Kyle Bass' Formula: Right Event + Quality Trade Structure = Profit

See our discussion on InformedTrades: http://www.informedtrades.com/1132273-trader-profile-kyle-bass.html

Download the whole interview with Bass: http://www.drobnycapital.com/books

See our Kyle Bass archive: http://www.informedtrades.com/tags/kyle%20bass/

See our Profiles of Winning Traders: http://www.informedtrades.com/f126/

KEY POINTS

+ Kyle Bass came from a middle class family in Texas, USA
+ He started his own hedge fund, Hayman Capital, at the age of 35
+ His big trade was to short mortgage-backed securities during the subprime mortgage crisis; this trade made him a significant amount of money and catapulted him into the spotlight
+ He takes a top-down, event driven approach
+ Manages risk through correlation analysis
+ Highly opinionated, but driven by a fear of losing

KYLE BASS' INVESTMENT APPROACH

+ Diversify: take both long and short positions in both credit and equity markets

+ Use stops when possible

+ Markets often overshoot; as a result, stop and reverse strategies can often be especially effective

+ Have conviction in contrarian opinions, but be afraid of losing

+ Think carefully about how to structure trades to express contrarian viewpoints in a manner that optimizes risk/reward

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