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MARRIED
TO THE
MARKET
After making his name as one
HALL OF of the most famous currency
FAME
traders ever, you might think
Bill Lipschutz would slow down.
Think again BY ANDREW BARBER
AT THE VERY MOMENT you’re reading
this, regardless of your time zone, Bill Lip-
schutz is most likely either trading or watch-
ing the markets. Should you be reading dur-
ing the three to four (nonconsecutive) hours
a day that his eyes are closed, he admittedly
will be doing neither. He will, however, be
dreaming about the currency markets.
“I really couldn’t be happier with my
life,” says the 52-year-old former Salomon
Brothers legend.
Indeed, although he left the Street some THE PURIST: Bill
Lipschutz’s world
16 years ago, Lipschutz — thanks to his $200 revolves around the
million forex vehicle, Hathersage Capital currency markets.
Management — never really stopped trading.
His spacious Manhattan duplex is adorned “You can get compensated really well, member of the Trader Hall of Fame.
with nearly a dozen state-of-the-art trading and that’s fine,” he intones. “But it isn’t Famously opaque, impossibly low-key,
flat-screens, strategically placed throughout about that for me.” Lipschutz shunned the spotlight despite
the rooms. The currency market never Not to say he hasn’t pulled down some massive size, helping him garner a reputa-
sleeps, which is why Lipschutz himself gargantuan scores. Back in the day, Lip- tion as a mysterious figure that lingers to
rarely does, either. And not only doesn’t he schutz helped create one of the most power- this day. As he settled down for a chat this
seem to mind, he embraces the challenge — ful trading groups on earth: the Salomon summer, Lipschutz found it hard to discuss
always unnervingly focused and with a Brothers FX department. Blessed with an personal accomplishments. “The story
remarkable purity of purpose. uncanny ability to manage risk and read of building a money machine is not very
markets, Lipschutz wrote the tickets that exciting,” he said, “but I have to tell you . . .
T H E T R A D E R M O N T H LY H A L L O F FA M E made cash registers sing — he once notched John Gutfreund found it pretty exciting.”
TOM BALDWIN, CHICAGO BOARD OF TRADE
16 up months in a row — and left competi- Lipschutz’s own story began ordinarily
LEWIS BORSELLINO, CHICAGO MERCANTILE EXCHANGE
tors in awe. In his heyday, he did half of the in blue-collar Farmingdale, New York.
MATT FESHBACH, FESHBACH BROTHERS
currency-option volume on the Philadelphia The son of a math teacher, he was an avid
JOHN HENRY, JOHN W. HENRY & CO.
Stock Exchange and, at times, a staggering tennis player in high school, with standout
LARRY HITE, MINT INVESTMENT MANAGEMENT
80 percent of the open interest. grades. He attended Cornell, completing
ANDY KRIEGER, NORTHBRIDGE CAPITAL MANAGEMENT
Says Lewis Broad, Lipschutz’s partner at its rigorous five-year architecture program
LEO MELAMED, CHICAGO MERCANTILE EXCHANGE
Hathersage, “Bill understands the options before pursuing his MBA there. In 1981,
JIM ROGERS, ROGERS INTERNATIONAL COMMODITIES INDEX
market better than anyone.” a year before graduating, he interned at
STEVEN SCHONFELD, SCHONFELD GROUP
For that reason — for being a giant of Salomon Brothers. It was probably the most
MARTIN “BUZZY” SCHWARTZ, INDEPENDENT
the game whose passion never waned — powerful trading firm on earth — and a veri-
MICHAEL STEINHARDT, STEINHARDT PARTNERS
Bill Lipschutz now becomes the twelfth table playground for a hungry young turk.
“UNDERLYING FUNDAMENTALS
OFTEN DIDN’T MATTER. IT WAS
ABOUT WHO BLINKED FIRST.”
As he emerged as the primary upstairs the 1998 Asian financial crisis, when panic
trader driving currency-options volume at took hold of the yen market, major players,
the Philly, competition on the floor grew including Julian Robertson, got creamed.
intense. It turned into a blood feud that Lipschutz was up 42 percent that year.
came to a head in October 1986, when Over the past 15 years, Hathersage has
Lipschutz executed a trade for 30,000 put racked up an 18.8 percent average annual
options, expiring in December, on the Brit- return. Only once in that period did monthly
ish pound — at that time the largest listed losses ever exceed 5 percent.
options trade ever. Lipschutz crossed both “It’s the intricacies of the game itself that
sides, shutting out the floor completely. drive me,” he says. “It’s about getting up every
As he recalls: “Andy Davis, who was run- day and trying to figure out how to beat the
ning CRT’s operation down there, actually market. That’s an ongoing fascination that,
stood up and gave an impassioned speech to in its purest form, never changes.” .