Koa

the footage the industry forgot

[Koa @koaxbt]

The man who built the greatest record in institutional investing wrote a second book telling ordinary people to never attempt what he did.

He handed the whole playbook to the world, then told most of the world to close it.

Nothing was hidden. He printed the method for endowments in one book and the method for you in another. The one written for you says buy index funds and stop.

His name is David Swensen.

In 1985 he left Wall Street to run Yale's money, less than 1 billion dollars at the time. He ran it for 25 years. By 2010 it was 16.7 billion, and for most of that run he had quietly beaten every endowment, every bank, every fund that tried to copy him.

The talk in this video is Swensen laying out the whole model himself, to a room of students. Watch the part where he explains why you should not run it.

He built the record on three moves. Own real assets, not bonds. Spread across things that do not move together. And take the illiquidity almost everyone else runs from, because you get paid to hold what you cannot sell tomorrow.

Own equity, not safety. Over decades the real money is in ownership, and the caution that feels responsible quietly costs you the whole return. Diversify for real. Not ten funds that all fall together, a handful of bets that genuinely do not, so no single bad year can take you out. Get paid for illiquidity. The premium sits in the assets you cannot exit on a Tuesday, which is exactly why the crowd leaves it on the table.

Everyone wants the Yale model. Everyone reads the book. Nobody has the one thing that made it work.

He says it flatly, in the same breath as the record. For an individual, the right move is an index fund, because you will never get the access or the patience that did this.

People call it the smartest money in the world. It was three plain ideas plus a door you cannot open, and the reason you cannot repeat it is not that you never read the book. It is that he already told you it was not written for you.

[Beaver @Beaver_0x]

https://t.co/IHhM8Fe47c

[Koa @koaxbt]

A fund returned more than 4,000% in the weeks the market fell apart, run by a man whose entire edge is that he loves to lose money.

He has lost a little, on purpose, almost every year for 14 years, waiting for the one that pays for all of them.

None of it is secret. He will draw the whole thing for you on a napkin. Almost nobody can sit through the losing years to collect.

His name is Mark Spitznagel.

At 15 he got under the wing of an old corn trader in the Chicago pit, a man with one rule nobody else traded: take a lot of small losses and wait for the rare enormous winner. Most desks do the exact opposite. They print money most months and blow up once.

The talk in this video is Spitznagel laying it out himself. Watch the part where he explains why almost no one else runs money this way.

He says the old man taught him at 16 that the way to make money is to love to lose money, and to hate to make it. When a trade goes one tick against you, you take the loss that second, and it happens most of the time. When it runs your way, you let it run.

Get the skew right. Most funds win small most of the time and lose everything once. He built the mirror image, small losses forever and one enormous win. Size for compounding, not the average. Heads you lose 50, tails you make 100, and over time that grinds to zero. Cut the bet in half and the same odds compound to positive. The arithmetic lies, the geometry pays. Bleed on purpose. The cover costs a little every year the sky does not fall, and the year it falls it pays for a decade.

Everyone wants the crash trade. Everyone wants the 4,000% month. Nobody wants the 13 quiet years of small red that buy it.

He says it plainer than any fund manager should. It is easy to look brilliant when you win small every month and bury the one time you go to zero.

People call 2020 the greatest tail trade ever placed. It was 14 years of losing on purpose and one week of getting paid, and the reason you could not have done it is that you would have quit in year 3, up nothing, and called it discipline.

[Triam @triiiam]

https://t.co/E5eKioMp7p

[Koa @koaxbt]

@mathhattan "out of prison friday, writing loans monday" explains all of 2008. nice one, saved

[Koa @koaxbt]

A trader ran his fund up 4,200% in 10 years while the S&P could not clear 50%.

The run that made his name, he says, could have been wiped out in a single afternoon.

Nothing he bought was a secret. It was the boring, obscure corner of the market every desk could see and nobody wanted to own.

His name is Jim Rogers.

It is 1973 and he has just started a fund with George Soros that will buy anything, anywhere: currencies, commodities, countries Wall Street would not bother to price. He grew up poor in a town where his phone number was a single digit. He went straight from the army to the market.

By 1980 the fund is up 4,200%. Over the same 10 years the S&P has not managed 50%. He is 37. He walks away.

The talk in this video is Rogers laying those years out slow, in his library, saying the quiet part about the biggest run of his life out loud. Watch the part where he explains why the record nearly killed the fund.

Passion, he says, and leverage, enough of it that one bad afternoon could have ended them. Then the other half. He once pitched buying the Danish krona, and the whole room stood up and left.

Look where nobody looks. The edge was the corner of the market the desk could not price, not a sharper call on the names everyone already traded. Be early and be bored. The money was in owning the obscure thing years before it was obvious and sitting in it while it did nothing. Size was the other half. He ran it on borrowed money he could not always afford, in the seat next to Soros.

Everyone files this under genius. Everyone wants the obscure winner the day it stops being obscure. Nobody sits in the name that empties the room.

He says it plainer than the travel stories ever let on. The money was in the trade the room walked out on, not the one it was shouting about.

People call it the greatest commodity run ever made. Half of it was leverage and the other half was a seat next to Soros, and the reason you could not have done it is that you would have stood up and left with the room.

[Zyron @Zyron5m]

https://t.co/YKQWpNduno

[Koa @koaxbt]

A hedge fund ran for 20 years and lost money in three months out of the entire run, each time by less than 1%.

The man who built it had already told the whole world how to beat the casinos, in a book, and let them read it.

None of it was hidden. He printed the blackjack system in a bestseller and the market system in a second one. The casinos changed their rules. Almost no one changed how they invest.

His name is Ed Thorp.

He worked out that blackjack could be beaten with a card count, then went to Nevada and proved it at the tables before he published a word. The book made him the most watched man in every casino in the state. So they changed the game.

The talk in this video is Thorp telling it himself, quiet, precise. Watch the part where he explains what he did after the casinos shut him out.

He took the exact same idea to Wall Street. A small, provable edge in mispriced warrants, bet at the right size, over and over. He got the idea to run a fund from Warren Buffett, who was winding his own down in 1968 and sat Thorp down to size him up first.

Find an edge you can measure. Not a hunch, a number. He would not bet a dollar until he had proven the edge was real, at a blackjack table or in a warrant. Bet it small and bet it often. The edge on any single hand is tiny, and you collect it by playing thousands of times without flinching. Cut the losers before they grow. In 20 years the fund had three losing months and not one cost 1%, while the market it beat had 96 down months over the same run and once fell 21% in a single one.

Everyone wants the system in the book. Everyone reads how it is done. Nobody runs it the same way twice without getting bored or greedy and breaking it.

He says it flatly. The fund basically printed money every month, and it made 20 to 25% a year at almost no risk.

People call him the man who beat the casinos. The casinos were the easy part. He put the whole method in two books anyone can still buy, and the reason you cannot repeat it is that you would take one small loss, decide the edge was gone, and walk.

[Tigerflow @tigerfl0w]

https://t.co/Ye9wCJ9Jiv

[Koa @koaxbt]

@dimveil 1982 is the real story here, not the $58bn. Nice one bro, saved

[Koa @koaxbt]

A fund manager watched $4 billion drain out of the biggest fund on earth in 2 days and spent both of them on a golf course in Ireland.

He knew the crash was coming. He had said so out loud. He booked the trip anyway.

None of it was a secret. The market has dropped 25% or more once every 6 years for a century. Everyone owns that fact. Almost nobody lives like it.

His name is Peter Lynch.

It is October 1987 and he runs Magellan, the largest fund on the planet, $13 billion of it. He has not taken a vacation in 6 years. So he flies to Ireland to play golf.

The talk in this video is Lynch telling the whole weekend himself, flat, years later. Watch him get to the phone call from Cork.

He lands, drives down to Cork, and calls in. The market is down 118. He tells Carol that if it falls again on Monday they should fly home. On Monday it falls 508. By the time he is back in Boston the fund has gone from $13 billion to $9 billion in 2 working days, and he describes himself, at the bottom of it, as a man stuck in a bunker on the 10th hole.

Nobody can time it. He says it plainly. He had no idea when it would fall and no idea when it would turn, and the people who swear they do are not in the room, they are in Palm Springs.

The math outs them. Be right on interest rates 5 times in a row on $10,000 and you walk away with $2 billion. There are not that many people with $2 billion.

A crash is the rent, not the fire. 53 declines of 10% in 96 years, one every 2 years. 15 of them 25% or worse, one every 6. This is the weather. He was never going to reschedule his life around the weather.

So he flew home and did nothing. He did not sell a share. The $4 billion came back and then some, because the only thing a crash takes from you is the money you hand it on the way down.

Every desk had the same century of numbers. Every client wanted to know what he was doing about it. Every one of them would have sold on Monday.

People remember 1987 as the day the market broke. Lynch remembers it as the 2 days he was even par on the front nine. The data was always public and the crash was always coming, and the only reason you could not have held the way he did is that you would have called it prudence on your way out.

[Koa @koaxbt]

A fund put $200 million into one position and pulled $1.5 billion out of it in 4 days.

It was not a prediction. It was a bet he had been quietly paying to keep alive while nothing happened.

The year is 2008. Carl Icahn is holding credit spreads, the cheap insurance nobody wants while everyone agrees the housing thing is contained. He pays to carry them. He keeps carrying them.

Then the system cracks, and the insurance he has been feeding for years reprices all at once.

4 days. 7x his money.

Icahn does not usually explain where the habit came from. Here he does it on camera, dry and unhurried, and takes it all the way back to a card table at a beach club.

Watch the part where he talks about the poker game.

He is a teenager working the club and the rich members invite him to sit in. He loses everything he earned that week. So he goes and reads 3 books on poker, comes back to men who have never read one, and cleans them out while they drink.

Find the table where everybody is guessing and you are the only one who did the arithmetic.

He built the same structure in markets. 10% down, a convertible bond held against a short stock, almost nothing to carry and everything to gain the day the market breaks.

The edge was never the call on housing. Plenty of people said the bubble would burst. The edge was already owning the thing that pays when it does, years before it did.

Everyone wants the 4 days. Nobody wants the decade of holding a position that bleeds a little every month and makes you look slow and wrong at dinner.

Paying to be positioned while nothing happens is the whole job, and it is the part you close out early to feel clever.

Everyone remembers the 4 days. The 4 days cost him nothing. He paid for them across ten years of looking wrong, and that is the bill you will never sign.

[Koa @koaxbt]

Seven years after he was fired with a pregnant wife and no plan, he owned the largest hotel company on earth.

He won it by spending the negotiation arguing that his own side was paying too much.

It is 1991. The savings and loan crisis is tearing through American property, his employer is weeks from bankruptcy, and Barry Sternlicht, thirty years old, is told his job is gone. He says out loud he will take anything that pays fifty thousand dollars.

Nobody is hiring. A man he barely knows offers to back him in a firm of his own, and the wreckage is for sale on every corner at once.

His first deal triples the money in eighteen months.

Sternlicht almost never walks the whole run in public. Here he does it on camera, slow, the firing and the backer and the afternoon a conglomerate handed him the company Hilton was fighting for.

Watch the part where the chairman calls him into the office.

He is thirty eight and expects a war. Instead he is told the company is his. He sits there thinking this is a make believe firm he invented three years ago.

In a stock merger you pay with your own currency, so overpaying is a bill your own shareholders quietly get.

He argued his own side down on price. The stock was thirty eight when they announced it and traded to sixty.

He did not get rich in a boom. He got fired in a crash, and the crash was the only reason the buildings were cheap enough for a man with no job to buy them.

Everyone says they want the next crash. Nobody wants the one where their own paycheck goes first, and that is the only kind that prices assets to sell.

Waiting for things to calm down feels responsible. Buying while everyone around you is a forced seller is the job, and it is the part you sit out.

Everyone files this under empire building genius. It was a fired thirty year old with borrowed money and no reputation left to protect, and the reputation is the part you will not risk.

[Koa @koaxbt]

A fund manager returned 40% a year for two decades, then gave the entire method away in a paperback.

Almost no one who read it made a dime, and he knew before he wrote it that they would not.

In a classroom at Columbia he draws one chart on the board. His name is Joel Greenblatt, and at his firm Gotham he compounded money for twenty years at a rate almost nobody has matched. The chart says the whole secret: the cheapest, most unloved businesses beat everything, if you can hold them.

The formula is two lines. Rank companies by how cheap and how good they are, buy the top of the list, ignore the rest.

Free, in a book, since 2005.

Greenblatt spends the hour explaining why a method he printed for everyone still barely gets used. He is not selling a fund. He is telling you why the thing that works is the thing you cannot sit through.

Watch the part where he explains why no desk on earth can run it.

He gives the reason as a bar of gold. You could buy it today knowing it pays in two or three years, and that you might watch it fall twenty percent while you wait. No trader alive can hold something that just sits there and bleeds.

The best managers of a decade spent three of their ten years in the bottom ten percent of everyone. Nobody stayed. They still finished first.

One famous fund returned eighteen percent a year. The average person in it lost eleven, buying every high and selling every low.

Everyone wants the formula. Nobody wants the three years in last place that make it pay, and a strategy you quit at the bottom returns you nothing.

Reading the book is a weekend. Sitting in last place while your neighbor gets rich on garbage is the job, and it is the part you quit.

Everyone calls this the simplest edge in the market. It is the hardest, and the proof is a book that sold two million copies and changed nothing.

[Koa @koaxbt]

A short seller made his name on the biggest accounting fraud in American history, and calls it the easiest trade he ever made.

The company was priced wrong in plain sight. The fraud sat in filings it was legally forced to publish.

Late in 2000, a fund manager reads a small story about an energy darling cleared to book profits it has not earned yet.

His name is Jim Chanos. He pulls the 10-K, and the related-party deals jump off the page, partnerships run by the company's own finance chief and built to trade with the company itself.

He shorts it near 60. The stock rips to 80, the whole tape screaming he is wrong.

Then it rolls over. Eleven months later, zero.

His biggest buy comes the day the CEO quits and the stock climbs, 36 to 40, the crowd calling it relief. Chanos sees rats leaving a sinking ship.

Chanos almost never shows the work in public. Here he does it on camera, slow and specific, and you watch him open the filing and read it aloud.

By its own numbers it is a sleepy pipeline, yet it trades like a rocket. His partner says it in a single line. They are a leveraged hedge fund sitting on top of a pipeline.

This is arbitrage in its oldest form. A gap priced wrong, sitting in public, closed by the one person who bothered to read it.

Start with the documents. Read what a company must disclose before you hear a word it wants to say.

A business earning six percent on capital is a utility, not a rocket, whatever multiple the crowd pays.

You do it backwards. You pick the story you like, then hunt for numbers that agree.

He starts with the boring filing and lets it kill the story.

The 10-K was public all along, free to anyone. You are not short of the disclosure. You are short of the patience to sit with the dull part.

[Superior @andreysuperior]

https://t.co/rUN1cPDY65