MiB: Peter Borish, Tudor Investments & Robin Hood – The Big Picture

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This week, we speak with Peter Borish, who is chairman and chief executive officer of Computer Trading Corporation, an investment and advisory firm. Borish was founding partner and right-hand man to Paul Tudor Jones at Tudor Investment Corporation, where he was director of research for 10 years. Borish also previously served as chief strategist for Quad Group LLC. His philanthropy includes sitting on the board of directors of Paul Tudor Jones’ Robin Hood and Jim Simon’s Math for America.

He explains what the trading experience was like on Black Monday, 1987. As head of research for Tudor Investments, he built the models that Paul Tudor Jones relied on when he was short Future and Equities the Friday before.

He is fond of noting: “Markets spend a lot of time doing nothing, then they reprice.” That applied in 1987, which looked parallel in price activity and volume to the 1929 crash: A pullback in August 1987 into the Labor Day holiday, a peak near the September expirations, a modest selloff, and then a weak rally into October. That setup plus the mistaken belief that Portfolio Insurance would offer protection from losses, was the perfect up parallel. Then came the crash, and based on prior market history, they decided to wait until mid-Tuesday to cover.

Borish also explains why “Trading and risk management are inherently unnatural.” Successful trading requires a very counterintuitive approach that is uncomfortable to most people. He notes “Without discipline, the irony of markets is buyers are higher, and sellers are lower; this is why everybody loved Bitcoin at 60,000 but hated it at 20.”

A list of his favorite books is here; A transcript of our conversation is available here Tuesday.

You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

Be sure to check out our Masters in Business next week with Ilana Weinstein, founder and chief executive officer of IDW Group, the top recruiter of fund managers and traders for many of the largest hedge funds. She previously worked at Goldman Sachs and Boston Consulting Group, and holds degrees from the University of Pennsylvania and Harvard Business School.