Bloomberg called this man the “Wall Street’s greatest trader”, while Forbes estimated his fortune in $1.05 billion in February 2017. Millions of people keep wondering what is Michael Steinhardt’s secret ingredient of success. In the meantime, he is reinventing investing over and over again.
The future "greatest trader" was born in 1940 in New York City. His family was not an easy one: Michael's father was Sol Frank Steinhardt - hot-tempered high-stakes gambler, who had a lot of acquaintances in the criminal world.
Despite the uneasy family background, Michael has always been eager to study and in 1960 he graduated from the University of Pennsylvania. His first steps in finance were made as an analyst and researcher for Calvin Bullock mutual fund company and in the brokerage firm called Loab Rhoades & Co. By 1967 Steinhardt, Fine, Berkovitz & Co. hedge fund company was founded. Steinhardt invested $10000 of his own earnings from investments. The company was very successful due to the special approach implemented by its founder: deep analysis of the macro market situation allowed to adapt company’s strategy to it perfectly. In 1995 Steinhardt made a decision to leave at the top of his career. By this moment the company was worth $4.8 million.
"I thought there must be something more virtuous, more ennobling to do with one's life than making rich people richer," he said. "It's not the sort of thing from which you would go straight up to heaven."
In 2004 Steinhardt started to work in WisdomTree Investments, which focuses on earnings-based index funds.
Steinhardt’s investment style is more about short term strategic trading. According to Charles Kirk, Steinhardt prefers to use several "rules of investing":
- Make all your mistakes early in life. The more tough lessons early on, the fewer errors you make later.
- Always make your living doing something you enjoy.
- Be intellectually competitive. The key to research is to assimilate as much data as possible in order to be to the first to sense a major change.
- Make good decisions even with incomplete information. You will never have all the information you need. What matters is what you do with the information you have.
- Always trust your intuition, which resembles a hidden supercomputer in the mind. It can help you do the right thing at the right time if you give it a chance.
- Don't make small investments. If you're going to put money at risk, make sure the reward is high enough to justify the time and effort you put into the investment decision.