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Here Is An Example Of The Emotional State Of Hedge Funds Managers | November 3, 2019

Submitted by Eric Peters, CIO of One River Asset Management "You either have risk on, or you do not,” said Simplicity, walking Occam’s Razor, "There are only these two states, nothing more." He lifted both hands, palms up, to illustrate the point. "Now, reflect on the levels of anxiety you have experienced in each state throughout your career.” And decades of an agitated existence flashed before my eyes. “There are times when you are carrying an enormous amount of risk and sleep like a newborn. And there are times when you have a tiny amount of risk yet feel deeply perturbed.” Sometimes you carry no risk and feel supremely relaxed. “But the most interesting state is the one where you have no risk and experience intense anxiety.” There are only a few times in a year to make a lot of money. When those times occur, you need to be involved, aggressive, big. The rest of the year it’s best to do as little as possible. “How do you tell the few opportune times from all the others?” asked Simplicity, weighing imaginary scenarios in each hand, “The answer is: you just do.” And I smiled, because of course, that is at once the simplest and most complex answer in all the world. “I was wrong about the election result,” he explained. “And I was then wrong about the reaction to the election.” He bought gold when Florida looked likely to fall. It rallied, then reversed unexpectedly. “I knew enough to immediately get out of all of my risk, everything.” Leaving him to observe the world with clear eyes.

“For two days I watched, as a growing anxiety consumed me. I had no risk on at all but wanted to jump off a bridge.” And Simplicity paused, reflecting. “There are times when you just know that something important is happening. And that you must take risk."

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