This week, we’re talking to Peter Borish, who is president and CEO of Computer Trading Corporation, an investment and advisory firm. Borish was founding partner and right arm of Paul Tudor Jones at Tudor Investment Company, where he was director of research for 10 years. Borish also served as chief strategist for Quad Group LLC. As part of his philanthropy, he served on the board of Paul Tudor Jones’ Robin Hood Foundation and that of Jim Simon Mathematics for America.
He explains what the Black Monday trading experience of 1987 was like. As Head of Research for Tudor Investments, he built the models Paul Tudor Jones relied on when he was short on futures futures and shares the previous Friday.
He likes to note, “Markets spend a lot of time doing nothing, then they revalue.” This applied in 1987, which seemed parallel in price and volume activity to the crash of 1929: a pullback in August 1987 in the Labor Day holiday, a spike near the September expirations, a modest selloff , then a weak recovery in October. This setup, plus the mistaken belief that portfolio insurance would provide loss protection, was the perfect parallel. Then came the crash, and based on market history, they decided to wait until mid-Tuesday to hedge.
Borish also explains why “trading and risk management are unnatural by nature”. Successful trading requires a very counter-intuitive approach that is uncomfortable for most people. He notes, “Without discipline, the irony of markets is buyers are higher and sellers are lower; that’s why everyone loved Bitcoin at 60,000 but hated it at 20.”
You can stream and download our full conversation, including all podcast extras, at itunes, Spotify, embroiderer, Google, YoutubeAnd Bloomberg. All of our previous podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Ilana Weinstein, Founder and CEO of IDW Group, the leading recruiter of fund managers and traders for many of the biggest hedge funds. She previously worked at Goldman Sachs and Boston Consulting Group, and is a graduate of the University of Pennsylvania and Harvard Business School.
Current reading by Peter Borish
The coffee shop by David Liss
Going to Infinity: The Rise and Fall of a New Tycoon by Michael Lewis