Michael Steinhart, a world-class short-term master, godfather of hedge funds, investment genius, and one of the most successful fund managers in Wall Street history.

He has been on Wall Street for three decades, from unknown investors to financial giants, from stock analysts to "godfather of global hedge funds" and "world-class short-term king".

If you put $10, 000 into his fund in 1967, you'll get $4.8 million by 1995.

Began to study stocks at the age of 13

There is no doubt that Michael Steinhart is a legend and a great investor. Michael Steinhart's parents divorced when he was 1 years old, and his father gave him 100 shares of Dixie cement in Philadelphia and 100 shares of Colombian natural gas to compensate him. So at the age of 13, Steinhart began to study trading reports and track the stock prices listed on World Telecom.

Steinhart was very smart. At the age of 16, he was admitted to the Wharton School of Finance at the University of Pennsylvania by virtue of his outstanding IQ and graduated early at the age of 19. After graduation, he found a job in securities research at Calvin Baroque Mutual Fund and started a legendary investment career on Wall Street. Steinhart then worked as a reporter for Financial World magazine and then as chief analyst at Lieb Rhodes Securities, during which time the share price of Gulf Western Oil, which he recommended, tripled.

Partnership to start a business and open the way to legendary investment

1967 was a very important year for Steinhart and the most important year on the road to a turning point in his life. This year, he hit it off with Fein and Berkosz, and the trio jointly paid 7.7 million to set up a new company. At that time, the US economy was taking off, and Stahart called that era "an era of money grabbing." the new company set up by the three of them showed explosive growth.Profits were 31% in the first year and 99% in the next year, when the s & p rose only 6.5% and 9.3%, and by 1969 the company had more than $30 million in capital.

There was no banquet that would never come to an end, and then Fein and Bekos left one after another to start a new fund, and Steinhart managed the arbitrage fund on his own, but with great success.His fund earned an average of 24.5% a year over the 28 years from 1967 to 1995.In other words, if you put $10, 000 into his fund in 1967, you'll get $4.8 million by 1995.

The most powerful "short-term killer" in the world

The reason why Steinhart can make a lot of money mainly comes from the short-term investment he is very good at, so he is called the most powerful "short-term killer" in the world. He has said that for him to participate in the market is just to gain the satisfaction of making the right decision, and the shorter the time from investment to success, the greater the sense of satisfaction. Steinhart is very enthusiastic about short-term investment, which not only gives him a sense of achievement, but also creates a huge return on investment.

In Steinhart's short-term operating career, investing in IBM has to be mentioned.In 1983, he used a borrowed $100m to buy 800000 shares of IBM for $117. the stock rose slowly by 15:00, and most investors were reluctant to close their positions, but had no choice but to watch it fall back to $120,132. Steinhart sold at a price close to $132m, netting more than $10m.When the stock price is at its peakHe shorted another 250000 shares and closed his position when the share price fell to $120, earning millions more.

Steinhart admits that IBM shares do make long-term profits, but he doesn't just wait there for the stock to rise to his price, he does more and gets more. "if I only work in the long term, I can't achieve such a success. I always give up when I'm ready," Steinhart said.

Steinhart liked the short term, and his judgment of direction was so accurate that when he learned that interest rates were likely to fall, he did not hesitate to buy bonds. In 1981, Steinhardt was convinced that the Federal Reserve would cut interest rates and that there would be a big rise in medium-term government bonds. So he used $50 million of cash held by the fund to buy $250 million worth of five-year Treasuries for the entitlement fund, waiting for interest rates to be cut.

In the endThe $250 million bond investment earned $40 million. In this transaction, the fund actually made $40 million with $50 million in cash.In late 1984, he bought $400m in medium-term government bonds, most of which was still leveraged, and this time he expects a cut in interest rates to earn $25 million.

Six principles of Steinhardt's Investment

In addition to the characteristics of short-term operations, Steinhart has six principles in terms of investment:

One is to make a mistake as soon as possible, in his view, make a decision to implement it immediately, and constantly correct the decision.

Second, always do what you like to make a living, only by doing what you like, your persistence can ensure the happiness of long-term success, rather than the emptiness after short-term speculation.

The third is to be relatively alert, to study all areas that may bring wealth at any time, and to perceive changes in the general situation earlier than others.

Fourth, even if there is insufficient information, we should try to make appropriate decisions. In the market, a lot of information is useless, the key is to see how to grasp the existing information and focus on the most important issues.

Fifth, always trust your intuition, experience is a kind of wealth, we have to admit that intuition is also the accumulation of experience, the important point is how to strike a balance between intuition and experience.

Sixth, do not make small investments, because people have limited time and energy, and when taking risks, we must ensure that the returns are sufficient to compensate for the expenses.

Although he focuses on short-term investments, Steinhart also attaches great importance to fundamental analysis. in order to know the information in the first place, Steinhart spends $35 million a year on all the materials on Wall Street, giving him a slight advantage over other investors.

Although he spends a lot of money on intelligence every year, Steinhart never believes the views of brokers. in his view, if a broker is great, he will not betray his views because the rate of return is too low. He always believed that those people were just following the crowd, and what they were doing all the time was to change their point of view and find some theoretical basis.

Steinhart tends to think independently, his favorite stocks usually become the object of attention in the near future, and he also makes use of new investment tools to enter new investment areas as much as possible.

Once you know his portfolio, people will be surprised to find that Steinhardt's attention is focused on all areas of the stock market, stock clutter has no inherent logic, but this is one of the most powerful portfolios.Steinhart never followed blindly and was always aware of the latest predictions flying all over Wall Street.

Encounter the "trough" of life and stay away from Wall Street

There are the best parts of life, and naturally there will be troughs. In 1994, for Steinhart, it was his lowest year, and it was also his most difficult and bumpy year. This year, not only was he fined heavily, but the hedge fund he managed also had its worst performance ever.

It all started in 1991, when the SEC began investigating four well-known hedge fund managers-Steinhart, Soros, Robertson and Bruce Koffler-who regulators suspected of colluding with Solomon Brothers to manipulate the two-year bond market. As the investigation deepened, Robertson and Soros disappeared from the list, but Steinhart and Koffler were not so lucky.In 1994, they and the Solomon brothers were fined a total of $290 million, which was said to be the second highest fine in Wall Street history at the time.

Not only was he fined heavily, but his hedge fund also had its worst performance in history that year. In 1994, during the bond market crisis, many hedge funds expected some European countries to cut interest rates to boost weak economies, so they bought large amounts of bonds and waited for appreciation.

Steinhart is one of them. He and his funds hold a total of $30 billion in bonds, but the Federal Reserve has raised interest rates by 0.25% because of a strong domestic economy, forcing Europe to follow suit. Steinhart suffered the biggest Waterloo of his life, losing 1.3 billion overnight. Although Steinhart earned 25% the following year and earned the money back for investors, he suddenly announced his retirement.

Courage is more important than knowledge, timing is more important than direction.

Maybe he was tired of buying and selling short in the market, or he pulled out of Wall Street after a fatal failure, no matter what the reason.Steinhart left Wall Street in 1995 and left the market he loved.

After retiring, Steinhardt bought land north of West Chester, bought many animals, formed a wildlife park, fed them, and almost created an African animal sanctuary. He and his wife also cultivated a camellia garden with apple and pear trees, and planted all kinds of berries, leading a life of "picking wild flowers by the fence and inadvertently seeing Nanshan".

I have to admit, it is admirable to dare to retreat and leave the market you love in the heyday of the hedge fund industry and resolutely return to the countryside. Someone once asked Steinhardt what was the secret of his success. He replied:Courage is more important than knowledge, timing is more important than direction.