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The Rankings


Trader: Seeks to exploit short-term volatility in the price of a security. The trader need not have an opinion on the merits of a company whose stock he trades, or the appropriateness of a particular exchange rate—just an opinion on the short-term direction of the securities.

Stock Picker: Differs from the trader in that stock pickers tend to analyze a company’s (or an industry’s or a country’s) fundamental business and make informed bets on their future direction. Tends to hold positions longer than a trader. Activist stock pickers try to personally intervene in company affairs. CEOs hate them.

Distressed Investor: Buys and sells the securities of companies in trouble, where there tends to be larger-than-usual differences of opinion over the relative merits of a stock or bond. Can also become an activist and attempt to take control of a company by buying a majority of its equity or, in bankruptcy, its debt.

Quantitative Investor: Generally relies on software-driven models that analyze historical trading patterns to inform current investment decisions, seek out price inefficiencies, or crunch financial-statement data in order to determine a theoretical price. It’s all numbers, no guts.

Hedge-fun-size estimates courtesy of Absolute Return magazine. Income estimates from Trader Monthly.


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