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analyst75

Ken Heebner: Worth Hearing

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INSIGHTS INTO THE MINDSET OF SUPER TRADERS – Part 13

 

"Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it overnight." - Jesse Livermore

 

Name: Kenneth Heebner

Nationality: American

Education: MBA, Harvard University

Occupation: Funds manager

 

Career:

Ken runs Capital Growth Management (CGM), Boston, Massachusetts, which was started in 1990, and part of his funds were performing very well in the year 2005; until recent huge drawdowns, which should’ve be controlled more effectively.

 

Between the year 2000 and the year 2010, the fund enjoyed a cumulative growth of 290.2%, when compared to the S&P 500's 16.4%. He’s really a good speculator who respects his own hunches and stays away from what he doesn’t understand.

 

Insights:

1. Ken was once ranked No. 1 stock picker in USA, but recently his predictions were less accurate and his funds also suffered. Nevertheless, he doesn’t lose his love for the markets. Good traders remain passionate about trading in good and bad times.

 

2. There’s one thing that’s unsavory about Ken, especially when compared to Michael Platt. Ken isn’t that good at risk management because the losses he suffers when he’s wrong are always substantial. For example, CGM Focus lost 48 percent in 2008 as the global recession hurt commodity prices and a move into beaten-down financial stocks proved premature. You can agree that someone who losses less than 5% in bad trades is better than someone who loses 35% in bad trades. Why would Ken’s fund plunge from $10.3 billion to $1.9 billion? It’s because he wasn’t trading defensively. It’s better to trade not to lose money, instead of trading to make money. That’s a defensive form of trading. Ken himself acknowledged that he’d have done better if he’d been more defensive. However, he always bounces back with time, which is the most important aspect of all – the ability to survive losing streaks and recover losses.

 

3. Based on his quote at the end of this piece, he doesn’t go with the crowd (for they tend to be wrong always). He’s like a countertrend trader.

 

4. Trading, for serious traders, should be a passion of a lifetime. At a relatively old age (71), Ken’s still passionate about trading. Unlike John Arnold, who retired from active trading at the age of 38, Ken doesn’t show any intention to retire. That’s the kind of freedom trading offers: you choose when to retire.

 

5. When you’re really good, you’ll be a role model to some great traders. One great trader has other role models who’re great traders as well; and the other way round.

 

Conclusion: James Altucher says something which is true of trading. He says, with art, you have to deal with perfection. Nobody is perfect. For everyone who loves singing, there is always someone who sings better. For everyone who draws, there is always someone who draws better. You can't make art if you are trying to be perfect." This is also true of trading.

 

This piece is ended with a quote from Ken:

 

"I am completely outside the mainstream. I see the mainstream in the distance."

 

Copyright: Tallinex.com

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"...That’s the kind of freedom trading offers: you choose when to retire."

It's really a unbeatable attraction, and beautiful and respected addiction. I always said to my kids : Welcome to this beautiful "Zombie" industry.

 

It's a great lead. Thanks and cheers.

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