Bruce Kovner
Investor, Hedgefund Manager, Philantropist
“You have to be willing to make mistakes regularly. There’s nothing wrong with it”
Bruce Stanley Kovner was born in 1945 in New York City's Brooklyn borough to Isidore Kovner, an engineer who briefly played semi-professional football, and his wife, Sophie. Kovner spent his early years in the Borough Park section of Brooklyn with his parents and three siblings before the family relocated to suburban Los Angeles in 1953. Early on, he was a high achiever, becoming a Merit Scholar. He was the student-body president of Van Nuys High School at 16, and an accomplished basketball player and pianist.
Kovner graduated from Harvard University. He stayed in Harvard University and the Pennsylvania State University to teach politics, which enhance his deep understanding about politics and economics. Based on this, he chose to research the economics of countries and thus works on Forex trade. Nowadays, numerous financial products such as stock, crude oil, future, Forex, and gold, etc. are in the market. From the author’s point of view, it is better to follow and research a product over a year when you want to invest a huge amount. Taken an extreme example, one may have to research a company for a year for investing a stock.
Bruce Kovner has three children and has been married twice. In 1973, at age 28, he married artist Sarah Peter, in a Jewish ceremony in Connecticut. They divorced in 1998. In 2007, he married Suzie Fairchild, the daughter of Robert Fairchild, and great-granddaughter of Louis Fairchild who founded the company with his brother, Edmund Fairchild, that became Fairchild Fashion Media, now a division of Condé Nast Publications.
Kovner has his own strategy rather than invest when the price is moving up. He always waits for the price reaches a new high and then buy more as long as it sags to a certain price. It would be a strong driven power for short swing trading rising when add money after retracement during a stable trend.
He stated: “Once a while, I am not able to find reasons about the reverse of market trend and my prediction. Until now, I will immediately short position if the market is going in a different direction with my prediction. On 19th Oct. 1987, the day of global stock crisis. I can’t figure out the fundamental crash reason, then short all the positions during 19th to 29th. One discipline to remember: never bear the loss caused by the market you are unclear about”.
Especially for the short swing trade, the situation should step further for advantages than reluctant to leave. It is better to trade when you more confident with the market in your hand.
Kovner will always trade according to fundamental analysis. Unless he knows the cause to the market movement, he will not put my money in. He will sometimes use technical analysis for market estimation. Bruce is a firmly fundamental analysis believer, and use technical analysis for supplementary. Investors should know that: the initial movement from the technical analysis is the long-term trend indication for the market when markets change by fundamental analysis. It is always a good chance to take adventure when the price break through the consolidation pattern.
According to Kovner, he will always set the stop loss price when he steps into the market. This could give him a sound sleep. In other word, he knows exactly when to out the market. However, he always set the stop loss point below down the technical level. Kovner tries to control not be out of the market regularly automatically, and there is still holding the chance for price bouncing back. To estimate the risk of his every position is a compulsory course for every day.
Kovner will be out of it, if the market trend is different from analysis. He doesn’t agree to be out of the swim of the market and bear the loss unconsciously. One has to use his own judgment to make decision. Mistakes can be taken. You have to try and fail. If it fails, try again. Only by this, one can learn to conscious about the market bear the situations in mind.
There are two traits of success. One is keeping the imagination about the market, and believe without a shadow of a doubt. Another is to be rational and moderate even under high pressure. A successful trader will always be persistent, independent, strong-minded. They have the courage to enter in the market of no one willing to.
Kovner's first trade was in 1977 for $3,000, borrowed against his MasterCard, in soybean futures contracts. Realizing growth to $40,000, he then watched the contract drop to $23,000 before selling. He later claimed that this first, nerve-racking trade taught him the importance of risk management. Between 1978 to 1987, he gained a yearly average rate of return of 87%. It is an astonishing achievement even in the market with high leverage. His wealth is estimated at $6.6bn in 2021.
In his eventual role as a trader under Michael Marcus at Commodities Corporation (now part of Goldman Sachs), he purportedly made millions and gained widespread respect as an objective and sober trader. This ultimately led to the establishment of Caxton Associates, in 1983, which at its peak managed over $14B in capital and has been closed to new investors since 1992. Kovner was a director of Synta Pharmaceuticals from 2002 to 2016.
He is Chairman of CAM Capital, which he established in January 2012 to manage his investment, trading and business activities. From 1983 through 2011, Kovner was Founder and Chairman of Caxton Associates, LP, a diversified trading company. Kovner serves as Chairman of the Board of The Juilliard School and Vice Chairman of Lincoln Center for the Performing Arts. He also serves on the Boards of the Metropolitan Opera, and American Enterprise Institute. In 1996 he established The Kovner Foundation to support organizations that promote excellence in the arts and education, initiatives that defend private enterprise and protect individual rights, and scholarly studies and research that strengthen American democratic principles. In September 2011, Kovner announced his retirement from his position as CEO at Caxton, succeeded by Andrew Law.
A long-time supporter of The Juilliard School, Kovner has been chairman of the School's board since 2001. In 2013 Bruce and his wife, Suzie Kovner, endowed the Kovner Fellowship Program at Juilliard with a gift of $60 million - the largest one-time gift to the school. In 2012 Kovner donated $20 million to Juilliard to endow the school's graduate program in historical performance. Kovner also donated a collection of music manuscripts to Juilliard in 2006. Kovner is vice chairman of Lincoln Center for the performing arts as well as a major funder of the redevelopment of Lincoln Center. He is also managing director of the Metropolitan Opera's board of directors. Kovner founded and was chairman of the School Choice Scholarships Foundation, which awarded scholarships to financially disadvantaged youth in New York City. He has actively supported other charter schools, such as the Success Academy Charter Schools, where his wife Suzie serves on the board.
Kovner has contributed extensively to conservative causes. In January 2012 he donated around $500,000 to Restore our Future, a Super PAC supporting the presidential campaign of Mitt Romney. He is the former chairman of the board of trustees of the American Enterprise Institute. His close acquaintances have included former Vice President Dick Cheney, neoconservative figures Richard Perle and James Q. Wilson. Previously, he was a backer of the conservative Manhattan Institute and had invested in The New York Sun daily newspaper. A paper by Robert Brulle noted that his foundation funded conservative organizations that may have been involved in conservative climate change studies from 2003 to 2010. The paper was criticized in The Guardian since the majority of organizations in the study have multiple focuses, and Brulle could not say what portion of money (if any) was devoted to climate issues.
Other philanthropic causes he has supported include the Institute for Justice, a public interest law firm that is focuses on school choice; the Innocence Project and Centurion Ministries, which help serve wrongly-convicted inmates, and Lambda Legal, which advocates for equality and civil rights for the LGBTQ community.
In 2008, he was inducted into Institutional Investors Alpha's Hedge Fund Manager Hall of Fame along with Alfred Jones, David Swensen, George Soros, Jack Nash, James Simons, Julian Robertson, Kenneth Griffin, Leon Levy, Louis Bacon, Michael Steinhardt, Paul Tudor Jones, Seth Klarman and Steven A. Cohen.
Kovner is a Fellow of the American Academy of Arts and Sciences and received an Honorary Doctor of Humane Letters from The Juilliard School. In 2016 he awarded both the William E. Simon Prize for Philanthropic Leadership by The Philanthropy Roundtable and The Alexander Hamilton Award by The Manhattan Institute.
His Fifth Avenue mansion in New York City, the Willard D. Straight House, features a lead-lined room to protect against a chemical, biological, or dirty bomb attack.
Quotations:
· The first rule of trading is do not get caught in a situation in which you can lose a great deal of money for reasons you don’t understand.
· Successful traders are strong, independent, and contrary in the extreme. They are able to take positions others are unwilling to take. They are disciplined enough to take the right size positions. A greedy trader always blows ou
· You have to be willing to make mistakes regularly. There is nothing wrong with it.
· Risk management is the most important thing to be well understood. Undertrade, undertrade, undertrade is my second piece of advice. Whatever you think your position ought to be, cut it at least in half.
· Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I’m getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis. I never think about other people who may be using the same stop, because the market shouldn’t go there if I am right.
· Through bitter experience, I have learned that a mistake in position correlation is the root of some of the most serious problems in trading. If you have eight highly correlated positions, then you are really trading one position that is eight times as large.
· Fundamentalists who say they are not going to pay any attention to the charts are like a doctor who says he’s not going to take a patient’s temperature.
· As a trader who has seen a great deal and been in a lot of markets, there is nothing disconcerting to me about a price move out of a trading range that nobody understands.
· My experience with novice traders is that they trade three to five times too big. They are taking 5 to 10 percent risks on a trade when they should be taking 1 to 2 percent risks. The emotional burden of trading is substantial; on any given day, I could lose millions of dollars. If you personalize these losses, you can’t trade.
· I caught hold of the great bull market in soybeans in 1977. I had no idea what I was doing, incidentally.
· In 1983, I set up Caxton Corp. It has been an interesting and happy ride since.
· The Heisenberg principle - If something is closely observed, the odds are it is going to be altered in the process. The more a price pattern is observed by speculators the more prone you have false signals; the more the market is a product of non-speculative activity, the greater the significance of technical breakout
· In a bear market, you have to use sharp countertrend rallies to sell.
