MAGGIE LAKE

So you’re a real global citizen. Keep going everywhere. That experience is very unique. I mean, not everyone has that sort of multilingual, multinational view from such a young age. Do you feel like that had a big impact on you?

JAY JANER

Yeah. Well, I mean, I guess I look at things from many different angles, you know, especially people themselves. I mean, I don’t know where I’m from. I have no idea.

MAGGIE LAKE

Sometimes, maybe that’s an advantage. We seem to be getting really tribal these days. So maybe it’s good to be able to float above that. So were you very clever when you were young? Did you do well in school? Did you know that investing in finance was something on your radar or was this something that came much later in life?

JAY JANER

Yeah, much later. When you grow up in Latin America, and then in Europe, you tend to be educated in a sort more academic or generic way. You know, less business and more… let’s learn about different subject matters. So, I was actually good at math and physics. And then so, was I clever. I don’t know how clever I was. I think I was a relatively good student. I think I knew what I had to do at school to do well. I don’t know if I was organized.

MAGGIE LAKE

We call them executive skills these days. Because I have two teenagers. How are their executive skills?

JAY JANER

I was good at executive skills. Yes. That’s a good way to put it. And so I went, you know, so I went to school, for example, in England. I was in a boarding school in England. I I went to college in the States. And I had no idea what I was going to do in life. I mean, I knew that I wasn’t good enough to become a physicist or a mathematician, but I was, I wasn’t good enough to be a scientist. I knew that much. So well, actually, it was very funny story. I actually sat down with a guy, with a friend of mine doing an MBA at college where I was at Cornell, and I sat down with him, and I asked him, and he was a guy from Latin America. And I said, “Look, what am I going to do with my life?” And he said, “Well, do you know anything about anything? I mean, do you like a product of any sort? Do you like cars? Do you like airplanes? I mean, what do you like Jay?” And I said, “I have no idea. I like lots of things, and nothing at all. I’m not too sure.” So then he said, “Well, you’re good at math, right?” “Yeah.” “Well, one product, you could think about his money? Because that’s sort of like a mathematical thing.” And I said, “Oh, yes. And so what do I do?” And then he said to me, “I’ll tell you what you do. You get a job in a bank. Because that’s where money is. You get an MBA, because you didn’t study business. So you might as well go back to studying something, some business, and then you get a job on Wall Street.” I go, “Oh, that’s it?” “Yeah. Just do that.” And I go “Oh, okay. And what kind of a job in Wall Street?” “Well, you’re sort of a mathematician.” So this was the late 70s. Right? This is ‘79. He said, “You’re a mathematician, right? And now they’re using math to do stuff on Wall Street.” And I go, “that’s it? Oh, really?” “Really. So just become a trader. Because, you know, that’s where money is traded.” And I go, “Great. Thank you so much.” And I did exactly that. I got a job at Citibank. I did an MBA, I went to Wall Street and got a job as a trader.

MAGGIE LAKE

And to me, what a good friend actually, to sort of have that. Because, correct me if I’m wrong, but in the late ‘70s, Wall Street didn’t really have that sort of allure, Masters of the Universe. I mean, stocks had pretty much gone sideways, the entire seventies. This was not the sexy destination to make your millions that everybody thinks of it.

JAY JANER

Plus I had no idea. So, I started to have an idea when I was at business school. When I was at Citibank, my job right after college, I was in the planning department, I had no idea there either. That was sort of, you know, a kind of a nerdy job. And then, and then I did an MBA. And in MBA, I started to get a feeling because I had met other traders, or had done investment banking, which is something that just required a little bit too much work, in my opinion. So I just said, “No, God, no.” So I kind of said, “Oh, hey, trading, but what do I trade? I mean, am I going to start trading stocks now or something?” That’s when I took a class on option pricing – option pricing theory and all that stuff. And I had a friend, I wasn’t particularly brilliant, but I had a friend who was, and he teamed up with me in that class. And he had his first little HP, which was a little box. This was 1983, a little box in HP. And we did programs together on pricing options. So then, when I got my first job as a trader, I said to the treasurer at Lloyds Bank, I said, “Hey, maybe we can start trading options.” And he goes, “Options on what, exactly? What do you mean?” And I brought up my little box, and I said, “You know, I did this little program here.” And I was totally wrong by the way, in the way I analyzed options. I had no idea what I was doing.

MAGGIE LAKE

Neither did anyone else.

JAY JANER

Yeah, maybe I still don’t have any idea. But, but – there were new products happening very fast at that time. And there were these long-term interest rate options, called caps on short-term rates. And they had just been, you know, only two or three Wall Street firms had them. So I said, “Well, what if I do this, and we become market makers in this?” And then he goes,” Well, okay, I have no idea what that’s all about. But I’ll tell you what, well, we got a professor to sign off on your formulas, and then when you start, start very small.” And I go, “Yeah, great.” And that’s what I did. And actually, the very funny thing is the very first trade. I didn’t even have time to switch on the computer. No, actually, the computer was switched on, but I had no idea what volatility I should be charging for these options. So I was, you know, sort of stuck back and I had this screen full of buttons. At that time you had buttons to all the brokers, and they started flashing on Monday morning of that fateful Monday morning when I I said, “We are market makers. Lloyds Bank is now market makers and interest rate caps.” And it was me and a couple of programmers, and that was it. And I was sitting in my desk and then I got a call. And Lehman Brothers – guy from Lehman – didn’t even come from a broker. Lehman Brothers guy says, “Where do you offer 100 million tenure tens?” I go, “Excuse me?” “Okay Jay, let me be quite clear here. Where do you offer 100 million tenure tens I says “100 million?” “Yeah. You’re Lloyds Bank, right?” And I said, “Ah, just a minute. Just let me..” So I get hold of Fallen brothers. I hit the Saudi button and go, “Where do you offer the 100 million tenure tens. And so he gives me a price. I start, like handling these two phones. I had no idea what I was doing. I’m like, “Oh, my God.” And before I know it, I do the two trades, right? So I make half a million bucks. Right? Arbing, Lehman and Sally, because they were not talking to each other for some bizarre reason. I think it’s because they were talking to the same client, maybe. I don’t know. I still don’t know what happened. So the treasurer walks into the office and goes “Hey, Jay, how are you? Good morning. Hey, did you start trading today? Did you do anything? Did you talk to anyone?” And I go, “Yeah.” And I was still looking at the faxes, right – trying to.. “I sold this, okay. I bought this and I…” and so I’m like, “Yes, sir. I did two trade, sir.” “So ,how much you do? “Two $100 million dollar trades, sir.” “Excuse me. You did what? Well, okay, Jack, Joe, Paul, everyone in my office right now.” So everyone’s in the office and I’m holding these two faxes in my hands like this, “sir, I think I did the right thing, you know.” So they looked at it, they stared at this stuff for like 10 minutes. Then they look at me and they go, “Okay, this is a good business. I like this business.” And I go, “Thank you sir.”

MAGGIE LAKE

It’s extraordinary that you were able to do that, as like a newbie coming in the door you pitched in this idea. Nobody really knows these – these markets are brand new. I mean, it’s like a scene from a movie.

JAY JANER

Yeah, it was. I’m still shaking now remembering what I was doing, and then I left that like “I don’t know what I’ve done. I’m not too sure. I didn’t even switch on the computer properly.” I mean, I had no idea. So this is what happened in the ‘80s. No, oh, excuse me, that was the best – that was the easiest trade I ever did.

MAGGIE LAKE

And it’s not even one of his four! We have a bonus.

JAY JANER

Exactly. I forgot about this particular trade.

MAGGIE LAKE

I mean, as harrowing as it was sort of being in there with the two phones. Did that success give you confidence? Or did it make you feel like an imposter? Because it could do both.

JAY JANER

Oh, of course! Yeah. In fact, I’ll tell you another funny story. I hired a very, very intelligent young French guy one time in another bank, later on. And again, we were still driving trucks through all of these different bid offer, spreads of these different products and so on. And he stopped me after about a week of being in the job. And he was very, very correct, young man. And he stopped me in the corridor, and I was alone with him. And he goes, “Jay, can I say something to you?” And I’m like, “Yes, Patrick, what is it?” “You are an imposter.” I said, “Oh,” and then I burst out laughing because in a sense, he’s right. You know, he’s a philosopher, you know, he studied philosophy and all that, and he’s probably right. You know, we’re all kind of imposters in a way, you just have to ride the wave, though, be at the right place at the right time. And, you know, you don’t have to be brilliant. I guess, yeah, choose the right wave at the right time. Yeah.

MAGGIE LAKE

So let’s, let’s jump into your first trade of the four that you picked. And that is one of your best. And that’s being long Brazilian stocks in 1996, when the Brazilian economy was opening up, and you were betting big on the telecom sector in particular. So set the scene for us, like what’s happening in your life and your career? Now, you are in equities. Are you still at an investment bank? Are you in London? What’s happening?

JAY JANER

No. It was in 1996, I moved from New York, I was at Morgan Stanley, and I was in charge of the Latin American equity derivatives desk at Morgan Stanley. And then I was hired away to go and manage the treasury operations of a hedge fund. A very big important hedge fund in Saõ Paulo. So that was exciting. It was the first time I was in a hedge fund. And I learned a lot from these guys because, you know, when you are on Wall Street, you really are not allowed – if you’re a derivatives trader, that is, you don’t really take positions, you know, directional views, right? I mean, you’re just, you are but in a very indirect – you’re trading volatility stuff like that very technical stuff. All of a sudden, I’m sitting with these guys making a lot of money. Brazil had opened up already two years before, but it was bubbling. So it was really bubbling. And the telecom sector had just been opened up. So it was a monopoly before and now anyone could compete for that and these new companies were coming out. And then all of a sudden, I’m sitting next to these guys who are saying, “hey, you know, I’m putting a million bucks into this new company.” I’m like, “You’re doing what? Just like that?” “Jay. They’re opening up the sector. Brazil is booming, and the monopoly is all over. This is the best place company.” So I said, “Okay, well, I’ll do the same then.” And that was probably my second best trade of my whole life. Because within six months, I doubled or tripled my money – I forget now – it was like some huge return very fast.

MAGGIE LAKE

So is it your own money that you’re putting in? Or is it the hedge fund?

JAY JANER

No, no, that was my own money.

MAGGIE LAKE

That must have been a little scary, though. Especially in emerging markets, I mean, you know, volatile. Things happen.

JAY JANER

Yeah. But that’s when I understood that some of these guys got really rich doing exactly that. Having the courage of conviction, in a sense, and that’s something that I hadn’t really done myself. I mean, I was kind of cautious. For my personal money, I was kind of cautious. Plus, when you’re working on Wall Street, you’re really not allowed to do a lot of this stuff, right? I mean, I couldn’t be trading Latin American stocks. I was in charge of Latin American equity derivatives at Morgan Stanley. I couldn’t even trade Latin American stocks. So all of a sudden, I’m sitting in a hedge fund, and they’re like, “well, we either put this in the fund, or I’ll tell you what, I’ll put 10 million bucks into it myself.” I’m like, “you can do that?! And you’re gonna do that?! That is crazy.” And then all of a sudden, the guy’s like, “I just made $30 million.” I’m like, “You did what?” And in Brazil that’s the kind of returns you were getting for – you know, that didn’t last that long – it was like a year’s worth of boom. And then, of course, then, I mean, Brazil is up and down, right? It’s tricky.

MAGGIE LAKE

Yeah. Well, that’s why it seems like such a risky move. Because even if you could see what’s in front of you…As you well know, from watching these markets, in emerging markets, you have so many factors, and the economic business ones can make a whole lot of sense. And then something political happens, or something out currency that has nothing to do with anything having to do with the country, and then you suddenly see capital flight or something like that. So there’s a huge amount of risk involved in that.

JAY JANER

Yeah, a lot. But what I think my luck is that the money that I put into it, I could afford to lose a piece of it. And also, I think I started making money very immediately, meaning within days of me having, you know, I was already up 10%. So then you slide your stop up, right? And you go, “Okay, I’m up 10% already, if I go down to where I came in, I’m alright.” And then all of a sudden, you’re up to 20, 30. And they’re like, “what?” And so then it’s a question of where to get out. That’s when I learned a lot from these guys, too. Because they were following the politics. They were following everything that was going on, and so on. And they said, “Okay, this is it, you know, we doubled our money. Okay, let’s get out.” “We’re out.” None of the were long-term investors for the telecom stuff.

MAGGIE LAKE

That’s one of the hardest questions that people grapple with when they come on. Is, if you’re in a winning trade, when do you get out? When do you know when to get out?

JAY JANER

Yeah. Well, one is that I was lucky that the percentages we’re talking about were huge, quick. So you know, if you’re up 100%, very quickly, within three months, and then you say, “go for 200%.” I was surrounded by really clever people who were following the politics, everything that was going on, and if they started hearing something that didn’t sound good, they would alert me. And they said, “Yeah, I don’t know.” “Okay, that’s it. I’m out.”

MAGGIE LAKE

So what do you think you learned from that trade?

JAY JANER

I think I learned how to pay attention to well, it was really the first time I was really immersed in an emerging market, directional trade. And so therefore, the politics and the risks involved. And I didn’t learn anything about risk, in a sense, because I was immediately at a profit. I was lucky I started off immediately out of profit, so I just slighted my stop up and you know, it’s like, “oh, when do I get out guys? You getting out?” “Yeah.” “All right.” So I didn’t really learn much.

MAGGIE LAKE

It’s like being in the right place at the right time.

JAY JANER

Yeah. And listening to people that really followed the stuff better than I did. So listening to others is I think, perhaps what I learned.

MAGGIE LAKE

Yeah, and understanding who has their finger, right? You know, you may not know, but if you can identify and listen to those smarter around you – which we talked about with your French imposter – is an important skill set.

So your second trade is an automated long short trade in top crypto coins from 2017 to present day. So, there’s a big gap here. So what were you doing between your big Brazilian win in 1996 to 2017 in your crypto? Did you stay in emerging markets? Was that your specialty? What were you doing in those decades?

JAY JANER

Well it was mostly junk bonds. For practically, I mean, in 2000, basically, I left that hedge fund and I started managing my own money. I mean, I wasn’t that good or that crazy to start to trade you know, 60/40, right. The 40% stock portfolio and the 60. I was much more, sort of 90% junk bonds, and a little bit of stocks once in a while. In a very timing trade. And pretty much all of it in Latin America.

MAGGIE LAKE

Which is in itself – junk bonds are inherently risky, and emerging markets are inherently risky. So why did you decide to park yourself in that area of the market?

JAY JANER

The stock trades are all timing trades, right. So that’s not long term, never. On the junk bond side, there are, for example, Brazil, after it opened up, their foreign currency reserves have been very good for many, many years. Right. Brazil exports a lot more than imports, right? And it receives a lot more money in investments. And that’s just a it’s been like that for 20 years. It’s not new. So Brazil has no problem paying dollars. The question is, “Who do you lend to?” I mean, if you lend to a small company, well, that’s a problem. But if you lend to the government, or if you lend to to a government company, then you go well… I mean, yes, it’s junk, because it is considered junk by the investment community, in general, because it’s not an investment grade country. But how much is it junk? I mean, if a leftist leaning government came in, would they default? I’m not too sure they would, they would want to default. They would default if they didn’t have the dollars to pay. Like Argentina defaulted many times and other places in Venezuela, and so on, defaulted many times for lack of dollars. But Brazil is a country that doesn’t have that problem and hasn’t had that problem for 20 years. It did in the ‘80s, by the way, but it didn’t have any more when they liberated the economy, and they had a free floating exchange rate, etc. So, I was like, “yes, it’s junk. Yes, I’m getting, I don’t know, treasuries, plus three or four, three, maybe 3%.” But is it worth it? I think it is. You have to know the economics of this country, but I think it’s a pretty good bet if it’s a government kind of backed. Or if it’s very, very well run company. There are companies that export to China that are incredibly profitable. And they should be investment. If they were a US company, they would definitely be investment grade, you see. So in my opinion, the junks are okay. I mean, you have to know the country that you’re involved in. Each country. Country by country, and of course, who’s the issuer?

MAGGIE LAKE

Right, right. So what attracted you to crypto?

JAY JANER

That’s a funny story. So in 2017, I’m minding my own business painting and taking care of my junk bonds. And maybe I should have stayed doing that, by the way, but that’s a story for a little while. But anyway, so my youngest – I have two sons in New York – and my youngest son, at that time 26, comes to me and says, “Dad, dad, I just multiplied my money by five.” I said, “Oh, well, what did you do?” And he goes, “Oh, I just bought some Bitcoin and so on.” I go “Son. I mean, Bitcoin. Where do you keep this? I mean, what is this stuff anyway? What is this? What’s it worth and why would you buy such a thing?” And he goes, “I see, Dad. Okay, sit down. I think you need a bit of a lesson here.” I was incredibly skeptical. I was like, “okay, Blockchain sounds cool. It sounds like a nerdy thing. Interesting. All right, maybe one day, whatever.” And then he goes, “No, no, no, no, no, no.” And he gave me a bit of a lesson. What I didn’t buy into what he was saying – he’s a directional crypto guy – I didn’t buy into what he was saying. But I bought into the idea that it’s a 24-hour market, quite liquid. At that time a few coins are already very liquid, and had futures, which I like, because I can go short. And then I said, “Wait a minute. Maybe I can bring out my little HP box and my HP box and some, you know, long short sort of formulas that I had for fun worked on before. And maybe they’ll work! I don’t know.” So I hired a programmer for myself and I started off with a little bit of money. And I said “I’ll do a bet with you. You do your directional trades, and I’ll do my long short quant trades. And let’s see who wins haha.” Well, unfortunately for him, we have crypto winter into 2018. Right. So I didn’t bring up the subject very much with him anymore, but I started making money in ‘18, ‘19. And that’s my best trade I’ve done in my whole life, is essentially doing the long shorts for the last four years.

MAGGIE LAKE

Amazing. Are you surprised that this ends up working for what now, Sort of 30 years, and whether it’s for a bank or for work, you know, trading your own money that that ends up being your best trade? Did that surprise you?

JAY JANER

No, it didn’t surprise me that it was going to work. I didn’t think the returns are going to be that high though. But it didn’t surprise me that it’s going to work, because you’re talking about stuff that’s over 100% vol, which is also traded by retail. When you have retail over 100%, what you have is sort of the blind leading the blind, right? And when you have the blind leading the blind, essentially, when you have this type of trading, these sort of models worked very well because essentially these are trend following. Long short models are mostly trend following and trends established themselves, right? And by the way, this is true, except this year.

MAGGIE LAKE

Yeah, well I feel like every single person, whatever asset they’re in, whatever trade they’re doing – the caveat is “not this year.” Like nothing seems to be working.

JAY JANER

No, no. So this, by the way, is my best trade and my worst trade. Both together. It’s my best trade in terms of returns. Not this year, this year is zero, so it’s not like I’m negative. I’m not losing, but I’m not making. So alright, yeah, I’m disappointed. But that’s not what I’m getting at by the way, it’s not the return that this year is zero. It’s that I got involved a lot. And the problem with me is because I’m such a nerd, I kind of like, I was painting, I was happy painting and traveling and having a fun life. And then all of a sudden my son got me back into the rat races.

MAGGIE LAKE

This is actually your third trade. This is crypto – the gains were your second trade and one of your best, your third trade is one of your worst. And that’s the fact that that success led you to start quant funds over the last three years.

JAY JANER

Yeah, exactly. At the end of ‘19, my friends were coming to me and saying, “Hey, Jay, what’s your return?” I go, “five times.” “Excuse me? What did you just say? Five times” “Five times.” “So how do we give you the money to trade?” And we’re like, “Well, I’m not going to start opening accounts and managing your account. So I’ll tell you Alright, fine, fine. I’ll open up a fund.” Okay. All right. So that’s what I did in June 2020. I opened my first fund and then I discovered another way to make money with crypto, which was arbing, which essentially trading the futures spread, right. Which is something that obviously I was very used to, which is just the spread between the perpetual futures and cash. And so and in 2020, and 2021, especially the first half of 2021, that stuff made a lot of money. And all of a sudden, I had six people working for me, I’m back to like, you know, coordinating programmers and the cloud and this and that, and opening funds and the lawyers and clients. All of a sudden Fund to Funds started hitting on me, like, “Oh, can we put money into…” And all of a sudden I’m back into Wall Street, when you know, I had retired. So that’s kind of like, you know, I’m not sure. You sometimes wish something and maybe shouldn’t get it. Maybe I should have just stuck to just managing my own money and just said no to my friends. I don’t know.

MAGGIE LAKE

Why do you think you didn’t though? Why do you think you were drawn back in?

JAY JANER

I don’t know. Is it an ego trip? I’m not too sure. Not sure. I just thought it would be easier. Maybe that’s also the case, you know, I just said to my friends, “look, I’ll just start a little fund, and you just invest in the Fund that’s a lot easier,” also, from the tax perspective was a lot easier for them and all that. So I’m like, “I’ll just do that. I’m sure I’ll figure it out. It can’t be that hard, etc” But it does get hard. Because when you have the responsibility of managing other people’s money, your risk controls have to be very tight. And I started the first fund, which was more of an ARB fund, because I wanted to have lower volatility. And I said, “Guys, I’m not going to give you the kind of all that I see my own account, because I don’t care if I’m down 20%.” Especially if I’m already up 50, right? “But hey, you guys know I started one fund and then I started another fund, you know, more risk at cetera, et cetera. And now I’m in my third fund, I started a third fund this month.”

MAGGIE LAKE

So you’re telling me you’re so aware that this is your worst trade and you’ve been pulled in, in a way. And you keep starting funds?

JAY JANER

Yeah, well the third fund is a directional font, and it’s a Web3 fund. Right? So it’s like, “Oh, there are these new things happening. These new tokens going on. And by the way, the market has dropped a lot. So maybe you can get them the cheap now.” I’m like, “but I don’t know how to pick those, so…” And then I meet a cousin that I had never met in Brazil. And he’s like, “Well, I’ve been following these protocols for quite a while Jay,” I’m like, “I can’t believe it. You’re gonna do it, you’re gonna pick the coins, and I’ll manage the risk.” And I get all excited. And then like, go through all the legal stuff. And anyway, finally, we started this fund this month, so a lot of work. But it’s fun. But you know, I haven’t had time to paint and to do a lot of other stuff.

MAGGIE LAKE

It does kind of consume your life, doesn’t it? Especially, it seems in the crypto side of things.

JAY JANER

Yeah. Crypto is such a mystery. And it will continue to be a mystery to even crypto people. It’s just a total, who knows what Web3 is going to be like, and what people are going to invent and crashes. nd crashes are like, Oh my God! You know, we just went down 70%. It’s like “Why?” “Well, because NASDAQ went down.” So what’s that got to do with NASDAQ? Crypto’s supposed to be separate or something? And is it? don’t know. It’s very high volatility. So you got to be cautious and you’ve got to have not too much money in it. I mean, if it’s your own money, be careful. If you want to put some money in crypto, you know, put a little bit. It’s play money. Of course, they say that the future of the world is going to be blockchain and crypto and tokens and all that. Yes, maybe. I don’t even know enough to be honest to know if that’s the case. The thing is, I don’t do that kind of investment. Well, the new fund maybe a little more. But I don’t do that. I’m not gonna buy Bitcoin and sit on it for the next five years. That’s not my style. Therefore, I’m subject to short term stuff.

MAGGIE LAKE

You know, it strikes me sort of listening to people, that they don’t talk about it in the same way that they talk about other assets. They’re so passionate about it. They feel like they’re part of a community, that there’s all of this other stuff that’s involved in it. Does that seem dangerous to you? Does that make it hard? Because you’re sort of talking about it in this really sort of slightly detached way.

JAY JANER

Yeah, I’m more detached than that. I’m older and I’ve seen lots of crashes. I’ve seen lots of strange things, you know – long term capital, Lehman Brothers, I worked at Lehman. I mean, I’ve seen a lot people claim that these are the greats, you know, we can’t go wrong with this trade and that trade, or this asset and that asset, I’ve seen that a lot. But I’m not saying that crypto is going to collapse and disappear. I don’t think so. But I’m not going to be around 30 years from now to see what crypto is going to become. All I need to do is make sure that the short-term risk that I’m taking is properly hedged, etc. and I have good formulas and that the market doesn’t become terrible, and then we can’t make any money. Which is what this year is turning out to be. But I don’t want to lose any. I don’t want to lose money for my investors, my friends, mostly. I really don’t want to lose money for them or myself. But what can you do? I mean, if the market is very, very choppy, it’s very hard to make money.

MAGGIE LAKE

Do you find this – it’s very frontier. But you have some experience with that emerging markets. Do you find all of this volatility and uncertainty, do you find it exciting? Or is it stressful? Like as you get older do you feel like that sort of wisdom and experience you have makes it interesting and exciting? Or do you feel like, “God, I just, I don’t have the stomach for this.”

JAY JANER

I’ll be honest with you. It’s exciting if you’re making money. It’s as simple as that. If you’re up one month, you’re like, “Oh, my God, I’m a genius. I’m not an imposter.” And then you’re losing the next month, and you’re like, “Oh, my God, it could be choppy like that for the next six months.” And then what? I’ll be down 30% “This is terrible. What do I say to my friends?” If you do it for your own money. You know, maybe I should have stopped doing it just for my own money. I mean, I get worried when I’m managing other people’s money.

MAGGIE LAKE

Yeah, there’s a responsibility that comes with that. It’s really heavy. It’s funny, you just mentioned imposter before. that was such a funny story to start the podcast off with. Is that a question that for you has come up through your career? I mean, did that stay with you when that fella said, that and pop up from time to time? Cause you laughed when he said that. Some people would have been really insulted because he was young and it’s quite something to say that.

JAY JANER

Yeah, he was young and he had the guts to confront me. He had a two-week job for Pete’s sake, and he confronted me. And he had to blurt it out – you could tell that he had something, – he looked at me very intensely. And he says, “I have to say…” He was very nervous. “I have to say something to you, Jay.” Like “Oh my God, what have you done?” And he had the guts to say that to me alone. To my face.

MAGGIE LAKE

How did you laugh and not get angry?

JAY JANER

First of all, I respect him. I think we all have to look at ourselves in the mirror and understand that we are basically, we’re kind of ignorant people. We are extremely ignorant. I mean, if there’s one thing that I’ve learned in everything that I’ve done, really is that I don’t know anything about just about anything. I mean, math, yeah, actually I got an honours degree at Cornell in math. So what? Did I know anything about maths? No. Not when I talked to my Nobel Prize professors in physics. And then in business school, was I the best in business? Did I understand how I was going to make a billion dollars after leaving business school after five years, like a couple of my friends did, by the way. No, I had no idea. Actually, I’m not particularly brilliant. Or even particularly informed, in a sense. All I can be is agile. Agile and honest with myself. One of the best things you can be honest with yourself. It’s good that once in a while you look at yourself in the mirror and go, “maybe you are a bit of an imposter. So now adjust your formulas. Maybe the market is different, Jay. Maybe those formulas don’t work anymore. Maybe you should look at other types of arbitrage, etc.” You have to be really flexible.

MAGGIE LAKE

That is not an easy lesson to learn, especially for people who are doing well, making money. The idea that you constantly have to sort of test yourself or be open to the idea that you don’t know everything, that’s not an easy lesson.

JAY JANER

Yeah, I mean, “you’re only as good as your last trade,” for example, to the degree that you have to keep in mind that there are moments where the markets are really favorable to you, etcetera, etcetera. But that doesn’t make you a genius. It just makes you lucky to be there in the right time with the right capital and that position, for example. But that goes for just about anything in life. I mean, if you chose to live in a nice place, in a nice area and a house with a garden or something, you’re lucky and all that. That’s wonderful. You should be lucky. Preserve that and learn that not everyone has that luck. And not everyone is in that place in the right time. And you’re not a genius for doing that. Yes, you planned it to a degree, right? You planned it, you were there, et cetera. But, hey, you’re lucky that you have your health, you’re lucky that you’re that your brain didn’t. So in the end, you have to understand that there are some people that are incredibly brilliant and have amazing lives, and actually people that contribute to this world. They are wonderful, of course. But for us mere traders and mortals, no?

MAGGIE LAKE

So your fourth trade is outside the world of crypto, but it’s also one of your worst. And this is holding on to Evergrande bonds for too long in 2021.

JAY JANER

Terrible. Yeah. I mean, I just bought these bonds. You know, here I am in a junk bond emerging market, junk bond. Evergrande, by far the biggest issuer of real estate bonds in the world, actually, and certainly China – how could they fail? “I mean, if they fail, the whole real estate market in China is going to fail. So how’s that gonna happen?” Well, guess what? It happened. And the whole real estate market in China has gone. I mean, basically. Who would have thought that China would even let that happen? That the Chinese government will let that happen? But guess what, it happens. I just couldn’t believe it. The bond kept going down and down and down, and there I made a mistake. I didn’t get out fast. My stop loss was way too comfortable. And I kept saying, you know, “it’s like a rubber band. It’s coming down, it’s just going to bounce back, it’s going to happen, it’s going to happen.” I got married to that trade. That’s the last thing you should ever do. Get married to trade? Don’t ever think that a big assumption that you may have is right. Don’t ever marry yourself to a huge assumption. You should always say, “Is that assumption, correct? Maybe not. What the hell, I’m out.” And that’s it. And then lick your wounds.

MAGGIE LAKE

Could the impossible be possible? It’s such a small percentage But is there any way I could be wrong about that? Because you’re right, it’s notoriously difficult to get information about what’s going on inside of China. But there wasn’t a high probability on that happening.

JAY JANER

Yeah, I mean, 30% of the economy is real estate driven. And most of the companies in that market right now are bust. And yet, everyone’s still working. China’s not in a recession yet. Maybe they will.

MAGGIE LAKE

Or they are and we don’t know it.

JAY JANER

Yeah, exactly. So it’s like, “my God, they would allow that to happen?”

MAGGIE LAKE

I feel like you said that during Lehman too, right? Like, who would have thought, and they did.

JAY JANER

But this is bigger. This is 30% of the economy. I mean, Evergrande is just one. Then there’s a whole bunch of them, they all went. And they’re all technically bankrupt. It’s just a different mentality, because they just hush it all up, and they just let the bank sort it out. And the banks are all going to be semi-bankrupt. But guess what we’ll, we’ll just muddle through, as long as we keep giving the houses to the people. We need to finish the construction, give them the houses. That we need to do. But apart from that, the rest is just financial mumbo jumbo. And somehow it’ll get resolved over time. I think that’s the way they’re handling it. I’m not too sure. It’s obvious that I knew nothing about China.

MAGGIE LAKE

It’s so funny. It’s so funny the way you just say that, because very few people would admit that. Like very few people would say, “obviously I was in way over my skis.”

JAY JANER

It’s obvious. I mean, now, of course, I read back and I go, “Well, there’s some people that were warning against this, you know, Jay, I’m not too sure you read the right people.” I’m like, “yeah, obviously not.”

MAGGIE LAKE

So what is your takeaway from this trade? What is the lesson you learned here?

JAY JANER

Do your homework. Don’t get involved, for example, with countries that you had no idea about. That’s a simple lesson. Another lesson is, you know, for example, in the United States, there are lots of junk bonds in the United States. And guess what, some of them really are junk – the word junk is correct. So it’s like, “wow, I’m just gonna buy a 10% yield bond.” Well, probably, there’s something wrong with that company. I mean, in the United States, the price, you know, it’s all priced much better. So, do your homework. You’ve got to be very, very, very comfortable with that company that’s paying you 10. And same thing with anything. Even if you’re gonna invest in a fund or you. Or even if you’re gonna invest in crypto, in Bitcoin tomorrow. Why? Why would you do such a thing? Actually, that’s a really, really hard question to answer. Why would I invest in Bitcoin? Some people are, like fanatical about it. And they think that Bitcoin is going to be worth a million bucks. Like, I have no idea. I don’t think so. Why? Why would you? I mean, I’ve heard all kinds of arguments, of course. I think for your own money, you have to be more like Warren Buffett, in a sense. Really do your homework on individual investments, and it’s hard to do that with tech related stuff, I agree. I mean, but that’s it in essence.

MAGGIE LAKE

What advice would you give some of the folks who are trading in the crypto space and might be newer to this whole concept – brought into it through the technology or through some or through NFTS or through some of the things they are interested in. What would be your advice to them?

JAY JANER

Don’t get hooked on trading as a game. Like, you’re just on the app, “Oh my god, it’s going up.” Because that tends to be self defeating, and it’s sort of like a drug. It’s adrenaline. Of course, it depends on the kind of money you’re talking about. If you’re doing that for a few $100, okay, who cares? That’s like playing a game, right? That’s alright, that’s not so bad. But careful when you take it seriously and you think you’re gonna make a living out of it, you’re gonna make a fortune out of it. Well you’ve got to be really sure of the direction of that trade. For example, “oh, it’s definitely a bull market, everyone’s in it.” Okay, fine. Do it for a small amount of money. It’s very, very risky stuff. And then have stop losses, profit goals and everything you do. Have a clear goal of how much is good? How much is enough? Or at least slide your stop up so that if you start making a lot of money well, if it reverts, well get out. Have risk control because in this world, people that don’t have risk control that don’t know how to trade, essentially, they leave the money on the table for who? For the ones that do know how to do that. So we’re just sucking – I mean, supposedly, – the professionals are sucking the money out of the people that don’t know how to risk control. That’s in essence what the game is all about. So, be careful. I had a boss once that told me, “You know what the hardest thing to get a person to do, a trader to do? And I go “No, what? Risk Control? Or stop losses? “No, no, no, no, no, no, no, no, none of that. Sit on his hands.” Because, that time Wall Street you had to press a button to trade, right. “The hardest thing you get the guy to do is to sit on his hands not to trade. That’s the hardest thing.” Only trade when you’re sure what you’re doing, when you’re very convinced of that move, then you trade.