Crispin Odey: He Trades What He Sees

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“It never ceases to amaze me the impact that controlling your losses has on your performance.” – Chris Tate

Name: Crispin Odey
Date of birth: January 31, 1959
Nationality: British

Crispin was born in east Yorkshire and educated at Harrow School. His dad had been a head boy at that school.

Crispin went to Oxford and got a degree in history and economics, after which he qualified as a lawyer. But instead of practicing law, he joined Framlington fund managers. He also worked at Baring, managing the Baring European Growth Trust.

He founded Odey Asset Management in 1991, a London-based hedge fund. He’s now a partner at the firm, which has about $9.3 billion under management, and Odey personally running $4 billion of assets. George Soros was one of the original seed investors of the firm, investing $150 million in it.

Crisping has been successful overall, but there were times he was wrong, like the year 1994, when he suffered a considerable amount of loss on his funds. Nevertheless, he thrived, like the year 2001, for he foresaw that the value of insurers would rise after the September 11 attacks on New York.

He once worked closely with Hugh Hendry, thus the quip, “Odey in the 1990s was a one-man band; Odey in the 2000s was a two-man band.” In 2008, he made lots of money from bear markets of the year, growing by 54.8% and paying himself 28 million GBP. He’d shorted some banks, getting called a “Big Business Shot.”

Whenever he lost some money, he lost some investors and his net worth declined. Whenever he made some money, he gained some investors and his net worth increased.

Trading is a lifelong career.

As of 2015, Crispin was worth £1.1 billion GBP, jointly with wife. He’s married to Nichola Pease. He lives in Chelsea, London and has a house in English Bicknor.

What You Need to Know:
1. Crispin’s multi-billion hedge fund has world leading investors and has an exceptional performance record across their conventional and hedge fund portfolios. You've got to look at assumptions behind markets long before you look at markets.

2. To be a successful long term investor you must think like an owner - know when to take risk and when to preserve capital, according to Crispin. You need to preserve your capital and generate superior returns eventually.

3. Losses are great teachers. A loss may wipe you out. Another loss would teach you how to survive and another loss would bring you profits and enjoyment.

4. Your qualifications don’t matter much when it comes to being a great trader. When it comes to speculation, History degree is far more useful than a CFA [Chartered Financial Analyst].

5. When you got great talent and skills and flexibility, you’ve control over your life. You may be under a boss, but eventually you may need to stand out on your own. Crispin broke away from Barings to found his own business at time when some felt that the private client side was playing second fiddle to the institutional business. Anyone with creativity had to operate outside the system.

6. Good traders have a knack for finding setups that would do well in spite of the vagaries of the markets. These markets are very hard to read, but some instruments would give you clear signals and you have to trade with confidence.

7. “Investment styles need to adapt as opportunities change. Living in investment denial must be avoided - if an investment is not working, we won't wait until it does,” says Crispin.

8. Good traders and investors are pretty good at making money; plus don't take too much out, either.

9. Other business also have their risks. Many people suffer in other areas of human endeavors. Crispin’s dad made money as an entrepreneur and then lost it because he broke his own rules. You’ll need to take your time to make money, thinking like the opulent. Don’t look for quick riches.

10. Genius traders fall and rise up again. A good trader may suffer a temporary loss, loss of revenues and loss of investors. Nonetheless, they would eventually grow, grow revenues and gain new investors.

11. You don’t know when a downtrend or an uptrend would end. Those who chase the market lose money, and those who get chased by the market make money. You need to stay ahead of the market.

This article is ended with a quote from Crispin:

“What we do is work very hard not to lose money. We don't live with hope in the portfolio; we live with fear. Our view of the market now is: Take care of the downside, and let the upside take care of itself.”

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