Ken Griffin started Citadel Hedge Fund in 1990 in a dormitory at Harvard Business School. Today, 25 years later, Citadel Hedge Fund manages an AUM of $25 Billion (Rs. 1,62,500 crore) and employs 1600 people. Ken Griffin’s personal net worth is $7 Billion (Rs. 45,500 crore).
When asked the secret to how he made Citadel into one of the most successful hedge funds in the World, Ken Griffin’s answer was refreshingly candid.
First, he pointed out that one of the major advantages that he had when he started out in his early twenties was that he was trading “24 by 7”.
Second, he explained that success comes from delegating (or being with) “really bright” people who are “self-motivated” and able to make “good judgement calls day in and day out”. “The founding principle of Citadel is the pursuit of talent, a pursuit of people who have a passion for finance”.
Griffin emphasized that such is his obsession at finding the best people that Citadel interviews “10,000 people to fill 300 jobs”. “It is easier to get into Harvard than it is to get a job at Citadel” he joked.
Third, he emphasized the need for in-depth research. “The key to our business is a lot of research. We did about 15000 management meetings this year. We have a lot of people on the ground trying to understand what’s changing corporate America and corporate Europe and where are the opportunities emerging.”
Fourth, Ken Griffin stated that we should be focused on what we are doing. “Focus on depth and not on breadth. Excellence in investment comes from focus” he stated.
If you had invested since 1970 and diversified your portfolio in terms of sector, and followed a strict principle in stock valuing and picking, such as estimating the sales growth rate for a 10’year period, and multiplying it with an estimate EPS for a trailing period, you would have made millions in the market. Why? Because the market itself has increased multi fold. It is the same as someone taking a surf board and riding a wave. So Ken is no different from the average joe, or Ravi out there. Listen, you need time, and money to make more money. I’m the man. D man.
I agree. I don’t recall by who, but there was a research that said that if you got in before the “epoch periods” in the market, you’d make a lot of money, irrespective of how brilliant (or stupid :P) you were.
Conversely, if you were brilliant, but missed some of those periods, your returns would be mediocre. So it is timing at the end of it all. Because we cannot get the timing right to perfection every time, we can overcome that drawback by longevity in the market.
He did not blink even once during the video ( i mean literally). He did NOT blink. Not once. Not even a single time!