Interview with Jim Leitner

Jim Leitner
Falcon management

What advice would you give to a young trader who would like to be in your shoes in 20 years' time?

- One needs to learn to fight certain human biases such as buying into stories. The thing that gets fundamental discretionary traders involved in trades is stories because we can grasp onto them. But, in general, it's good to step away from the story and take it back to the numbers. Trading off a story is too amorphous. We need to quantify things and understand why things are cheap or expensive by using some hard measure of what cheap or expensive means. Then there has to be a combination of story and value. A story is still required because a story will appeal to other people and appeal is what drives markets. If there's no story and something's cheap, it might just stay cheap forever. But if there's a story involved, make sure that you first look at the numbers before you get involved to be sure there is some quantitative backing to the idea.

Where do you source your stories?

- I read a tremendous amount of books and papers, I subscribe to research services, and I read The Economist religiously. If somebody asked me how to get involved in global macro investing, I would say start with a subscription to The Economist, read it every week, and think about what you learned this week that you didn't know the week before.

If you read about an oil discovery, start thinking about how to develop it into a trade. The idea is to do as much research as you can just reading and thinking about anything in the world before reaching out to your network. Developing a net work by going out and meeting groups of intelligent people is also very important.

Another thing that's important is not to be afraid to be ignorant or to ask questions. Learn to love to listen to people and when you hear something interesting, follow up on it. Don't just think, "Well that's and interesting idea," only to find out a year later that the company you could have bought shares in is now up five hundredfold. You never want to say coulda, woulda, shoulda. When I find a really compelling idea that I don't know much about, I put a tiny amout of money into it and treat it like a cheap option.

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