Paul Tudor Jones feels “like I’m in my 20s again.” In a February 2 letter to investors reviewed by ValueWalk, where he quotes Shakespeare, the well-known hedge fund manager was documenting his thoughts just as the jaws of what might be considered the oddest market correction in history were about to clamp down. Those involved in creating volatility products that imploded bore no financial responsibility, but investors who operate under short time horizons found themselves playing an unfamiliar game where traditional economic correlations went bust.
The letter was wide-ranging and addressed numerous meaningful topics. But at a time when the VIX index can increase in value and break its price correlation ratio with the underlying S&P 500 that it tracks, as well as S&P 500 volatility diverging from small-cap markets — the world is changing in very odd ways. From one angle, Jones sees the historical perspective of how these algorithmically driven markets and manipulations have subsumed what it means to manage money during and after volatility. But Jones sees change coming, which might even benefit his macro trading outlook again.