to Harvard Business School, was accepted, and packed to go when the idea occurred to him that: 'this is crazy, because for what I'm doing here, they're not going to teach me anything. This skill set is not something that they teach in business school'.

He consulted his cousin, William Dunavant Jr., for advice. Dunavant, whose Dunavant Enterprises is one of the world's largest cotton merchants, sent Jones down to New Orleans to talk with commodity broker Eli Tullis, who hired and then mentored him in trading cotton futures at the New York Cotton Exchange.

In 1980 Jones founded Tudor Investment Corporation which is today a leading asset management firm headquartered in Greenwich, Connecticut. The Tudor Group, which consists of Tudor Investment Corporation and its affiliates, is involved in active trading, investing and research in the global equity, venture capital, debt, currency, and commodity markets.

One of Jones' earliest and major successes was predicting Black Monday in 1987, tripling his money during the event due to large short positions.

With his colleague Hunt Taylor, Jones was instrumental in the creation of FINEX, the financial futures division of the New York Board of Trade, and in the development of the U.S. dollar index futures contract that trades there. He also served as Chairman of the New York Cotton Exchange from August 1992 through June 1995.

As reported in Market Wizards, Jones futures trading style and beliefs are summarized as follows:

  • Contrarian attempt to buy and sell turning points. Keeps trying the single trade idea until he changes his mind, fundamentally. Otherwise, he keeps cutting his position size down. Then he trades the smallest amount when his trading is at its worst.
  • Considers himself as a premier market opportunist. When he develops an idea, he pursues it from a very-low-risk standpoint until he has been proven wrong repeatedly, or until he changes his viewpoint.
  • Swing trader, the best money is made at the market turns. Has missed a lot of meat in the middle, but catches a lot of tops and bottoms.
  • Spends his day making himself happy and relaxed. Gets out if a losing position is making him uncomfortable. Nothing’s better than a fresh start. Key is to play great defense, not great offense.
  • Never average losers. Decreases his trading size when he is doing poorly, increase when he is trading well.
  • He has mental stops. If it hits that number, he is out no matter what. He uses not only price stops, but time stops.
  • Monitors the whole portfolio equity (risk) in realtime.
  • He believes prices move first and fundamentals come second.
  • He doesn’t care about mistakes made 3 seconds ago, but what he is going to do from the next moment on.
  • Don't be a hero. Don't have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead.

Jones is the founder of the Robin Hood Foundation, a philanthropic organization mainly backed by hedge fund operators.

He founded and was the Chairman of the Board of the Excellence Charter School, the country's first all-boys charter school, located in the Bedford Stuyvesant neighborhood of Brooklyn, New York. He also founded and chaired the Bedford Stuyvesant I Have A Dream Foundation, which puts local students in colleges.

He owns Grumeti Reserves in Tanzania’s Western Serengeti and was recently lauded by the East African country’s Parliament for not permitting hunting in his reserve. Jones has been working with Tanzania and Paul Milton of Hart Howerton, a London architectural firm that specializes in large-scale land use, to develop regional plans for the sustainability of the area, its wildlife and its local communities.

He has also made large donations to his alma mater, the University of Virginia, including a $35 million donation, which went to the construction of a new basketball arena, named John Paul Jones Arena in honor of his father.

Jones is a former chairman of the National Fish and Wildlife Foundation and currently chairs the Everglades Foundation, and also has a large ranch in Kremmling, Colorado, where hunting and fishing opportunities are provided for people with disabilities. Quite often he opens his fishing waters to the wounded warrior project giving the soldiers opportunities at trophy sized trout.

Married to his wife Sonia, a former Australian fashion model, since 1988, the couple have four children. Jones' father, John Paul Jones, is an attorney who attended the University of Virginia.

Source - www.wikipedia.com

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