intelligence comes in many forms Steve Mandel (Lone Pine): "But one thing that we've learned, or I've learned, is people can be unbelievably smart, but if they're very linear thinkers, they will never work as an analyst. We are always dealing in shades of grey, probabilities. If somebody has to know the answer, like to a math problem or whatever, if they have to know the answer, there is never the answer in our world. And so those people can be incredibly smart and might be winning Nobel Prizes or whatever, but they can't work in our world because our world is all about probabilities and weighing outcomes. And if that makes you uncomfortable, it's just not the work for you."

on risk mgmt, cutting losses, common mistakes... "move your feet" Steve Cohen: If a [short] is moving against me, I’m probably buying in some every day. Even if there’s no change in the fundamentals? Oh sure. I always tell my traders, “If you think you’re wrong, or if the market is moving against you and you don’t know why, take in half. You can always put it on again.” If you do that twice, you’ve taken in three-quarters of your position. Then what’s left is no longer a big deal. The thing is to start moving your feet. I find that too many traders just stand there and let the truck roll over them. A common mistake traders make in shorting is that they take on too big of a position relative to their portfolio. Then when the stock moves against them, the pain becomes too great to handle, and they end up panicking or freezing. What other mistakes do people make? Steve Cohen: They make trades without a good reason. They step in front of freight trains. They short stocks because they are up, as if that were a reason. They’ll say, “I can’t believe the stock is so high,” and that’s their total research. That makes no sense to me. My response is: “You have to do better than that.” I have friends who get emotional about the market. They fight it. Why put yourself in that position?

druck on risk mgmt via P&L watching...discretionary, tape feel, doesn't trust quant models "So my risk management system has always been what I've described, that knowledge, and then my gut, and watching my daily PnL. And if the daily PnL starts acting in a way it shouldn't, instead of going to some quantitative VAR or beta model, go, Oh, I'm okay, the model says I'm okay." -- full quote "And my risk management system is, and I believe this is true with George although we never talked about it: If I own, let's say, in today's world, the last 10 years at least, if you own stocks and you're short bonds, that most of those 10 years has been the same bet. And if you're long the Euro, that's probably a long risk bet. And you just kind of get a feel in your head of where your matrix is. And I can go in the gym and watch CNBC at 11 o'clock, and I have probably, if you include the whole firm, hundreds of positions on, and all I see on that stupid little ticker is what the S&P is doing, and I can probably tell you our PnL within $2mn. Just because my head knows what my Pound or my Euro position will be doing, and my gold position, based on that. And so I sort of have this internal thing where I'm watching everything. But the reason I love the human side as opposed to the quantitative side is there's nothing like my PnL--and you will pick up, Oh, C is not acting the way it was with A the last eight years, and there's something funny. And then you'll start seeing more funniness going on. And I have always thought that if my PnL acts--if things went well that day, and I'm losing money, and I examine what went on, and if that continues, something is really starting to go haywire in the system. So my risk management system has always been what I've described, that knowledge, and then my gut, and watching my daily PnL. And if the daily PnL starts acting in a way it shouldn't, instead of going to some quantitative VAR or beta model, go, Oh, I'm okay, the model says I'm okay. To me, these models are not only okay, they can get you in huge trouble by causing you a false sense of security when things start going awry, because the model will tell you you're okay, and you will see things happen you've never seen before, whereas if you are a intuitive human trader, you should be able to use your instinct to just start cutting when things aren't acting right."