Power of Margins

August 29, 2005 20058 2:46 am | In Finanducation | 1 Comment

A good post about the power of margins from Fool.com. Margins represent the efficiency by which companies capture portions of sales dollars but David Meier attempts to summarise/categorise different ways to look at margins:

• The traditional lens – basics/definitions about margins i.e. gross, operating, net margins.
• The fuel lens – are companies powered by gross margins?
• The power lens – is power (dollars) better than efficiency(percentages)?
• The psychology lens – capping gross margins brings in the customers?

Read more…

Ten Useful Lessons from John Llewellyn

August 29, 2005 20058 1:27 am | In Finanducation | Comments Off

Amazing article by John Llewellyn, chief economist of Lehman in the Guardian a while back. Thought I should at least keep a copy in my blog before it disappears!

1) Economic events – what economists call 'shocks' – seldom produce just one consequence. Usually the effects ripple on for years. A tax cut or an increase in government spending usually does indeed have the sought-after effect of increasing total spending, output, and employment. But later it may result also in higher inflation, balance of payments problems, currency depreciation, higher interest rates and misallocated resources. Maybe, in the end, all the expansionary policy achieves is the bringing forward of some demand and output – followed by an unavoidable 'payback' period of below-trend output and above-trend inflation. Maybe, maybe not. That debate rumbles on. But the point that policy proposals should be evaluated over their full lifetime, and not just an electoral lifetime, is well made.

2) Good economic policies do not guarantee good economic performance; but bad economic policies inevitably result in bad performance. No economist finds it easy to say what policies would guarantee a better performance in France or Germany. But virtually no economist doubts that Zimbabwe's disastrous performance is mainly the result of its economic policies.

3) It is structural, not demand-side, policies that most influence economic performance over the long term. The experience of reforming economies as diverse as Australia, New Zealand, the Netherlands, and Poland is testimony to that. But structural policies take ages to produce effects. The initial consequence is usually a reduction in expenditure, which slows economic activity. It typically takes five years or more for positive effects to start to outweigh the negative. No surprise that politicians so seldom undertake reform. They know that the negative consequences will occur on their watch, while the benefits will accrue to their successors. Look at how Labour has benefited from the policies of Mrs Thatcher.

4) People respond powerfully to economic incentives. They may not analyse the situations they face in the framework, or use the terminology of the professional economist. But discussion in the cafe or pub, plus trial and error, results in a solid practical understanding of what it is optimal to do, given the rules of the game. Look at the way unemployed people in Britain, in contrast to those in Belgium and France, now go in search of a job – the rational consequence of the incentives in the UK's new unemployment benefit regulations.

5) Economic and social policies have to be considered as a whole. It is no good, as the Dutch found, setting unemployment benefit at a level that gives incentives to unemployed people to seek work if, meanwhile, the social benefit system encourages them to register as disabled. In the Netherlands in the 1990s, disability benefit was equivalent to at least 70 per cent of the recipient's wage, and often matched it. No wonder that 13 per cent of the Dutch workforce was on disability pension.

6) Competition is one of the most powerful of forces that motivate the perpetual quest for more efficient ways of doing things. It also makes companies' lives more demanding, one of the reasons that they so often seek to curb competition, not least that which comes from abroad via international trade. However, when such competition causes major layoffs and plant closures, such that workers who lose their jobs cannot find another for which they are qualified, the costs – economic and social – can outweigh the benefits. It is therefore sensible, fair, and efficient that society finds ways for the winners to compensate the losers: but without reverting to protectionism. The way in which Scandinavian countries retrain workers whose skills have become obsolete is the classic example of such thinking.

7) History seldom, if ever, repeats itself precisely. Economies have the habit of producing new mixtures of circumstances that require new approaches. The Korean War commodity price shock of the 1950s produced scarcely a ripple in overall inflation: but the similar-sized oil shock of 1973-74, which happened in an environment of strong unionisation and widespread wage-price indexation, zoomed inflation in many countries up to 20 per cent or more. And who would have thought that, a little over 20 years after tackling 20 per cent-plus inflation, Japan would be grappling with the problems of deflation.

Complicated economic policies whose rationale is hard to explain usually fail. J K Galbraith gives a great example. During the Second World War he was in charge of price control in the United States. A crusty, 71-year-old adviser, Bernard Baruch,said: 'just put a ceiling over the whole price structure'. Galbraith, young, enthusiastic, and a trained economist, knew better. He devised a system that allowed price increases where warranted, disallowed them where not. It failed. He improved – complicated – the system further. Again, failure. In the end his agency effectively froze all prices for the duration of the war. And it worked.

9) Some of the biggest, and most important, economic issues remain unresolved. One current example: A major experiment in macroeconomic management is under way, with the US on the one hand and the continent of Europe on the other, following quite different philosophies. In the US the biggest fiscal and monetary boost to spending in the past 50 years has produced a strong economic recovery, but also two asset price booms/bubbles – first the stock market; now housing. Steadier polices in the euro area, by contrast, have largely avoided this. But economic growth has been slow, and risks becoming self-perpetuating. Whether activist US policy, or the steady-as-she goes European approach will produce the better outcome over the economic cycle as a whole is not yet clear: this is a two-act play, and so far we have seen only the first.

10) Last lesson, and perhaps the most important. Just because professional economists don't always have a confident answer, it does not follow that all proffered solutions have equal validity. Folksy, common sense-sounding, policies can often be demonstrated by the economist as simplistic at best, dangerous at worst. Hence, often the biggest contribution that the professional economist can make is to demonstrate why the current fad or nostrum is wrong and will fail. Examples of policies that policy makers thought would work, but whose economic illogic was demonstrable from the outset, are legion. Go no further than Zimbabwe's seeking to reduce inflation by printing smaller-denomination bank notes, or France's seeking to reduce unemployment by making it illegal to work for more than 35 hours a week.

Source

Top Wall Street & Bank Traders

August 26, 2005 20058 11:21 pm | In Trading | Comments Off

As the list is very long, please use the Search (Ctrl+F) function on your browser!

Michael Hutchins

City: New York
Firm: UBS
Age: 49

As UBS’s global head of fixed income, rates and currencies, Hutchins is one manager who still actively trades. The expectation that he will soon retire from the bank has sparked mass speculation among Street watchers over who his replacement might be. Publicly, however, Hutchins does not appear inclined to depart. Last October, he joined the Bond Market Association’s board of directors.
Estimated income: $30–$40 million
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Driss Ben-Brahim

City: London
Firm: Goldman Sachs
Age: 40

The head of Goldman’s exotics-derivatives desk in London, Ben-Brahim made partner and was named successor to Christian Siva-Jothy and Geoff Grant, the former co-heads of Goldman’s global foreign-exchange prop-trading desk who left for hedge-fund land last year. Ben-Brahim did not take home a 2004 bonus in the same stratosphere as his 2003 check (which was rumored as high as $70 million), but he can still ably afford London rent.
Estimated income: $25–$30 million

*Updated: He's reported have earned a £50m bonus in 2006.
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Ken Karl

City: New York
Firm: UBS
Age: 46

Running the UBS prop-trading desk (known internally as PFG) as well as the firm’s credit arbitrage group, Karl fared well last year, winning a bonus package that might have made even a hedge-fund manager envious.
Estimated income: $25–$30 million
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Jon Wood

City: London
Firm: UBS
Age: 42

Dubbed “Keyser Soze” by some rivals after the mysterious kingpin from The Usual Suspects, Wood, yet another big-earning UBS trader near the top of the Wall Street heap, is known for being secretive. He has also earned a reputation as one of the most aggressive and successful traders today. With just a few others alongside him, Wood runs what is viewed as one of the City’s most powerful equity-prop desks. He was recently lured out of seclusion as a result of his involvement in a legal spat concerning the Gadget Shop in the United Kingdom. Keyser Söze apparently has a sense of humor; British comedian Sacha Baron Cohen (Ali G) provided the entertainment at his fortieth birthday party.
Estimated income: $25–$30 million
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John Bertuzzi

City: London
Firm: Goldman Sachs
Age: 50

Goldman insiders say Bertuzzi, another energy warrior, was on fire in 2004. “He made well over $100 million in profit for the bank,” one source tells us. While oil was so hot last year that many could turn a profit just by getting up in the morning, to rank among the most profitable in Goldman’s elite crew takes an edge.
Estimated income: $20–$25 million
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Robert Cignarella

City: New York
Firm: Goldman Sachs Asset Management
Age: 36

Considered among the best debt traders on the buy side, Cignarella, a graduate of the University of Chicago Business School, is one of the brightest lights at GSAM, the asset-management arm of Wall Street's most prestigious firm.
Estimated income: $25 – $30 million
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Jeffrey Frase

City: New York
Firm: Goldman Sachs
Age: 37

As Goldman’s head of crude-oil trading, Frase had the catbird seat for the one of the biggest oil-price run-ups ever witnessed — and it appears he made good use of it. Colleagues report that his raw trading talent is as good as anyone’s.
Estimated income: $20–$25 million
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Geoff Grant

City: London
Firm: Goldman Sachs
Age: Early 40s

A top Forex-market prop trader at Goldman, Grant took his bonus check and traded London drizzle for California sunshine, moving to Santa Barbara, California, to launch a hedge fund with fellow Goldman alum Ron Beller. The global macro fund, Peloton Partners, will be based in London, but Grant will operate from his little piece of paradise.
Estimated income: $20–$25 million
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Olav Refvik

City: New York
Firm: Morgan Stanley
Age: 46

Some rival traders have dubbed him the “King of New York Harbor” for his savvy rental of waterfront real estate — he controls a large chunk of oil-storage space, which gave the firm an edge in last year’s raging oil market. Refvik, a Norwegian, is also known to sail around the harbor in his yacht, Song of Norway. His February bonus check should allow for a significant naval upgrade.
Estimated income: $20–$25 million
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Neal Shear

City: New York
Firm: Morgan Stanley
Age: 50

Part of the crack energy team that was practically printing money for Morgan Stanley in 2004, Shear was rewarded for his success. In March, he was appointed head of fixed income, replacing Zoe Cruz. If the energy markets weren’t excitement enough for Shear last year, his appointment lands him neatly in the midst of a major power struggle between the backers and the enemies of CEO Phil Purcell.
Estimated income: $20–$25 million
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Ashok Varadhan

City: New York
Firm: Goldman Sachs
Age: 33

Considered one of the best young traders on Wall Street, as well as a likely candidate to be among the next crop of Goldman pros bolting for a hedge fund, Varadhan heads up North American interest-rate products, reporting to Philippe Khuong-Huu. The numbers gene runs in the family: Varadhan’s father, Srinivasa, is an eminent mathematics professor at New York University.
Estimated income: $20–$25 million
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Jack DiMaio

City: New York
Firm: CSFB
Age: 37

A cool cat, DiMaio has gone through a few lives in his career on Wall Street. The acclaimed bond trader first made headlines when he threatened to take his credit team to rival Barclays Capital, and later did an about-face after extracting a breathtaking compensation deal from CSFB. Former CSFB CEO John Mack, chagrined by the episode, later shunted DiMaio and his team over to the asset-management wing, CSAM. Now, with more than $1 billion of CSFB’s money under management, DiMaio is starting his own credit hedge fund, DA Capital.
Estimated income: $15–$20 million
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Simon Greenshields

City: New York
Firm: Morgan Stanley
Age: 49

Another of the hot energy traders who made Morgan Stanley’s commodities department one of the top performers on Wall Street last year, Greenshields, a natural-gas and electricity trader, was handsomely rewarded for his performance.
Estimated income: $15–$20 million
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Yan Huo

City: London
Firm: UFJ International
Age: 41

After a successful run heading a prop-trading desk in London for J.P. Morgan, Huo moved last year to a prop-trading position for UFJ International in the City, where he continued to excel.
Estimated income: $15–$20 million
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Michael Nierenberg

City: New York
Firm: Bear Stearns
Age: 42

Bear Stearns had a phenomenal year in mortgage-backed securities, and few did better than Nierenberg, the firm’s co-head of MBS trading. In 2004, Bear dominated the global MBS market, with $93 billion in issuance for a 10 percent market share, some $6 billion more than its closest rival. Nierenberg is reportedly so superstitious that he refuses to write in red ink; we suspect he used quite a bit of black throughout 2004.
Estimated income: $15–$20 million
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John Shapiro

City: New York
Firm: Morgan Stanley
Age: 53

The head of Morgan Stanley’s commodities-trading team, Street veteran Shapiro is known for trading in the physicals as well as energy derivatives. Morgan sources say Shapiro didn’t do too badly for his own book.
Estimated income: $15–$20 million
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Barry Wittlin

City: New York
Firm: Merrill Lynch
Age: 47

Appointed head of strategic risk trading for Merrill Lynch’s global debt markets in January, Wittlin made his 2004 score heading the firm’s global-rates group. While the titles sound official and stuffy, Wittlin is in fact “one of the biggest prop traders there,” one insider says.
Estimated income: $15–$20 million
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Nasser Ahmad

City: New York
Firm: CSFB
Age: 37

The A in Jack DiMaio’s new DA Capital, Ahmad, part of the group that jumped over to CSAM with DiMaio, has been running an internal credit hedge fund for CSFB. An accomplished fixed-income trader, he will now help run the more than $1 billion in DA Capital’s pot.
Estimated income: $10–$15 million
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Charlie W.K. Chan

City: Singapore
Firm: CSFB
Age: 45

The head of emerging-markets FX trading, Chan (whose full name is Charlie Chan Wai Kheong) paced the bank-trading scene in Asia in 2004. His trading book for CSFB created buzz; might a move to a hedge fund be in the works?
Estimated income: $10–$15 million
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Nicolas Dusart

City: New York
Firm: BNP Paribas
Age: 32

French banks have a reputation for not paying as well as their American counterparts, but industry sources say BNP Paribas was hardly stingy when it came to Dusart’s bonus. The director of high-yield prop trading is said to be well worth all those euros.
Estimated income: $10–$15 million
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Philippe Khuong-Huu

City: New York
Firm: Goldman Sachs
Age: 40

Another in a long line of brilliant minds to serve Goldman masters, Khuong-Huu was brought in four years ago from J.P. Morgan, where he launched the firm’s options-arbitrage group. A world traveler, Khuong-Huu worked in Paris at Société Générale in the late ’80s, trading in the bank’s index-arbitrage business. He later moved to J.P. Morgan in Tokyo.
Estimated income: $10–$15 million
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Angie Long

City: New York
Firm: J.P. Morgan
Age: 30

Among the top traders at J.P. Morgan, Long last year ran high-yield and credit-derivatives trading; she was recently promoted to be deputy to Eric Rosen, the head of credit trading. Extremely bright and a trader’s trader — she can hold her own on the desk and on the town — she’s also the only female on the Trader Monthly 100.
Estimated income: $10–$15 million
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Rajeev Misra

City: London
Firm: Deutsche Bank
Age: Early 40s

Misra, head of global credit trading, has helped turn Deutsche into a credit-derivates powerhouse. His inspiration was to better integrate the unit into the bank, leading to greater innovation and more money.
Estimated income: $10–$15 million
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Aziz Nahas

City: London
Firm: J.P. Morgan
Age: 33

Head of prop trading at J.P. Morgan, Nahas was lured away from CSFB along with Cyril Levy-Marchal last March. He reported to head prop honcho Yan Huo (see page 81), but when Huo left, Nahas took over.
Estimated income: $10–$15 million
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Sal Naro

City: New York
Firm: UBS
Age: 43

Naro surprised many when he left UBS this spring to launch a new hedge fund with SAC Capital veteran Mark Fishman. Based in Stamford, Connecticut, the fund is called Sailfish Capital.
Estimated income: $10–$15 million
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Michael Phelps

City: New York
Firm: J.P. Morgan
Age: Early 40s

While the Olympic swimming stud who shares his name took home more gold in 2004, the Phelps who works at J.P. Morgan took home more green: He’s among the top prop traders at the bank.
Estimated income: $10–$15 million
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Eric Rosen

City: New York
Firm: J.P. Morgan
Age: Early 40s

In the past 18 months, Rosen has risen, going from head of loan trading to co-head of credit trading and then to sole head of credit trading. Many speculate he’ll climb further still.
Estimated income: $10–$15 million
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Christopher Ryan

City: New York
Firm: UBS
Age: Late 30s

Named co-head of the newly created global credit group at UBS along with Sal Naro late last year, Ryan is the man left standing at the helm after Naro bolted to start his own hedge fund. UBS insiders say Ryan does not possess quite the trading chops of Naro, but he certainly did all right for himself in 2004.
Estimated income: $10–$15 million
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David Sabath

City: New York
Firm: J.P. Morgan
Age: 41

As head of credit prop-trading at J.P. Morgan, Sabath had a scorching year in 2004. This spring, he left to team up with Satellite Asset Management's David Ford to launch a broad-based credit hedge fund. Before coming onboard at J.P. Morgan's prop group, Sabath headed up distressed debt at Golman Sachs.
Estimated income: $10 – $15 million
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Geoffrey Sherry

City: New York
Firm: J.P. Morgan
Age: 40

It has been an interesting 18 months or so for Sherry, who was promoted in November, along with Eric Rosen, to run J.P. Morgan's credit-trading business. Sherry did not stay especially long in his new seat, however. This past March, he bolted the firm to join Bruce Kovner's Caxton Associates, where he's starting a new fixed-income hedge fund.
Estimated income: $10 – $15 million
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Boaz Weinstein

City: New York
Firm: Deutsche Bank
Age: 31

One of the most popular traders on Wall Street, Weinstein is also among the most talented. As head of global credit trading-U.S., overseeing approximately 100 traders, he still spends a good deal of time trading for the firm's internal hedge funds and prop-trading book. A star chess player, Weinstein was also once something of a card counter.
Estimated income: $10 – $15 million

Other Categories:

- Top Prop & Indie Traders
- Top Commodity & Pit Traders
- Top Wall Street & Bank Traders
- Top Hedge Fund Traders

Prop & Indie Traders

August 26, 2005 20058 11:20 pm | In Trading | Comments Off

As the list is very long, please use the Search (Ctrl + F) button to look for what you want.

Thomas Peterffy

City: Greenwich, Connecticut
Firm: Interactive Brokers Group
Age: 60

Chairman of the futures and options market makers, Peterffy oversses IBG's ground-breaking algorithmic models. While machines do all of the actual trading, Peterffy and his team actively feed and monitor them. An IBG spokeswoman insists Peterffy no longer trades, but a source close to the firm says, "At an age when he could be taking it easy, he's still very much hands-on with that whole operation." Peterffy is a majority owner in the privately held firm, which brought home estimated profits of $250 million last year.
Estimated income: $75 – $100 million
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John Devaney

City: Key Biscayne, Florida
Firm: United Capital Markets
Age: 34

What He Trades: Down in south Florida, John Devaney is taking on Wall Street — on his own terms. A secondary market maker specializing in the sale and structuring of asset-backed securities, Devaney and his firm, United Capital Markets, pick up paper other houses wouldn't touch with a very, very long pole — and they make a killing. But he's not about to let the Street catch up. "There's still plenty of opportunity out there," he insists. "Generally, by the time value has stripped from the sector, we're already into the next one." Some currently hot markets for him include pooled aircraft leases and CDOs.

How He Trades: Knowledge is the key to Devaney's strategy. His firm doesn't just buy any old junk, instead researching the underlying risk. "We're willing to take on the principal risk in our deals, as opposed to merely lining up buyers and sellers," he says. "When we buy distressed bonds, we're buying at levels where we'd be comfortable holding them to maturity if necessary." Many view him as a maverick, though Devaney balks at the term. "To me, the word maverick implies reckless risk-taking. We view ourselves as educated risk-takers. Our opinions of credit are informed."

How He Got Started: Talk about taking risks: In 1999, Devaney quit his job on the mortgage-trading desk at Capital International, took $500,000 of his own money and, with no outside investors, decided to open his firm. He was 28 years old — and the sole employee.

When He's Not Trading: Eager to attract attention, Devaney has hired everyone from Earth Wind & Fire to the Counting Crows for industry conferences. "Compared to many of our competitors in the industry, the money we spend on marketing and advertising is a drop in the bucket," he says with a shrug. "Focusing our dollars on one or two big events each year has been a way for a firm like ours to make a big splash. We like to do them right."

On the philanthropic side, he backs a local community-reinvestment program and has headed the Key Biscayne Community Foundation. He also owns pieces of a real-estate investment company, a yacht charter operation and an aviation holding company.

Words to Live By: "We've had to be creative to keep our edge."
Estimated income: $40 – $50 million
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Joe Lewis

City: Lyford Cay, Bahamas
Firm: Tavistock Group
Age: 68

A legenday currency trader who has a hand in various investment ventures, the British-born Lewis caused a stir last year when he joined a hostile bid for U.K. homebuilder Countryside Properties. A golf fanatic who once paid $1 million at a charity auction for a round with Tiger Woods, Lewis's net worth is an estimated $5 billion. That's not bad for a lad from London's East End who left school at age 15. His Tavistock Cup tournament in Orlando, Florida, at the Tavistock-owned Lake Nona and Iselworth clubs, always draws a slew of PGA and European-tour talent.
Estimated income: $40- $50 million
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Nicholas Roditi

City: London
Firm: Plantation and General Investments
Age: 60

A former Soros traders, Roditi took the Quantum leap in 2000 along with Stanley Druckenmiller after the fund suffered severe losses by failing to effectively gauage the tech-stock surge. Roditi, a macro trader and notorious recluse, has been quietly trading his own money and cleaning up. Born in Zimbabwe, he owns a 68 percent stake in Plantation and General Investments, an African group.
Estimated income: $30 – $40 million
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Paul Rotter

City: Zug, Switzerland
Firm: Rotter Invest AG
Age: 33

It was quite a year for Rotter, the Czech native who is regarded as one of the most successful individual traders on the Eurex. He specializes in German bond futures and is responsible for some 10 percent of the Bund market.

Early last year, some Eurex prop traders started noticing suspicious price movements in Schatz futures; they blamed Rotter, branding him "The Flipper." (Rotter says it's just sour grapes about his size and acumen.) He used to spend up to 11 hours a day trading but says he cut down last year.
Estimated income: $30 – $40 million
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Michael Palumbo

City: Chicago
Firm: Third Millennium
Age: 38

What He Trades: Palumbo’s foremost hunting ground is in the equity-options market, and last year he made major bank going long oil stocks and short volatility. "We started going long crude-oil stocks at the beginning of 2004, based on the feeling that the level of demand in places like China and India was underestimated," he explains. His long positions in BP, Exxon and Halliburton options also panned out nicely.

How He Trades: Don't ever expect to find Palumbo thumbing through the morning papers. "I rarely read the Wall Street Journal," he says. "I get my ideas about the market from talking to people." Says John Niemann, a CBOE floor broker and friend, "Mike is a really smart trader — even at the beginning of his career, he was good."

Because Palumbo was a once a credit analyst, he knows his way around a balance sheet. But it's his understanding of macroeconomics — and Third Millennium's role as a market maker — that most helps him sniff out winning trends. "I pay close attention to what is coming across our desk," Palumbo says. "We might not be in on the trade, but it's important to know what people are doing."

How He Got Started: Palumbo began his trading career as a clerk on the floor of the CBOE for Susquehanna Financial Group in 1993. Within six months, he had graduated to the ranks of market maker. He soon felt he could make it on his own.

"I could have stayed and made a pretty good living. But I wanted to go out on my own and see what I could do," he says. "I didn't feel like Susquehanna was giving me fair compensation." He split and formed Third Millennium. Starting in the Kmart pit in 1996 with $250,000, the firm quickly moved upstairs. There were rough spots at first — such as the summer of 1998, when Russia defaulted and the Dow tanked — but the last few years have been sensational.

When He's Not Trading: Growing up, Palumbo mastered poker and blackjack; he knew how to crunch numbers. These days, when he jaunts to the Palms in Las Vegas, he prefers to unwind with craps.

But he doesn't have to go to Vegas to be treated right — he's a partner in two swank nightspots in Chicago. "It just made sense for the lifestyle I have," he says. "I wanted to make sure I could always get the best table." He also owns a 125-foot power yacht that spends its winters moored in the Caribbean and its summers on Lake Michigan.

Words to Live By: "Perseverance."
Estimated income: $20 – $25 million
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J.P. MaManus

City: Geneva, Switzerland
Firm: Cubic Expressions
Age: 53

Known as the Sundance Kid, McManus is a successful, reclusive, high-rolling foreign-exchange traders and financier. Born in Ireland, he resides in Geneva for tax purposes and is reputed to have an army of foreign-exchange traders working for him. He also has plenty of other interests, including horses and other forms of gambling (he made his first fortune as a bookmaker). In the U.K., McManus is best known for his stake in the Manchester United soccer club. He's also part of the Joe Lewis's massive forex syndicate.
Estimated income: $20 – $25 million
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Christian Schaffer

City: Munich
Firm: First Futures
Age: 37

Among the largest traders on the Eurex, Schaffer is the managing director of First Futures, a prop-trading firm with eight employees, and member of the Eurex Deutschland Exchange Council. He trades mainly Bund and EuroStoxx futures. He also recently launched his own managed-futures fund, SASCAM Global.
Estimated income: $20 – $25 million
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Bob Bright

City: Las Vegas
Firm: Bright Trading
Age: 65

A senior statesman among prop traders, Bright still lights it up. The NYSE-listed equities market has always been his sandbox (he dislikes Nasdaq market makers), though he dabbles in futures an doptions, mostly equity indices. Lately, he has been employing a pairs-trading strategy. "He's thrilled over the NYSE merging with ArcaEx – it's a big win for prop trading," says his brother, Don. When he's not trading, Bright scours the Strip for a baccarat table from which he hasn't been banned. He also owns Bugsy Siegel's 1933 Packard limousine.
Estimated income: $15 – $20 million
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Dan Zanger

City: Miami
Firm: Chartpattern.com
Age: 52

What He Trades: No commodities, currency plays or black-box intelligence for this self-made prop legend. Instead, he trades mostly Nasdaq stocks. On the surface, Zanger is a purist, using chart patterns and more chart patterns to find his prey.

How He Trades: What is he looking for? "Frisky stocks that are starting to perk," he says. He takes a high-intensity "180-mph, inches from the wall" margined 2-to-1 approach to trading. In early 1998, Internet stocks exploded, and as they cooled in late 1999, biotechs took off. They ran for six months; then fiber-optic stocks took over in 2000 and cooked until Nortel preannounced a shortfall in earnings.

Zanger has found that such groups run for around 6 to 18 months, and then it's time to move on. "You have to know what's hot and follow that stock or group. I find out who the winners are and stick with them, moving in and out until they begin to fizzle," he says. On a typical trading day, you'll find him glued to his computer screens, following anywhere from 40 to 60 stocks, watching his "frisky buddies" for breakouts or breakdowns.

How He Got Started: After finishing high school in 1971, Zanger was a ski bum for four years, then got addicted to Charting the Market, a little-watched television show on channel 22 in Los Angeles, on which the host charted pennants, flags, cups and handles and other patterns.

In 1989, Zanger took a course from Bill O'Neil and would spend three hours on weekdays and 15 hours on weekends looking for chart patterns in his chart books; he still applies O'Neil's signature "Canslim" formula to this day.

In the early '90s, he had correctly identified rallies but got killed on corrections. By 1996, he had learned to recognize market tops; he accurately spotted a bearish reversal in the oil index in 1997, which he calls the turning point in his trading career. Taking what was left of his trading capital — all of $10,775 — he made $18 million in 18 months. In under two years, this stake had grown to an incredible $42 million.

When He's Not Trading: "Anyone who has worked in the construction business, like I did for 25 years, knows what it's like to work long, hard hours for little income. When the market is open, I have to be there. It is my passion and one of the loves of my life."

Zanger has homes in Miami Beach and Los Angeles, and he recently bought a new 88-foot yacht that will be equipped with a four-foot satellite dome that will allow him to trade from anywhere in the world. Zanger boasts an enormous collection of California cult wines and is also an avid collector of art.

Words To Live By: "Price, chart patterns and volume."
Estimated income: $10 – $15 million
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Greg Beard

City: Chicago
Firm: TND
Age: 44

Last year, Beard made the move from pit to screen, giving up his former company, Beard Trading, for the screen-oriented TND. He currently trades interest-rate instruments. His major side pursuit, meanwhile, is buying and selling home on Lake Geneva.
Estimated income: $10 – $15 million
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David "Tiger" Williams

City: Stamford, Connecticut
Firm: Williams Trading
Age: 43

One of the more amiable figures on Wall Street, Williams is a former trader at Tiger Management (the Yale hockey star's "Tiger" nickname pre-dated his time at Julian Robertson's famous fund). The eight-year-old Williams Trading, of which Williams is the founder and sole managing partner, is a desk-for-hire for hedge funds keen to outsource their execution needs.

An avid swimmer, runner and cyclist (he has completed an Iron Man triathlon), Williams is a major sponsor of the U.S. Postal Services cycling team and counts Lance Armstrong as a friend. His Tiger Foundation supports a range of charities.
Estimated income: $10 – $15 million

George Soros

The godfather of funds handed over control of Soros Fund Management to his sons last year to focus more fully on his philanthropic and political activities.
Estimated Income: $200–$250 million
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Dan Och

Och is still very much involved in the operations of Och-Ziff, but Street sources assure us that he no longer actively trades.
Estimated Income: $100–$150 million
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Ken Griffin

He hasn’t been near the trading floor in years. Regardless, his black-box Chicago hedge fund, Citadel Investment Group, had a great year and is doing more market making.
Estimated Income: $75–$100 million
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Michael Gordon and John Angelo

Once two of the toughest arbitrage traders on the Street, Gordon and Angelo have built a top financial powerhouse — but they’re no longer trading.
Estimated Income: $75–$100 million each

Other Categories:

- Top Prop & Indie Traders
- Top Commodity & Pit Traders
- Top Wall Street & Bank Traders
- Top Hedge Fund Traders

Commodity & Pit Traders

August 26, 2005 20058 11:18 pm | In Trading | Comments Off

As the list is very long, please use the Search (Ctrl + F) button to look for what you want.

Steven Berkson

City: New York
Exchange: NYMEX
Age: 41

Maybe the biggest natural-gas trader in the ring, Berkson had a banner 2004 – possibly the best of any energy local, NYMEX sources report. Berkson (whose badge reads BERK) keeps a low profile outside the ring.
Estimated income: $20 – $25 million
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Mark Fisher

City: New York
Exchange: NYMEX
Age: 45

Fisher, considered among the most talented energe traders ever, makes most of his dough through his clearing firm, MBF Clearing Corp. But the gold-badge man and NYMEX grassroots leader still trades with the best of them.
Estimate income: $15 – $20 million
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Eric Bolling

City: New York
Exchange: NYMEX
Age: 43

What He Trades: Natural-gas futures are Bolling’s market of choice, though he got his start in crude oil. “If you think of the crude-oil pit as a $100-minimum table,” he explains, “then natural gas is the $1,000-minimum table. It’s hugely volatile.” The international nature of energy appeals to him. “Chicago has a lot of grain markets and agricultural pits where the markets are localized, but energy is global. Something can happen in Saudi Arabia that has ripple effects from Shanghai to Manhattan.” Bolling owns two seats on the NYMEX, two on the Comex and two on the NYBOT.

How He Trades: Bolling is down in the pits all day, every day. When trading ends, he monitors his positions electronically. Still, he remains a devotee of the cut and thrust of the floor: “When something happens in the market, they all go to open-outcry, because that’s where the volume is.”

Bolling represents a lot of that volume, claiming responsibility for as much as 5 percent of the action in the natural-gas pit. Six-foot-one and a former professional third baseman, he says the physical and mental edge that comes from competitive sports gives him an advantage. “When you’re on the field or on a court, there’s a process you go through in your mind that is similar to making a commodities trade or a pit trade. Not necessarily an upstairs, long-range hedge-fund manager’s trade. But in an instantaneous pit trade, athletes are very good.”

How He Got Started: In 1985, Bolling, drafted out of Rollins College by the Pittsburgh Pirates, was playing for their single-A affiliate in Bradenton, Florida, when a routine grounder came his way. “I picked up the ball, turned to throw and heard a pop in my shoulder,” he says. “That was it, the end of my career.” He started looking for other jobs. A Chicago native, he had seen the serious money to be made at the exchanges. Later that year, he found himself on the energy desk for Prudential-Bache in Boston.

“I realized that the people really making money were on the trading floor. So I did whatever it took to get down there.” He leased his first seat in 1987 and bought his first seat the next year.
Estimated income: $10 – $15 million
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Tom Gordon

City: New York
Exchange: NYMEX
Age: Mid-40s

One of the most successful NYMEX traders last year, Gordon scored as crude prices went through the roof. "Tommy is one of the top oil traders down there," says one NYMEX veteran. Gordon is a large contributor to the exchange's charitable foundation.
Estimated income: $10 – $15 million
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Kevin McDonnell

City: New York
Exchange: NYMEX
Age: 45

A NYMEX institution, the unassuming McDonnell is one of the best energy crack spread traders ever. NYMEX sources say he was one of the most successful traders in the pits last year, often playing crude against gasoline prices. He was also among a group of traders who spent time in Dublin attempting to build the exchange's European energy-trading presence.
Estimated income: $10 – $15 million
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Alan Rottman

City: Chicago
Exchange: CME
Age: 42

Few Chicago traders were as fortunately placed last year as the Eurodollar options guys. Rottman, who trades front months, and his team rode some late-year volatility in what turned out to be a fantastic 2004. "We've been specializing in this sector for 20 years," Rottman says of his group. "And we experienced a very profitable year."
Estimated income: $10 – $15 million
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Jeffrey Wolfson

City: New York
Exchange: NYMEX
Age: Mid-40s

Known by his badge, GEOF, Wolfson does serious volume in the crude-oil pits. "They don't come much bigger," says one industry source. Wolfson blows off steam generated in the NYMEX trenches by playing basketball at night.
Estimated income: $10 – $15 million

Other Categories:

- Top Prop & Indie Traders
- Top Commodity & Pit Traders
- Top Wall Street & Bank Traders
- Top Hedge Fund Traders