Last Updated on 7 September, 2021 by Samuelsson
Bruce Kovner is an American investor, philanthropist, and hedge fund manager. In 2012, he founded and chaired CAM Capital, which is responsible for investing his private assets, and Kovner Foundation, which oversees his philanthropic activities. He served as Chairman for Caxton Associates, a global macro hedge fund.
Kovner was born in Brooklyn, NY. His family moved to suburban LA in 1953, where he attended Van Nuys High. Kovner excelled in his academics, played varsity basketball, and was elected student body president and class president in his senior school year. He was an activist in school, leading a team protesting against segregated luncheons. Kovner also organized initiatives to acquire and send writing and educational materials to secondary schools in Kenya.
He went to Harvard College on a scholarship grant studying political economy at the John F. Kennedy School of Government under the influence of three Harvard professors: Edward C. Banfield, Henry Kissinger, and James Q. Kovner enrolled in the Kennedy School of Government for his Ph.D., after he was encouraged by Wilson and Banfield to follow their footsteps into the world of academics. He completed his course work and examinations, but unfortunately, Mr. Kovner left the Ph.D. program to pursue a career in another path.
He was introduced to the financial market by a family friend in 1976. Kovner began learning and researching about the nature of commodity, currencies, and debt markets all by himself.
Kovner kick-started his trading career in early 1977 by borrowing $3000 on his MasterCard. He made $1000 profits on his first two trades on the interest rate and copper futures.
However, he made a $22000 loss on his $4000 running position in soybean, which Kovner attributed to his losing control of the trading process in the soybean market. Initially, he had a running profit of $45000 in six weeks, but when prices turned down, he panicked and exited his position losing $23000 in the process. “It helped me understand risk and create structures to control risk,” He said.
He worked as a Senior Trader at Commodities Corporation— later acquired by Goldman Sachs. Kovner founded Caxton as a modern Macro hedge fund some six years later and ran it for over 28 years, making profits in tens of billions of dollars for his client. He has reported his money-making success to “stupid governments,” noting that mistakes by policymakers in governments and central banks cause conditions in the market that can be exploited. In 2011, he retired from the hedge fund after running it for three decades.
In an interview in Market Wizards, he talked exclusively about his trading life and the principles he applied; he puts it, “I would say that risk management is the most important thing to be well understood. Under trade is my second piece of advice. Whatever you think your position ought to be, cut it at least in half. Through bitter experience, I have learned that a mistake in position correlation is the root of some of the most serious problems in trading. If you have eight highly correlated positions, then you are trading one position that is eight times as large.”
Mr. Kovner lives in Florida with his wife and three children.
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