- “Discipline before vision,” amen, brother…
- Watch “The Trader.”
- Let’s keep our eyes on the 10-year U.S. Treasury yield too.
I had the amazing privilege to talk to Wall Street legend Peter Borish on Wednesday.
Peter is a co-founding partner and was second-in-command at Paul Tudor Jones’s investment company.
Paul Tudor Jones is known in the investment community as one of the greatest traders of all time.
He’s the Michael Jordan of macro trading.
I was on a call with Peter this week getting ready for a panel discussion on Tuesday at the New York Athletic Club.
Welcome to the Club
New York is cool in a lot of ways. One of my favorite things about the city is the history.
There are all kinds of old, private clubs like this one, including the Yacht Club and the University Club, among many others.
These places have been around for decades, if not centuries.
I’ve been invited into these exclusive clubs over the years. And I just can’t get over the architecture.
They had a lot more time on their hands back then, and the beauty still shines today.
There were times when I wasn’t allowed inside the NYAC because I was wearing jeans.
So suit and tie for me, believe it or not, on Tuesday morning.
I’ll be on a panel with Peter moderated by veteran trader Michael Martin.
In our preparation call, Peter and I couldn’t help but start talking about markets.
For what it’s worth… probably a lot… one thing he left me with was the secular move he’s seeing in rates.
Here’s a long-term chart of the 10-year U.S. Treasury yield:
Peter thinks we’re in for a long period of rising rates.
And I think he makes a good point.
This could certainly be how this plays out – rising rates for many years to come.
Here’s another scenario, though, particularly across shorter time frames: Rates remain choppy.
We had that initial thrust off the 2020 lows, and then it’s just been a sideways mess over the past couple of years.
I think, for now, the choppy mess remains in place.
And stocks like that.
What stocks don’t like is when rates move too quickly in any one direction.
Slow and steady is what stocks want from bonds.
And this mess over the past two years has led to historic returns in U.S. stocks.
I think the mess for bonds likely continues. And that’s not a bad thing for stocks.
Peter also told me that the Tudor model is based on a simple idea about strategy and risk-management.
“Discipline before vision.”
I love when I hear stuff like that from people I respect and admire in this game of ours.
And I’m just plain grateful I got to talk markets – and get to share some real-time insight with you – from one of the GOATs.
Watch “The Trader”
If you trade, invest, speculate, or just observe markets, this 1987 PBS documentary is a must-watch.
“The Trader” gives us all an inside look at what working in markets was like back in the 1980s.
Let’s just say things were different. They actually used phones… lots of phones!
The doc features a young Paul Tudor Jones and his partner Peter Borish, who was still in his 20s.
Here’s PTJ himself looking back and why he’s such a technician who focuses on price:
I see the younger generation hampered by the need to understand and rationalize why something should go up or down. Usually, by the time that becomes self-evident, the move is already over. When I got into the business, there was so little information on fundamentals, and what little information one could get was largely imperfect. We learned just to go with the chart. Why work when Mr. Market can do it for you? These days there are many more deep intellectuals in the business, and that, coupled with the explosion of information on the internet, creates the illusion that there is an explanation for everything and that the primary task is simply to find that explanation.
It’s cool to see the great ones pointing back to price itself. Underscores why we do the same thing.
This documentary is a trip back in time for sure.
I watched it again yesterday because I was so excited to speak to Peter, who was featured regularly throughout the film.
I realized it had been too long since I watched it.
And Paul Tudor Jones is just full of wisdom. Here are a few more bits…
“No man is better than a machine, and no machine is better than a man with a machine.” Seems particularly relevant today.
“Losers average down losers.” We don’t do this.
There’s even a famous meme about this one:
“I’m always thinking about losing money as opposed to making money. Don’t focus on making money. Focus on protecting what you have.” I love it.
I’ll share more from my experiences in New York with Peter next week.
And we’ll keep tracking the 10-year U.S. Treasury yield…
Stay sharp,
JC Parets, CMT
Founder, TrendLabs