Bruce Kovner, The Cure For Aging, and 100%+ Returns

Bruce Kovner, The Cure For Aging,  and 100%+ Returns

Alex is off in NYC celebrating the Marine Corps 242nd Birthday with his old teammates so I (AK) am here with this week’s Macro Musings.

As always, if you come across something cool during the week, shoot an email to [email protected] and we’ll share it with the group.

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Articles I’m Reading —

Operator Jamie shared a speech from the legendary Bruce Kovner in our Comm Center recently. You can read it here. Here’s an excerpt:

In these efforts, I try to pass on something of the proverbs, ethos and culture of trading that I have regarded as essential to Caxton’s success. Of these, I will mention three:

  1. Listen to the market. Close observation of price behavior is always necessary for the discipline of successful trading and it is very often very helpful in providing evidence about the nature of current conditions. If we can understand what the market is telling us, we will most likely be able to understand how to trade it. Listen to the market, hear it, don’t tell it what to do. Listen.
  2. Take politics and policy seriously. Changes in policy matter. Changes in leadership matter. Study them seriously. This doesn’t mean that politicians and policy makers will get it right – indeed very often they will get it wrong and these ‘mistakes’ in and of themselves may be important to markets. But ignore them at your peril. Policy matters. Politics matter.
  3. Above everything else, never let the discipline of risk control become lax. Those 100-year storms have a way of coming round every few years. If in real estate it’s “location, location, location”, in leveraged trading it is “risk control, risk control, risk control”. It is surprising how often this focus is lost.

Video I’m Watching —

I really enjoy the Kurzgesagt – In a Nutshell YouTube channel. They’re great at explaining a variety of science-related concepts with engaging animation. You can watch their latest video — How To Cure Aging During Your Lifetime — by clicking the image below:


It’s interesting to think about the effects age therapies could have on global economies. Demographic trends would drastically change. A more able-bodied elderly population could mean extended working lives, a huge drop in medical costs, and a number of other unpredictable consequences. And the fact that many scientists believe these age therapies will be viable in our lifetimes makes it even more interesting…

Podcasts I’m Listening To —

Tim Ferriss recently interviewed Walter Isaacson (you can listen here) — the author of various popular biographies including Steve Jobs, Einstein, and Benjamin Franklin. Isaacson’s latest biography is on Leonardo da Vinci.


I’m excited to dig into this book after searching for a comprehensive history on this legendary polymath for a long time now.

The Ferriss interview is fantastic because of Isaacson’s ability to share wisdom not only from his own life (he’s also the CEO of the Aspen Institute and a former CEO of CNN) but also from the legends whose biographies he’s written.

One topic comes up again and again in the interview — the cross-disciplinary approach. Being curious about everything, from biology to art to mathematics is how polymaths like Benjamin Franklin and Leonardo da Vinci were able to accomplish so much in seemingly unrelated fields. Their broad interests helped them see connections other couldn’t. And those connections lead to a variety of new discoveries.

We’re fortunate enough to work in a field where the same types of skills are highly valuable. In the world of investing it pays to be able to pull together disparate ideas into cohesive theses. That’s how unique insights are developed… and those are often the most profitable.

For more podcast recommendations, check out our list of the best trading podcasts here. And don’t forget about our comprehensive reading list for global macro traders and investors either.

Chart(s) I’m looking At —

Last week we mentioned that the Barclays High-Yield Bond ETF (JNK) had closed below its 200-day moving average for the first time since August. JNK is a useful indicator of the market’s risk-appetite. If it falls, we can expect the broader market to follow.

Since last week JNK has continued to plummet. We’re currently keeping a close eye on a market sell-off that could follow.


Another way to evaluate risk appetite is with the High Yield Option-Adjusted Spread.


We can see it’s currently bouncing from 2014 lows, which isn’t a cause for concern just yet. But if it breaks the upper level of the current consolidation, it’s a signal that liquidity may finally be draining from the system.

The last time the spread broke out, in mid-2014, we got the dollar rally and crude crash. And then it’s second leg higher from 2015 through 2016 culminated into the low of the market.

Trade(s) I’m Looking At —

Sometimes our calls pay off quickly…

Last week we mentioned we were looking into Pangea Logistics (PANL), a speciality shipping company. Our thesis revolved around the shipping industry putting in a bottom. The Baltic Dry Index was hitting multi-year highs, international fuel regs were set to pinch supply, and the order book as a percentage of fleet capacity was at an all-time record low.

PANL proceeded to shoot over 110% higher in the last few days.

Pangea Logistics Solution

PANL made us look pretty smart eh? But as the trading game goes, sometimes we’re not sure what the hell is going on…

Trip Advisor (TRIP), a long idea we’ve covered in these pages was crushed after it’s latest earnings report where the company beat estimates. Either we’re really missing something or the market is really wrong. It’s probably the former, but we’re having a tough time seeing it. If you’ve got any insights, shoot us an email.


Quote I’m pondering —

Risk control isn’t an action so much as it is a mindset. It stems largely from putting at least as much emphasis on avoiding mistakes as on doing great things. ~ Howard Marks

We’ve been on a roll lately in our portfolios. Whenever that happens, we try to get even more strict with our risk management. The last thing we want is to get cocky, make a mistake, and squander away our hard earned profits. The goal is to stay objective and not let emotions get in the way.

That reminds me of another quote:

Every day I assume every position I have is wrong. I know where my stop risk points are going to be. I do that so I can define my maximum drawdown. ~ Paul Tudor Jones

If you’re not already, be sure to follow us on Twitter: @MacroOps. Alex posts his mindless drivel there daily.

Lastly, here’s a link to our latest global macro research. And here’s another to our macro trading strategy and education.

Have a great weekend.

Your Macro Operator,


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