Mister “Process Process Process” in Hedge Fund Land and “macro strikes me as bullshit”

A certain long/short guy that many respect claimed:

“Macro strikes me as bullshit unless you can show me a repeatable, disciplined process that has delivered consistent returns over time.”

The fact of the matter is, many single stock-focused people consider macro “bullshit”, so his comment is unsurprising. While I disagree, what really got my attention was this line: “repeatable, disciplined process with consistent returns over time is a strategy.”

So a few (disparate) comments regarding the above:

  • Soros/Druck Qualify as Bullshit According to His Logic - Nearly all the great macro/trades and fortunes in history would qualify as “bullshit” under that guy’s definition (it’s also unsurprising he continued by insulting Druckenmiller - at least he’s consistent) - the Soros funds were characterized by more than a few drawdowns that would make the above-mentioned long/short guy pee his pants. The “Big Short” experienced a 20-35% drawdown right before working extraordinarily well. It’s not as if these fortunes were made with some previously implemented “repeatable process” . If you want to “repeatable, consistent returns” see Bernie Madoff, or stick with bonds.
  • Process -> Algorithm - “repeatable, disciplined process with consistent returns” ultimately , in my opinion, converges into an algorithm… algorithms render the very long/short guy who made the above claims , largely obsolete. Oh the irony. This suggests to me that if discretionary investors want to outperform the algo/quant ones, we need to go beyond process…
  • Mister Process Process Process - Someone I used to know - he had the right investment banking/consulting background - went to the right Business School. He was well-versed in Buffettology. He believed the Kool-aid, and spread the Gospel of Kool-Aid. He was that boring/safe guy who you’d want your daughter to marry… he was also highly process oriented. He was so accomplished at building processes, he was the guy you’d want to train all analysts at your fund. He’d groom them well. Guess what? He was and is an average/bad investor. He was great at going long value traps (and being the perfect counterparty/contra-indicator). He had no short selling skills. He also had no concept of position sizing conviction. He missed some of the best trades in history, even though they were staring at him right in the face.

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