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Michael Novogratz

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2019-08-12
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2019-08-12
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  1. “Macro traders, and I've tried quant businesses over and over have really ever been successful at programming themselves. Listen, you look at what Jim Simons has done. He is the Buddha. Like I said, there's many past the Buddha. He's the one. He is the single greatest track record of the history of this sport of investing. There's not a close second. And so it's just is impossible. I haven't been able to do it myself. I wish I did. I mean, listen, even just recently, I went on to Fast Money or one of those shows and I was talking about the crypto rally and I said, well, looks like we put a tradable top. I sold some. I wish I sold more. We're going to be in a 10,000, 14,000, 9,000, 14,000 range. And now I'm waking up this morning. I was like, I said it on TV. I only sold X percent of my portfolio. I thought the market was most likely going down. I should have sold. Like, what the age was I doing? How did I, after 30 years?”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “So, one of my dear friends and mentors and a far more successful speculator than me, a guy named Paul Jones, he was obsessed with this because he was like, listen, all macro traders try. There's an algorithm in my head that I don't completely understand, but let me see if I can write it down and codify it. And so the machine can do it so then I don't have all the damn stress of feeling stupid or feeling, you know, I should have. Or once you have this intuition to say, I think the market's going up, then you've got to act on it. And so what stops you is anxiety. It's fear management. It's risk management. It's anxiety management. And so if I can have a set of rules that's programmed into a computer, oh my God, that's like the holy grail. And so Paula tried, he hired the best guys in chess to do it, right? The guy that programmed Big Blue and IBM way back. And he had people follow him around and look at every last thing he did. And none of us.”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “It's not a conscious pattern recognition. Great macro traders, I always say, can figure out how many jelly beans are in a jar better than the next guy. It's just kind of this gut calculation that goes on.”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “And I looked at him with a little grin, and then he said something in French. And he's like, oh, I forgot you're not so smart. You don't speak French. And he translated. And it was a quote from Napoleon which says, I don't know how you're smart generals. I hire lucky generals. And it was that the best generals have an intuition to see the battlefield. They've got battlefield vision. They know one to attack and not attack. And there's not a word for. So they call it luck, but it's a different type of intelligence. And the moment he said that, It just clicked it liberated me. I was like, well, that's why I make money. And then I look back and I was like, I was Goldman's top sales guy for two years. And I thought I was a sales guy because all the guys liked me. And I was like, no, I was a good sales guy because I was right on the market all the time. And they wanted to talk to me, not because, you know, I was charming, because I was right. Lucky enough that my brain seized the future better than norm. And a lot of it's just pattern recognition.”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Goldman Sachs, I'd started this hedge fund. I was 18 months into it, and I was kind of miserable. I was just so much stress that I was going to shut it down even. My mice said, dude, you just hired your best friend. You can't shut the thing down. I was like, I don't want to come home miserable every day. And I'm having lunch with the prime minister of Israel, the ex-prime minister, Hud Barak, who was one of the smartest guys and most charming guys I've ever met.”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “The volume numbers of exchanges, and we had comments from some of the big prognosticators. We still might make very different decisions on what to do with Bitcoin. And so as you move away from really commercial things to really intuitive or speculative things, it takes a different skill set. And so that was my first big lesson. It was like Pete Brigger, my partner at Fortress, he could never do my job and I could never do his. And yet we're both investors. He could have done mine because he couldn't live with the risk and I couldn't do his because I have none of the toughness and diligence to cross-T's and dot I's and that a distressed debt investor needs. And so that was it. It's like find your lane and be comfortable in your lane is the biggest lesson I learned. And my lane is speculating. It's very intuitive. And so what's hard about that is you're not exactly sure why you're good. You're like, I had this amazing breakthrough moment. You know, I'd left.”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “First of all, that there are a thousand paths to Buddhahood, and there are lots of lanes in trading, and your personality and your skill set has to match the lane you're in. And so if you're an arbitrageur, it's a very different skill set than if you're a macro trader, a pure speculator. And as you move from what I'll call complete commercial or mercantile things like arbitrage, if I told you we could buy this soda here for 50 cents and drive it 30 blocks north to the upper east side and sell it for $2, we both say, let's do that as many times as we can. Commercial guys make the same decision. If we had all the information about... Regulation coming in Bitcoin. If we had the newspapers from next December and we had”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Goldman Sachs, Asia's blowing up, and we predicted it had the foresight and had some spectacularly highly leveraged bets that Asia would blow up that we were smart enough to figure out. It wasn't, I had so much courage that I took all this risk to make a fortune. I found a way with limited risk to make a fortune. And boom, once it blew up and we made a couple hundred million dollars, you go from being a $10 trader to a $50 trader to a hundred dollar trader. And now you're a big guy. And that confidence jump happened all at once. 1997 in Asia were like dog years. I mean, it was literally seven years in one. We worked our tails off, had an amazingly profitable and exciting time. And that kind of was my first big jump.”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “To starting, yes, to running the trading business. And he gave me a year. It was a brilliant year. It was like I had a 007 license and a bulletproof jack. I flew around to the different offices and I sat with all the best traders of Goldman Sachs and interviewed him and tried to figure out who did what and who was good and did my own education of both reading and just meeting people. And I spent my first two years successful but not really confident to put risk on enough to make a whole lot of money. I was being too prudent. I had a great batting average. And I almost quit because you just didn't make enough money to be as relevant. And then the Asian crises happened in 97. And a lot of people in this business get their jump of confidence in nonlinear moves. So all of a sudden.”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “I know I can outsell him. I'm not sure I can outrate him. What edge do I have versus him? I didn't think I'd be worse than him, but I didn't think I had an edge and I knew I had an edge selling. So that was my logic. And my fourth year at the firm, I had a monster year selling and made a fortune for the firm. And I got paid fine. Well, there was a colleague of mine in London who had made a fortune as a trader, and he got paid six times what I got paid. And I went haywire. I was like, this makes absolutely no sense. I was making risk adjusted, better money than he was. And I yelled at John Quorzine, who was my mentor and friend. And he was like, listen, kid, there are a lot of guys that can sell. There are very few guys that can hit a 100 mile fastball, 300 feet through the air. And I was like, well, I'll try. And so he switched me to trading.”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “I started at Wall Street as a salesman and I was kind of a natural born sales guy. My mother couldn't sell anything. We're a family of storytellers. I always thought I could taught my way into anything. And so I was having a really successful career as a salesman. And I thought my college roommate was a very successful trader. And I thought,”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “When you're young, I remember when Tianaman's square happened and that young guy in front of the tank and you felt like, God, those guys have their moment and we're sitting over here. We got nothing to do. And that even when Saddam invaded Kuwait in Desert Storm 1, all my buddies from flight school were over there and I literally felt like a punk. I'm like, I'm missing my chance. Look at it now like what an idiot you were like, none of my friends who went to war really liked it. You know, it's a horrible, horrible experience lowing people up. And so probably by the grace of God, I missed it all. But at that moment, I felt like I was being gipped. I was like, here I'm freaking sitting behind a Wall Street desk and I could be over there fighting.”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Switched over to the Jersey National Guard and got to defend the great state of New Jersey. From what I'm not sure. It's funny, when I was in the guard, it was kind of a flying club. And if you had told me they would use the guard in battle, I would have thought you literally had been smoking the funny stuff. We had great pilots in our unit. They were all ex-Vietnam vets. They had flown Air America, the covert war in Cambodia. They had really some of the best pilots, and they had demoted themselves to warrant officer, which is just pilot. And so I'd go up there as troops and they'd be like, listen, Lieutenant, this is how it's done. We're going here. We're going here. You go wherever you want. And so I literally thought no chance. And Goldman Sachs asked me to go to Tokyo. So I went on to the inactive guard six months after I'm in Tokyo. They sent my unit to Bosnia. And so I raised my right hand and swore to defend the constitution. I spent a lot of time in and around the military, though I never really served actively in any kind of combat zone. But my freaking unit went to Bosnia.”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “You know, I was ROTC, you know, back in 1983 when I graduated from high school, even the Ivy League, even while they gave financial aid, they didn't give great financial aid. Being one of seven and parents that were not grade savers, he could have either gone to a state school, EVA, and I would have maybe got a half-wrestling scholarship there or finance my college somehow. And ROTC was, it was kind of a financing option. We didn't really think we were joining the army. Like our whole neighborhood applied for ROTC scholarships because that's what she did. And so I got to Princeton. The government paid for all but my room and board, which of course was still a lot of money, which I couldn't afford. And so I took student loans there and had a Razzi scholarship. And so when I graduated, it was supposed to be four years in the Army. Reagan had built up the Army so much in the 80s that they realized they had too many young officers. And so they asked for volunteers to join the National Guard. And by the time the sentence was half done, my ham was up. I was lucky enough to get flight school. And so I spent 18 months in officer school and then learned how to fly helicopters. And then I...”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “My dad put me into wrestling when I was like third grade. And I was pretty good at it. And what I realized is you stick with things you're good at because this feels better. Wrestling's not a fun sport by any stretch, but it's a tough sport and I was a skinny, scrawny little guy. And so learning to be tough and getting tough, I think was the biggest thing. You learn not to be scared. You learn to walk off your front foot. The other thing in wrestling is you don't win all the time. You actually get the crappy daddy a lot. And so learning how to like get the crappy daddy and get back up and go back at it. Almost nobody has never lost, right? Kale Sanderson had that one great run, but then he even lost. And so I think the resilience is probably the biggest lessons.”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “I was the third of seven kids, big Catholic family. We grew up kind of in a John Yews movie in that. It was like suburbia USA. There were cheerleaders and jocks and freaks and just a classic middle class upbringing. Great public high school. My dad was an Army officer. We moved around a decent bit when I was young, young, but K to 12, we lived in the D.C. area. And so I had a pretty stable friend group and experience not the classic Army Brad experience in a pretty lovely youth. I used to say I grew up in a snow globe because we kind of thought the whole world was like our world. You know, you didn't have the internet back then. You didn't have Facebook. And so your little universe was a big universe. Kind of cool.”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “My guest on today's first meeting is Mike Novogratz, the CEO of Galaxy Digital, a merchant bank with a balance sheet to invest that seeks to serve as the bridge between the crypto and institutional investment worlds. Mike is a well-known speculator who started his career at Goldman Sachs and later managed Fortress's multi-billion dollar global macro fund. He's notably made and lost a few fortunes in his career, most recently riding Bitcoin up starting in 2013, almost all the way down and back up again earlier this year. Our conversation covers Mike's background as a wrestler and helicopter pilot, his development from salesman to trader, the art of speculation, his initial interest in Bitcoin, the business of Galaxy Digital, the development of the crypto ecosystem use cases in privacy, payments, and”

    2019-08-12 · Capital Allocators · Michael Novogratz – Galaxy Digital (First Meeting, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source