Paul Tudor Jones, a trader with original ideas

Paul Tudor Jones was born in Memphis, Tennessee on September 28th, 1954. He’s the founder of Tudor Investment Corporation, the society that manages his different associations of private investments, also known as hedge funds.

Jones graduated from the Presbyterian Day Primary School before attending the Memphis University High School. He then went to the University of Virginia, where he graduated in economics in 1976.

In 1976 he started working as a broker at E.F. Hutton & Co., and in his second year he earned over $1 million in commissions.

When he got into the world of trading, there was little information about it and the few information that could be obtained was rather imperfect. They’d only learn through charts.

His cousin William Dunavant, was an important cotton trader, and he advised Jones to go to New Orleans and talk to yet another famous trader called Eli Tullis, who hired him and was his mentor in cotton futures at the New York Stock Exchange. The great emotional control of his mentor was what impressed him the most. Tullis could lead an educated and relaxed conversation with his visitors, in spite of having great losses in his futures at the time. Later, he’d say that Tullis was tough. He taught him that trading is very competitive and that you have to  fight to try and save yourself regardless of the circumstances. It doesn’t matter how you do it, as there are huge emotional and psychological ups and downs in the business.

In October 1980, he established himself as an independent trader in the New York cotton exchange for two and a half years, earning millions during that time. The really impressive thing about his achievements wasn’t the magnitude of his returns, but the consistency of his results. He only had losses for a single month. But he concluded his venture and stated that he got quite bored.

In September of 1984 Jones created the Tudor Futures Fund, one of the main asset management divisions of the company based in Greenwich, Connecticut. The Tudor Group, which includes the Tudor Investment Corporation and its subsidiaries, participates in operations of assets, investments and research in the world’s patrimony, risk capital, debt, foreign exchange and markets of basic products.

By the end of 1988, for every $1,000 invested in his fund -from the beginning-, he would have obtained a final amount of $17,481 and in those four years the amount of managed money went from $1.5 million up until $330 million. In fact, the managed amount could be greater, but Jones stopped accepting new funds in October of 1987.

One of the greatest and most important achievements of Jones was his prediction of the Black Monday in 1987, therefore tripling his money during this historic event. October of 1987 was a devastating month for many investors, since the world’s markets witnessed a crash that rivaled in virality with the Big Depression of 1929. That same month, the Tudor Jones Fund managed to obtain an incredible return of 62%.

Paul Tudor Jones also directed the Futures Industry Association and he was fundamental to create and develop of an education division for the organization. He was also a defender of the conception and implementation of the first ethical educational programme which would later become a standard for American exchange markets.

Paul Tudor Jones at TED University_american businessman_patrick dwyer merrill lynch
Image courtesy of TED Conference at Flickr.com

In March 2011, Forbes Magazine estimated that Jones had a net worth of 3.3 million and placed him in the 107th place of the wealthiest Americans and 336th in the list of the world’s wealthiest people. In March 2012, he occupied position 330 in the list of the world’s richest people.

His company Tudor Futures fund has rates which are superior to the industry standards. Said standards are 2% of managed assets yearly and 20% of earnings, and Tudor Investment Corp. charges 4% of managed assets yearly and 23% of earnings. Jones has always been a very independent trader. His style of trading is unique. It’s also important to note the fact that he managed to achieve what many considered impossible: He got returns superior to 100% for five consecutive years, with very small intermediary losses.

His public image is that of a boastful and selfish person. Mass media have discussed his life and exaggerated the most flashy elements of his lifestyle, such as his mansion at Chesapeake Bay, a 3000 acres farm, pretty ladies, nice restaurants and so on but he’s also helped the needy through his foundation.

Now he spends his time trying to be as happy and relaxed as he possibly can. He is the creator of the Robin Hood Foundation, a philanthropic organization backed mainly back by the operators of hedge funds. This organization honors its name by getting money from the rich to distribute it to the needy via help groups. He also owns the Grumeti Reserve in Tanzania’s Western Serengeti and he was praised by the East African community for prohibiting hunting in his reserve.

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