A few quotes from the book Hedge Fund Market Wizards by Jack Schwager, from his interview with
Colm O’Shea:
“I turned bearish when money market liquidity dried up in
August 2007. Declining housing prices [2006] were the impending storm clouds,
but it started raining when money markets stopped working. Most people, however,
didn’t notice. Fundamentals are not about forecasting the weather for tomorrow,
but rather noticing that it is raining today.”
…
“The great trades don’t require predictions. The Soros trade
of going short the pound in 1992 was based on something that had already
happened—an ongoing deep recession that made it inevitable that the U.K. would
not maintain the high interest rates required by remaining in the ERM.
Afterward, everyone said, “That was incredibly obvious.” Most of the great
trades are incredibly obvious.”
…
“Equity markets would eventually notice, but being short
equities is a hard trade because they might still keep going up for a long
time. After a bull market that goes on for years, who is managing most of the money?.....
Because the bulls control most of the money, you should expect the transition
to a bear market to be quite slow, but then for the move to be enormous when
the turn does happen.”
…
“I think implementation is the key in everything.
Implementation is more important than the trade idea behind it. Having a
beautiful idea doesn’t get you very far if you don’t do it the right way.”