Source: Red and Green

1. When the “statement” doesn't hold true, give up and find the next goal

Robertson has a firm philosophy: as long as the statement about investment remains the same, then the investment position should be increased; once the statement changes, the position should be closed immediately.

His trading operators and analysts are well aware of how Tiger Fund works, and they also know that this is what has enabled Robertson and his fund to become a beast in the hedge fund world. This is how business should be done; it's simple and smart.

What exactly is a “statement”, please take a look at the following example.

Let's say you're interested in a sturdy oak table. The analyst will tell you that he has already searched the market, evaluated the relevant information, and came to the conclusion that even if you can buy it for $100, it's a good deal, because this table is precision made and won't fall apart easily. This is a “statement.”

So you went to the store and wanted to buy it. However, you just touched that table with your hands, and a corner of the table fell off. At this point, the store will rush to get rid of this broken table, and the price is $20.

Analysts will think that this is simply a huge bargain — you can buy something worth $100 for $20 and repair it with a little effort.

However, for Robertson, this “statement” is unreliable. He'll say he definitely won't buy it. How is it possible that a corner of a fine oak table made by precision engineering will fall off? He will also feel that the problem is not just that table; there are also problems with analysts' market research. Since this “statement” doesn't hold true, give up and look for the next goal.

2. Finding the best companies is easier than predicting when the market will rise or fall

During Kidd Bebodie's years, Robertson developed a keen sense of smell, and he likes to find and invest in valuable companies.

At Kid Bebodie, he has the tools to find value. The first and most important tool he has mastered is the most basic element of value investing.

The method of value investing is easy to learn, easy to understand, and easy to implement, but it is extremely difficult to really master because it requires patience and persistence.

For Robertson, his choice was clear: to form a system that works and actually works. Over the years, every time he began to look for value investment opportunities, he focused on stocks with low price, low valuation, and potential to achieve value.

In the years that Kidd Bebodie worked, in his contacts with Wall Street elites, Robertson portrayed himself as a fund manager who could find and dig deep into stock investment opportunities.

His father instilled motivation and ambition in him, teaching him the importance of success and a passion for doing business. The company continued to help him reinforce these traits — he learned how to read financial statements, conduct research, and build a valuable network of partners.

Robertson gradually believed that people who wanted to play with the market couldn't actually make money. He also gradually understood that if he wanted to actually make money, he had to buy at a low price and then sit back and wait for the stock price to rise.

Looking for value investment targets is what he is most passionate about; looking for opportunities is his driving force for success.

Robertson's belief is: in order to outperform the market, you should not consider the market. Instead, you need to focus on finding better investment targets; invest in value, and seize any opportunities you can find to go long. This is the Tiger Fund's consistent battle slogan, regardless of whether it crashes or not.

The market wasn't something Robertson wanted to know. The market never opened up to him, and he believes never will. Stock selection is an area that Robertson has always excelled at, and it is his specialty.

He is convinced that it is easier to find the best companies than to predict when the market will rise or fall. The experience of the 1987 stock market crash made Robertson confirm this belief once again in terms of investors and competitors.

3. The key to success is to establish all-round connections

When Robertson first started working, he tried to build his own network of relationships around the world, often asking others about potential investment targets, telling them his thoughts and listening to their opinions before making investment decisions.

When the Tiger Fund was founded, Robertson's network of relationships was already very large. If he needs it, he can pick up the phone and find someone who can help him.

Robertson is very proud of his network of relationships: they are all potential investors.

He is very active in using the company's performance as a selling point, marketing to investors and attracting them to invest in Tiger Fund.

Robertson's key marketing strategy was to write to investors. He is a master writer and loves to share his views on the market, the economy, the White House, and even the world in the form of words.

His method of getting information over the phone is simply art. A reporter saw him call with his own eyes. The reporter felt that the speed-dial function of the phone was invented for Robertson. His phone calls went on and on.

At work, Robertson was either on the phone, looking at a chart, or looking at information. He continues to expand his network, and he wants to ensure that once the Tiger Fund obtains new information, he can always find someone to help him analyze it.

Over the years, Robertson created a long address book, which was a list of people he met around the world. He also continues to make friends and sift out people he doesn't need. His ability to store information is also impressive.

4. When too many people in the stock market are optimistic, they should be conservative and cautious

Robertson and his team only really start to be optimistic when most people are pessimistic.

In the mid-1980s, investors all had a bullish mentality, which would continue to boost the stock market. However, Robertson realized that the overall situation was not good in 1985.

As a result, during the blooming season, Tiger Fund began to take a series of defensive investment actions. This year, many phenomena showed that the whole world was in disarray.

Two major events kept alarm bells ringing in Robertson's mind.

First, in just a few weeks, the yield of the S&P 500 index was actually 175 benchmark points different from the yield of the S&P AA index corporate bonds. This makes bonds more appealing than stocks, which isn't a good thing for fund managers.

Second, the US dollar plummeted. Robertson believes this will cause negative reactions in the stock market and bond market.

His research shows that after experiencing a currency crisis such as the depreciation of the Mexican peso, foreign investors did not suffer losses because loans were dominated by the US dollar.

When the exchange rate of pesos against the US dollar plummets from 28 pesos to 200 pesos to 1 dollar, borrowers lose money because they have to use dollars to repay their loans.

Now that the dollar has fallen, lenders are starting to suffer losses. Robertson feels that lenders will empty their positions in the US stock market and bond market at this point.

Although Tiger Fund saw this huge opportunity in the stock market, it acted carefully. Robertson judged that the stock market is too volatile, and he needs to adopt a more conservative investment strategy.

Looking back at his investment strategy, there are three reasons: first, Wall Street's optimistic bull market sentiment; second, as far as over-the-counter trading and US stock exchange issues are concerned, there is a strong speculative atmosphere; the opposite is the low position of pensions and pension plans; and third, the dollar depreciates.

However, Robertson still believes that in March 1985, some stocks were “ridiculously cheap.” Moreover, he has accumulated a lot of experience in buying undervalued stocks.

The time is ripe to invest in certain stocks, and Robertson and his team believe it is easy to find out which stocks to buy and hold large positions at this point.

However, simply searching for such potential stocks will not allow Tiger Fund to survive market fluctuations. They also need to find other targets. They also need access to large global markets.

As a result, while actively searching for new potential stocks, they also continued to broaden the overall investment strategies of companies and funds, and began entering the global market to seek more profits.

5. Facing investment opportunities, we must “see trees and forests”

Some industry insiders believe that Robertson is actively entering the global macro market because he has “special abilities,” and he can see and discover trends earlier than others.

In the money management community, the popularity of something this year does not mean that it will be popular next year as well. Robertson's strength is that he can “see trees and forests” in the face of investment opportunities in the US or global markets.

Faced with investment opportunities, many fund managers act on impulse to enter and exit the market. Robertson wouldn't do that. He doesn't use his feelings; he only has a calm mind and makes clear and clear investment decisions.

In a letter to investors in February 1986, he wrote, “Our strength is stock selection, right and wrong, not commodity trading. These two are completely different categories. But it would definitely be wrong to exclude yourself from any possibility, because doing so would be a missed opportunity.”

The purpose of this letter is to persuade investors to allow Tiger Fund to include commodity trading in the scope of investment.

At that time, Tiger Fund's Private Placement Memorandum (PPM) stated that investors had no intention of investing in commodities or futures. To be able to make such investments, Tiger Fund needs to convince investors, as well as the Commodity Futures Trading Commission.

Therefore, Robertson used the success stories he received in the silver market while working for Kid Bebodie to illustrate.

In the past, there were some special situations in the commodity exchange market, and I failed to seize the opportunity; that was a big mistake.

Some people have known me since the late 60's when I was a young Kidd Bebodie trader.

I discovered one thing: the Ministry of Finance is publicly selling silver in large quantities, thereby capping the price of silver, but the Ministry of Finance has discovered that there is a shortage of silver.

As a result, investing in silver became the best investment I've ever made, and this is definitely not because silver is risk-free.

After that, you probably remember how we frantically traded livestock futures when herbs were disappearing...

6. All investors should hold an “Doomsday Fund”

Robertson said that all investors should hold a “doomsday fund” containing a package of US government bonds and notes.

He believes that investors, regardless of their experience or wealth, should hold this type of fund to protect them from a sharp decline in the market.

He warned investors that such funds should not account for too much capital. The idea that the market might drop to zero is unimaginable, but it is a reality that prices may fall.

The 1987 stock market crash was arguably the worst day most investors have ever experienced.

This is a financial crisis that no one can imagine. Wall Street's response was mostly shock and disbelief. Investors of all types and sizes are in a state of shock and overwhelmed.

At the time, everyone blamed the collapse on a variety of factors, including the lack of major market adjustments in five years, concerns about inflation, rising interest rates, and increased volatility due to the use of derivatives.

For Robertson, the crash of 1987 was a perfect storm.

His Tiger Fund did not receive any additional security deposit notices directly due to losses during this period. During the stock market crash and its aftershocks, the Tiger Fund outperformed Robertson's real rivals at the time — Soros and Steinhart.

Of course, this crisis also inevitably affected Robertson and his team. The reason is that their portfolios can also be more reasonably hedged to take advantage of the market crash.

7. Managing risk is an important aspect of Tiger Fund's success

Before opening a position, Robertson will definitely spend a lot of time understanding the risks of the transaction, as well as the risks that the portfolio may face.

Robertson said that Tiger Fund's analysts will only open positions in the investment portfolio after testing the risk and making a very clear decision that it is worth taking the risk.

He believes that the purpose of the investment selection process should always be to determine that the probability or cost (i.e. risk) of an investment target error is less than the return.

He also believes that although these positions are established one by one, each position will have an impact on the investment portfolio.

To better understand these risks, Tiger Fund uses a variety of tools, including real-time profit and loss reports, liquidity stress tests, and daily risk exposure and performance reporting systems.

These analyses enabled Robertson and his senior management team to understand and discuss all important aspects of the portfolio's performance and risk.

In addition to these analytical tools, Tiger Fund also uses more traditional protective measures to minimize losses.

In all areas, they have a strict set of controls, including a clear separation of front and back offices, and a series of internal and external audits to prevent “operational risks.”

Robertson told investors that the company's culture is driven by investors' return on investment. Therefore, risk management is the number one priority throughout the company.

At Tiger Fund, once an analyst recommends an investment, Robertson and the rest of the investment team will further discuss and review it, even to the point where it is flawed.

Robertson also questioned investment advice in a strict and regulated manner, almost to the point of being strict.

edit/lambor