Insights from John Arnold, the natural gas trader

i came across the interview that NYSE did with John Arnold, the natural gas trader, which is now available on YouTube and a few things he mentioned seemed kinda interesting:

1) he started his hedge fund in 2002 with $8 million - but unlike previous media reports, he tells his side of the story on the starting AUM, which is that he was actually supposed to have $50mm of commitments, but bc of the Enron fallout, the $50mm commitments melted away for the most part & he was stuck with $5 mil from a broker-dealer, $2 mil of his own money, and $1 mil from a random private investor. so instead of making enough dough to already have $8 million after tax to start his hedge fund in his 20s, his portion of the starting AUM / the whole setup seemed more modest

2) he emphasized a few times in his interview that he doesn't use "technical analysis". not sure if i really believe this statement and take it at face value 100% though, i mean, who doesn't look at charts before opening a position, especially as he was reportedly trading huge positions

3) he also mentioned in the interview that he tried applying to the investment banks in new york but got turned down, which is how he went to enron instead. so i guess even superstars like him are not 100% successful in what they do 100% of the time

4) when he started, he made 30% the 1st month, but he explained that it was pretty much arbitrage for what he did to generate those profits, not just slinging a position. would be good if someone could explain the mechanics -- he said something along the lines of all he had to do was work the phones to make millions in profit per month, and it sounded like he didn't have to use his balance sheet that much either

5) he generated like 100% the first three months of business, which got him more AUM

6) another thing that stood out was how well he still remembered all the details from the 05-06 era when he did the trades opposite amaranth, etc. also casually inserts talk of butterflies and risk mgmt into the conversation like a real pro despite having announced his retirement from trading

 

He's a genius and a legend

 

Can you post the link? Thx.

 

This is a book you might find interesting:



It was a good read.

 

To be honest, I doubt this is great story.
Natural gas is very sensitive to winter condition.
When winter is very cold, NG volatility will increase.

There is no mention about winter thing in the writeup.

 

1/2 of his staff were working on predicting/analyzing weather patterns. I have huge admiration for him. Stellar example.

 

%%
''Doesn't use tek analysis??
NOT true @ all; TA is study of price + volume.

 

Thanks for sharing this info. I am knowing about John Arnold for the very first time.