Ray Zee, here's my question for you...

I wasn't trying to say Buffett was better than your acquaintance ML, so let me rephrase. First of all, I'm definitely astonished by ML's success rate that you've reported, no matter what asset level he was trading. So I'm very interested to know how high he's been able to scale that edge. I mentioned the figures on Buffett because I'd be especially impressed if ML's scaled up to that territory. It seems like most traders reach a plateau at 10 figures or below.

I just ask why didn't he? Were his 100s of trades yielding a couple bucks a pop? If you hit 100 trades in a row, you should be playing with a seriously fat BR. I don't care what you trade and how much you start with, futures trading is so heavily leveraged that you have to make a lot of money if you even pick 80% winners and put stops in place. Maybe ML was so obsessed with winning trades that he took unnecessary risks? Who knows, all I know is that it is true, if you hit that kind of percentage you should be calling up Bill Gates for computer advice and talking to George Soros about where to donate your charity this year.

Regarding ML win rate.First you need to understand the times.Late 70s and early 80s.ML

was ahead of his time.He understood spreads in currencies better than the banks.We did currency arbitrage on the floor of the IMM.We had over a billion dollars in credit lines with various banks.ML would examine say the Swiss

Franc 2 month forward vs the 5 month forward.He would then buy or sell that spread in big numbers.

He was never wrong.When then Peso was devalued in the 70s one of the big banks asked him to come to trade out of the banks losing position.

The man was incredible.I can't tell you what type of income ML generated long term because I left the firm after a few years.(the arbitrage generated 35M my last year)But he and his brothers were incredible.We use to have a poker

game in the office Wednesday nights.

One night we went into one of the other brothers

"book".He was a local in the pork bellies.

On average he made 10k a day with one losing session every 10 days of about 3 or 4 k tops.

This book covered over a nine month period.

Anyway,I don't mean to belittle Buffet but I think

the number of decisions he has made are subject

to the "coin toss" analogy.I know that is not true of ML and family.

Buffett has been lucky in some ways, but I think there is certainly talent there. You have to give him credit for the incredibly smart idea of getting into Berkshire in the first place just as the best structure for an investment vehicle. Then you have to give him credit for being able to move such huge sums of money without pricing himself out. Also remember that its tough investing when you become a significant, if not controlling owner of the company. Its one thing to like management and its model, but its another to suddenly be the one choosing management and its model. Of course Warren stays out of that almost all the time, but its still something not many could do. That is akin to you or I going out and buying say a local store that is struggling and not quite living up to its potential. Almost every time we would go in there and clean house, get new management in or at least tell them to try new things. Instead Warren just tells them keep doing what you are doing and just send me your financials when you are done. And if you want my advice or help of our experts, here is my number. Not too many people have that kind of self-control but to Warren its second nature.

So he made 2.5MM a year trading huge volumes. Listen, I'm not trying to downplay how good this guy was. But just because "your buddy" was a good trader doesn't make him a better investor than Buffet. The proof is in his net worth...despite the fact that his stock has a valuation premium. The guy is still just plain good. I think him staying out of the Internet stocks ended up a solid play by the way.

The 2.5MM you refer too was not ML but one of the brothers(the weakest trader).It is an amazing feat to win 10 out of 11 sessions,month after month.

ML made considerably more.One man,no research assisitants etc.We traded with the biggest banks in the world.ML "picked them off" all the time.

They had teams of players and analysts and all the trappings.

Sorry no comparison between ML and Buffet.

Well...Buffett is still much richer. Even without his "guru" premium. A great trader is not a great investor in my book.


We'll have to agree to disagree.

I agree.But ML was an investor as well .I know he

bought triple A tax free bonds at the height of the interest rate peak(1979?)and those made a fortune.I also know he loaded up on stocks back then also but which ones I couldn't say.But I would make the following bet.I have not been in touch since I left Chicago in about 1982.But I spoke to his brother when the S&P was about 650.

I asked what he thought and he said he expected to

see it over 1000 and perhaps double.I think this was in about 1997.I thought he was nuts.

I am telling you this group was blessed.

Almost like the Producers.They bought some race horses for tax purposes.I don't need to tell you what happened.Win,Win!!I know they bought part of a major league baseball team and it made it to the playoffs.

They invested as well as traded.

pffs that year.