Trading guides, news and stories
Trading guides, news and stories
Paul Tudor Jones is an investor born in 1954 in Memphis, Tennessee. He got his start on the trading floor in 1976, becoming a broker soon after. Jones was related to a cotton merchant who ended up introducing him to an impressive commodity trader named Eli Tullis. Tullis became Jones’ mentor, and he gave Jones a job trading cotton futures on the NY Stock Exchange.
Often when people talk about PT Jones, they will mention the influence of Eli Tullis. The details of it are made clear in a 2009 speech to graduates of The Buckley School. PTJ said:
IIIt was a Friday morning in June, and I had been out literally all night with a bunch of my friends. My job was to man the phone all day during trading hours and call cotton prices quotes from New York into Mr. Tullis’ office. Around noon, things got quiet on the New York floor, and I got overly drowsy. The next thing I remember was a ruler prying my chin off my chest, and Mr. Tullis calling to me, “Paul. Paul.”My eyes fluttered opened and as I came to my senses, he said to me, “Son, you are fired.”
After this he spent over two years trading well for his own firm, Tudor Investment Corporation. He allegedly got bored of this and applied to Harvard Business School. Oddly, he was accepted and then chose not to go. He decided he couldn’t learn anything useful about trading there.
In 1980, Paul Tudor Jones founded his own firm, Tudor Investment Corp. It is a hedge fund that operates in many markets. It is through the actions of this firm that PTJ would leap into the public consciousness.
Tudor Investments were analyzing the market in 1987 and came to an interesting insight. Particularly it was Peter Borish — the second most senior member of Tudor Investment — who had made the discovery. He analyzed the 1929 pre-crash market in comparison to the 1987 market and found many similarities. He shared this with PTJ and they were in agreement on the indicators.
Things worked out wonderfully for Tudor Investments in the crash. They correctly predicted Black Monday in 1987. They backed up this prediction with strong short positions which tripled their money and gained them some fame for their foresight.
This time in the spotlight led PBS to film “TRADER: The Documentary”. This film follows PTJ through his trading life, and it aired on public TV in 1987. It is now hard to find a copy of this documentary —Tudor Jones asked for it to be taken out of circulation in the 1990s. There is speculation that he bought all the copies he could find, possibly to keep some of his techniques secret. If so, this move shows how reclusive PTJ is; agreeing to the documentary then trying to erase its existence.
Due to his reclusion it is hard to know exactly how much he made on the 1987 crash. Estimates top at about $100 million. The crash fit his style of contrarian trading.
Current estimates of his total wealth are in the neighbourhood of $4 billion. His fund has assets under management of about double that amount. The fund used to even go above the normal hedge fund fees. Most hedge funds will charge you 2% of the amount being managed, and 20% of profits. Tudor Investments at times had increased to 4% management fee and 23% performance fee, but recently they have reduced to the norm.