Feb

6

 John W Henry, is trying to turn the fortunes of English Premiership team Liverpool, after being a success across the pond at the Red Sox. In a interview in The Guardian, he disclosed a few points in his battle which may be of assistance to us. First, an extract from his trading thinking:

I don't believe that I am the only person who cannot predict future prices. No one consistently can predict anything, especially investors. Prices, not investors, predict the future. Despite this, investors hope or believe that they can predict the future, or someone else can. A lot of them look to you to predict what the next macroeconomic cycle will be. We rely on the fact that other investors are convinced that they can predict the future, and I believe that's where our profits come from. I believe it's that simple.

John W. Henry

On his battle with Liverpool, and strategies for a premiership:

1. That, he said, will be Liverpool's two-pronged approach to rebuilding the squad, which will be financed only out of its income; he and his fellow investors in Fenway will not be pouring cash in.

2. Henry, however, said this did not mean they were not prepared to spend big fees on the right players, as the group has done when turning the Red Sox into a World Series-winning baseball team again.

3. "We intend to get younger, deeper and play positive football.

4. Adding two top players "We intend to get younger, ………Adding two top players [Carroll and Suárez] who have just turned 22 and 24 is a good first step.

5. "It's not a coincidence that the last two ownership groups could not get a new stadium built," he argued pointedly. "What they proposed or hoped for just didn't make any economic sense6. Our goal in Liverpool is to create the kind of stability that the Red Sox enjoy," he said. "We are committed to building for the long term."

OK what does all that mean with respect to trading.

1. Invest from within. Generate cash from within other ares of your business, then use this to improve revenue in your core model (and fit under regulation framework in doing so).

2. Rio trade is alive and well! Well, at least investing larger on a proven strategy where the rest of the business model can fit around it. In fact, this might be the only way to take you over the line with some kind of speed, without grinding it out, and losing to the vig.

3. Do not expect to play defense and win. You must trade positively and add to positions when you can in an effort to score the match winner.

4. Law of ever changing cycles. Get fresh new ideas and strategies. Add to the old tried and true with fresh blood, since this will be where your future lies.

5. Do your books. Money management. Don't over extend on risk.

6. Your after stability in trading and low volatility returns over the long term… not in beating the morning star monthly genius.

Jonathan Bower writes: 

I dunno, blowing GBP 35 million on an unproven and injured 22 year-old player with multiple arrests for assault, including his ex-girlfriend, (Carroll) makes much sense from a business or trading perspective.


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