10 Lessons from Wall Street’s Greatest Legends
387: Wisdom from Wall Street’s Coldest Titans
When I launched the Arbitrage Andy meme page in 2017, the aesthetic surrounded much of the notoriety of Wall Street. Salomon Brothers, Lehman Brothers, Stratton Oakmont, SAC Capital, Enron — all of the most storied or controversial firms and legacies capture our attention for a reason — they’re some of the most exhilarating and wild sagas in finance and markets history involving debauchery, riches, clever schemes, rule bending, and risk.
Today I want to return to the roots of the account/brand — but through an angle that will help all of us become better traders, investors, and market participants.
With the heightened market volatility — this is the perfect time to see what we can learn from the very best. Many of you have likely read books or articles about the legends we will cover today — but there are very few places where I see this information condensed in one place. That’s what I have aimed to do today — you will notice similarities between the guys we cover today, but also notice each has a distinct style with qualities they clearly prioritize differently than their peers in the industry.
Today we’re going to go through some of the individual legends of Wall Street and high finance, looking at what drove their success, helped them dodge major curveballs, advice they have given, things they have said that they are most famous for, and how they made/make a shit ton of money.
While the culture of Wall Street has transformed since the early days and cowboy era of the 1980s, the underlying qualities that define top tier performers have not.
Today we’re going to look at the rise of the following Wall Street legends:
Steve Cohen – SAC Capital / Point72
Bill Ackman – Pershing Square
Paul Tudor Jones – Tudor Investment Corp.
George Soros – Quantum Fund
Jesse Livermore – The original Wall Street trader
Jim Simons – Renaissance Technologies
Michael Marcus – Commodities wizard
Ed Seykota – Trend following OG
John Meriwether – Salomon Brothers / LTCM
John Arnold – Enron / Centaurus Advisors
There’s many titans we could cover today — but I picked these ones specifically because I believe there are takeaways from their lives, successes, and investing journeys that we can implement into our own trading/investing today. I also threw in some books/documentaries you should check out if you want to learn more.
If you thoughtfully implement the common denominators that drove monetary/market success for these individuals into your own framework in markets — chances are you’re going to:
lose less
win more
improve your ability to identify winning opportunities
regulate your emotions more effectively
These guys lost and won millions sometimes billions of dollars. We have the luxury of learning from their experiences and applying it to our own financial approaches. Only difference is most of us don’t have private jets, Tiger Sharks encapsulated in formaldehyde, or sprawling $30M Greenwich mansions (yet).
For each trader/investor today we’ll cover their journey up through the ranks of Wall Street, what separates them from others, some of their biggest trades/wins, and then a core takeaway for the reader that we can apply to our own trading/investing.
Pumped for today’s overview, should be timely for those of us looking to sharpen our trading accumen in a period of heightened volatility with abundant external factors moving markets each day.
This list is a collection of some the most savage market participants to walk the earth.
Let’s start with a man most of you are probably familiar with.
Steve Cohen – SAC Capital / Point72
One of the most notorious and well known Wall Street legends is none other than Steve Cohen. He is the inspiration for the show Billions and his original fund SAC’s transformation into Point72 today is one of the wilder epics of Wall Street lore.
Steve Cohen started his Wall Street career in 1978 as a junior options trader at Gruntal & Co., where he reportedly made a cool $8,000 on his first day. He quickly earned a reputation as a prodigious risk-taker with the uncanny ability to read the tape and spot short-term opportunities (featured in the documentary To Catch a Trader). By the time he left Gruntal, he was managing a $75 million portfolio and generating millions in profits annually, setting the stage for his launch of SAC Capital in 1992.
It wasn’t long until SAC Capital was embroiled in one of the biggest insider trading scandals in Wall Street history, paying a $1.8 billion fine in 2013 and shutting down its outside investor operations after several portfolio managers were convicted. Steve Cohen later rebranded the firm as Point72 in 2014, rebuilt its culture around much tighter compliance (it’s actually insane) and multi-strategy investing, and has since grown it into a $30+ billion powerhouse with elite global talent, cutting-edge tech/data, and consistently strong returns.
Cohen’s reputation on the street is ruthless — it is said that the “vest” craze started at SAC when Cohen would keep the temperatures cool to keep traders alert. Cohen had a live feed of every trader’s P&L at SAC and would watch it all day on a massive screen, sometimes walking around eating cereal out of a box. If someone started bleeding, he’d sometimes call them mid-trade and say things like:
“You need to cut that… now.”
He once told a trader who was too emotionally tied to a position:
“Get out. You’re trading like a fucking rookie.”