My First Million – This Hedge Fund Manager Got Away With Insider Trading… Then Made Billions

Intro

In this episode of “My First Million,” the hosts discuss the correlation between attractiveness and investment returns, the lifestyle of hedge fund managers, and the story of a hedge fund manager who got away with insider trading and made billions. They also explore topics such as the 996 work schedule in China, the history of the 40-hour work week, and the importance of generating cash flow in business. Additionally, they touch on the challenges and risks of investing in startups and the experiences of visiting a health guru.

Main Takeaways

Investing and Attractiveness

• Being conventionally ugly outperforms in investing by 2%
• There is a correlation between attractiveness and rate of returns for investment managers
• Taller people do not necessarily get better returns
• Good looks do not necessarily lead to better investment returns, according to CB Insights founder

Hedge Fund Managers and Insider Trading

• Successful hedge fund managers often trade their lifestyle for the job earlier in their career
• Steve Cohen, a successful hedge fund manager, made billions through day trading and finding arbitrage opportunities
• Keith Reboy talks about the 996 work schedule in China, where employees work from 9am to 9pm, six days a week
• White collar criminals can get away with their crimes, as seen in the case of a convicted insider trader who paid billions but did not go to jail

The 40-Hour Work Week and Its Impact

• The history of the 40-hour work week dates back to the industrial revolution and was established to boost consumerism
• Research suggests that humans can only focus and concentrate for about five hours a day
• Some companies have tested four-day workweeks, but the effectiveness is still up for debate
• Chinese companies still practice the 996 work schedule despite being illegal

Steve Cohen and His Hedge Fund

• Steve Cohen started his own fund, SAC, with $10 million of his own money and crazy commission rates
• SAC accumulated $10 billion, but after the first $600 million, insider trading became prevalent
• Cohen was convicted but started another firm called Point 72, which is now his family office
• Cohen has an impressive memory for stocks and is unwavering on discipline and portfolio/firm structure

Other Topics

• Differentiating yourself is important when applying for jobs in highly competitive industries like hedge funds
• The story of the sardine bubble in southern California serves as a cautionary tale for investors
• The importance of generating cash flow is often overlooked in favor of focusing on profit
• Visiting the house of a health guru and the experiences of following their protocol

Summary

Investing and Attractiveness

Contrary to popular belief, being conventionally ugly may actually lead to better investment returns. Research shows a correlation between attractiveness and the rate of returns for investment managers, but being taller does not necessarily guarantee better returns. The CB Insights founder shared data that challenges the notion that good looks lead to better investment performance.

Hedge Fund Managers and Insider Trading

The lifestyle of successful hedge fund managers often involves intense work and early sacrifices. Steve Cohen, a prominent hedge fund manager, made billions through day trading and finding arbitrage opportunities. Despite being convicted for insider trading, Cohen started another firm called Point 72. The case highlights how white collar criminals can sometimes escape jail time by paying hefty fines.

The 40-Hour Work Week and Its Impact

The 40-hour work week, established during the industrial revolution, aimed to improve workers’ well-being and boost consumerism. Research suggests that humans can only focus for about five hours a day, making the effectiveness of longer work hours questionable. Chinese companies still practice the 996 work schedule, despite it being illegal, while some companies have experimented with four-day workweeks.

Steve Cohen and His Hedge Fund

Steve Cohen’s success as a hedge fund manager can be attributed to his impressive memory for stocks and his unwavering discipline in portfolio and firm structure. Despite his conviction for insider trading, Cohen started a new firm called Point 72, which now serves as his family office. His fees were 50% net of fees, and he had a remarkable stretch of high returns.

Other Topics

Differentiating oneself is crucial when applying for jobs in competitive industries like hedge funds. The story of the sardine bubble in southern California serves as a cautionary tale for investors who chase potential rather than focusing on profits. Generating cash flow is often overlooked in favor of profit, but it is a crucial aspect of sustainable business. The experiences of visiting a health guru and following their protocol offer insights into alternative lifestyles and health practices.

Conclusion

This episode of “My First Million” explores various topics related to investing, hedge fund managers, work schedules, and lifestyle choices. It challenges conventional wisdom and provides insights into the world of finance and business. Whether it’s discussing the correlation between attractiveness and investment returns or the impact of the 40-hour work week, the hosts offer thought-provoking perspectives. They also delve into the story of a hedge fund manager who got away with insider trading and made billions, shedding light on the complexities of the financial industry. Overall, this episode provides valuable insights for listeners interested in finance, entrepreneurship, and work-life balance.