Thursday, February 17, 2011

Steve Cohen on trading, global macro

If you caught our last post on Steve Cohen's ISI chat with Paul Tudor Jones (coverage courtesy of Dealbook), it's highly likely that you clicked through to read the details of Steven's interview.

Here's one item from that discussion that really grabbed my attention, Steve Cohen talking global macro:

"...Mr. Cohen, who said probably 25 percent of his investments were made outside the United States, has been emphasizing to his traders that global macro themes are more important than ever in investing.

For this reason he went to Davos, Switzerland, last month for the World Economic Forum and said that he found “the development of the next phase of the consumer economy in China is very intriguing.” He recognized that there “could be more situations like Egypt” and “you have something going on here that could be a tinderbox.”".

This piece of info really jumped out at me for a few reasons.

Firstly, as far as I know, Cohen has not been identified as a global macro trader in the past. SAC Capital seemed to grow from Cohen's roots in proprietary stock trading, with SAC's traders eventually taking on a larger role in fundamental analysis as time went on.

The fact that such a prominent, fundamental and technical-driven US stock trader is now stressing the importance of global macro themes and their influence on markets is quite noteworthy.

His recent comments to PTJ on the firm's growing exposure to international investments were also touched on in an earlier, 2008 interview with AR:

How much does SAC invest outside the U.S.?

[SC] Probably 15 to 20 percent of our activity is outside the U.S. There’s a lot of opportunity for growth in both Europe and Asia. The game is changing. Stock markets are starting to develop all over the world, and that creates opportunity....

This brings to mind two separate interviews, with
Passport Capital's John Burbank and California investor Michael Burry, that we shared last fall in our global macro post series. Both stressed the importance of international investing and the profound influence that global macro themes now have over US markets.

The observations made by Burry and Burbank were soon echoed by well-known hedge fund manager, David Einhorn, who noted the shift that had occurred in his investing style due to the impact of big picture, macro trends.

These interviews are a rare glimpse into the thinking of some of our most astute investors, and are all must hear/must read material. Hoping you will be informed by, and profit from, them.

Related articles and posts:

1. Must hear interview with John Burbank - Finance Trends.

2. Michael Burry: an up & coming macro star? - Finance Trends.

3. Macro themes dominate investing world - Finance Trends.