TTU45: How To Overcome Cognitive Bias in Investing & Trading ft. Roy Niederhoffer of R. G. Niederhoffer Capital Management – 1of2
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 670 Ratings
🗓️ 17 November 2014
⏱️ 79 minutes
🧾️ Download transcript
Summary
Roy Niederhoffer has a fascinating live story that starts with Harvard and neuroscience and continues into his starting a hedge fund in the short-term trading space in 1993. Roy discusses the exciting and bootstrapping beginnings of his firm, the cognitive biases that keep most humans from making good investment decisions, and how his firm stands out from other CTAs. Investors and managers alike will learn a wealth of information from this episode.
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In This Episode, You’ll Learn:
- How Roy got interested in the financial markets from an interest in computers at a young age.
- How he started a company that had 30 employees by the end of his high school.
- How his brother was an early adopter in the Hedge Fund space.
- How he spent his undergraduate years studying neuroscience.
- Roy graduated from Harvard and was set to go to Cambridge for neuroscience until he worked for his brother for a summer.
- The story of how he started his firm and when he began trading in July 1993.
- How the human brain influences behavior and how that translates to trading.
- Cognitive biases and how to avoid them in the financial market.
- What Roy thinks of trend following and how to explain it to the public.
- The other investors he worked at in his first job out of college, that later became famous investors in their own right.
- Why Roy’s firm was “employing” a cook and a maid when they started the business in 1993.
- How he plays in a symphony and keeps up his pursuit of being a musician while running his firm at the same time.
- What he thinks about the future of the CTA industry.
- How his model works in an ecosystem of other portfolio management options.
- How they distinguish themselves from other CTAs.
- An overview of the strategies that his firm does today.
- How the infrastructure of the business is setup today and the unique opportunities of the short term space.
- What he looks for when adding people to his research team.
- The culture that he has created at the firm.
- What matters to him when investors look at the track record of his firm.
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Resources & Links Mentioned in this Episode:
- Learn more about Roy from his wikipedia article.
- Niels mentions that listeners should also check out the Top Traders Unplugged episodes with Kathryn Kaminsky.
Follow Niels on Twitter, LinkedIn, YouTube or via the TTU website.
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Transcript
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| 0:00.0 | I can pretty much play any song on the piano from memory in any key and sing it. |
| 0:09.0 | I think if the hedge fund thing doesn't work out, I'm going to play piano in a piano bar. |
| 0:17.0 | If you want to stand out from the crowd, it requires a unique approach to life and business. |
| 0:24.9 | An approach that is aligned with your personality and that goes against the herd or the trend. |
| 0:32.7 | At times, it will expose you and make you vulnerable to the public and at times it will make you look like a |
| 0:40.2 | hero. Deep down, it's about being a contrarian and that's what we're talking about in today's |
| 0:48.6 | episode of Top Traders Unplotked. Imagine spending an hour with the world's greatest traders. |
| 0:56.0 | Imagine learning from their experiences, their successes, and their failures. |
| 1:01.0 | Imagine no more. |
| 1:02.0 | Welcome to Top Traders Unplugged, the place where you can learn from the best hedge fund managers in the world, |
| 1:08.0 | so you can take your manager due diligence or investment career |
| 1:11.5 | to the next level. |
| 1:13.1 | Here's your host, veteran hedge fund manager, Niels Kastrop Larson. |
| 1:25.3 | Welcome to Top Traders on Block, where my goal is to give you the clarity, confidence and |
| 1:31.3 | courage you need to invest like or invest with one of the top traders in the world. |
| 1:37.5 | It is the stories that you never get to hear set out as the most honest and transparent account |
| 1:43.6 | that I can make of what goes on inside the |
| 1:47.3 | minds of some of the best investors in the world delivered to you via a one-on-one conversation. |
| 1:55.6 | Today you're listening to episode 45. |
| 1:58.6 | If this is the first episode you've heard, you might want to go back and listen |
| 2:02.9 | to all the earlier conversations. Before we go any further, let's find out who's on today's show. |
| 2:10.0 | I'm Roy Niederhofer. I'm the founder and president of R.G. Neaterhofer Capital Management, |
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