Forex education: How hedge funds make decisions
Testimony by former SAC (SAC Capital Advisors, Steve Cohen’s hedge fund) analyst Jon Horvath givens some insights into how the hedge-fund firm made its trading decisions:
- SAC placed a lot of emphasis on information directly obtained from companies
- It offered sessions led by “intelligence professionals” on how to interview and question company executives to extract clues
- Analysts kept internal “sizing work sheets” that scored how big a trade should be based on roughly 50 data inputs. Among the data points considered were whether the information was a “direct read” from management and whether management was being “dodgy (avoiding you)” and perhaps hiding bad news
Is bad news being hidden?
More at (The Wall Street Journal is often gated, so if you’re unable to access the article try a search of Google news using the headline): Testimony Sheds Light on SAC’s Trading
Say what you like about SAC, and there is plenty of chatter about borderline activities, but read the above without any preconceptions and take what you can from it.
What I've taken is the focus on 'soft' data - analysts perceptions of how they were being treated by management: "whether management was being "dodgy (avoiding you)" and perhaps hiding bad news". This is not 'hard' data, it requires experience, skill and judgement, something that only comes with time, but is worth cultivating nonetheless.
