Kovner described himself as a “writer” when he got married, at 28 in 1973, to an artist, Sarah Peter, in a Jewish ceremony in Connecticut. They moved to 57th between Eighth and Ninth, and he found a writer’s job: He drove a cab. “He told me that his wife was not exactly thrilled by that turn of events,” says Kovner’s friend Lionel Tiger, the anthropologist and author. This is the one point to which Sarah Peter responded, in a postcard she sent to me declining to be interviewed: “For the record . . . it’s incorrect that I was annoyed with him driving a cab.”
Intellect, not money, is the gold thread in the Kovner story. A Harvard-grad-school dropout, he redeployed his knowledge of government to make billions in commodities, and now spends it freely to influence Washington.
Her husband was suffering “vocational adolescence,” he would confess to his Harvard class. “I wondered if I was going to fulfill every Jewish mother’s fear that her son will turn into nothing but a bum,” he wrote (a curious turn of phrase, for the report was in 1991, 26 years after his mother’s suicide). By then, he had struck on a new course. “Somebody,” he would say, had introduced him to the commodities markets, and with the same thoroughness that he had studied government texts, he was staying up nights studying commodities—“devising paradigms and models, simulations, and scenarios.” He borrowed $3,000 against a MasterCard, and tried out his ideas in copper and interest-rate futures.
In the mid-sixties, an MIT Ph.D. named Helmut Weymar, who had written his dissertation on the cocoa market and was working as a cocoa-products buyer for candy companies, came to understand that he would be better off if he traded the commodity himself and so set about to gather colleagues to study commodities, a commodity to a man, in a stone farmhouse in Princeton. After a bloodcurdling start in which he and his brainy samurai lost nearly half their capital in one six-week spiral, they absorbed the hardest lesson about markets—discipline—and over the next eight years averaged an 85 percent return per annum—the Ur–hedge fund. The methods they pioneered, including computerized trading and a satellite dish in the countryside, have become mainstream: Commodities Corp., the company they founded, is now part of Goldman Sachs.
One of Weymar’s best hires was a former psychology grad student at Clark University named Michael Marcus, an overflowing character with a highly attuned sense of irony who performed so well that by late 1976, he was told he could hire an assistant. Marcus put an ad in the financial press, and then he called his boss on the phone: “Helmut, I have in my office the next president of Commodities Corp.”
“He brings Bruce in, and as far as I was concerned, it was love at first sight,” Weymar recalls. “He was just a very impressive person. He has a natural, wonderful way about him. As much as anything, it’s his sense of humor. The eye-opener was when he said he was part-time music critic for Commentary magazine. I really value richness in intellect, and Bruce was rich up the kazoo. We had to hire the guy on the spot.”
They hired him not as an assistant but as a trader, and in time, Marcus blew fairy dust on Kovner’s large head, telling him that he could make a million dollars. Kovner came to believe him, and it was not long before he was making much more than that for Commodities Corp.’s investors.
In 1991, Kovner described these developments to his Harvard classmates in an understated manner that seems to reveal his inner sense of grandeur by mocking it. “Then I did find something. I found out that I understood financial markets . . . True, I was still broke, but something seemed to be coming together . . . What happened after that was, well, improbable. I started making money, and quickly . . . ”
Marcus would tell another Commodities Corp. alumnus, Jack Schwager, author of Market Wizards, Interviews With Top Traders, that Kovner’s objectivity made him great. “If you can find somebody who is really open to seeing anything, then you have found the raw ingredient of a good trader—and I saw that in Bruce right away.” Weymar told me that one of the most important qualities of a trader is ego strength, the self-confidence that allows a person to acknowledge his mistakes and not fall in love with his ideas. “The biggest risk in trading is hubris.” This is because being wrong is actually an integral part of success. A successful futures trader makes many more losing trades than winning ones. The key is to recognize and concede the mistakes and cut losses. And ride the winners.
In 1983, Kovner went solo, and before long, his hedge fund’s winnings became legend on the Street. Partly to dispel the talk, Kovner gave the most expansive interview he has given, in 1989, to Schwager for Market Wizards, and explained that his gifts were vision and discipline. “I have the ability to imagine configurations of the world different from today and really believe it can happen. I can imagine that soybean prices can double or that the dollar can fall to 100 yen. Second, I stay rational and disciplined under pressure. . . . When something happens to disturb my emotional equilibrium and my sense of what the world is like, I close out all positions related to that event.” Kovner said he had seen other traders come up with better ideas, but they put too much money on them.
His style of trading is described as global or macro. His game board is the world, and he draws on his political understanding, a sense of what the Finance minister of New Zealand or Britain will do or not do to protect his currency. (Of course, he sometimes knows these ministers; he hangs out with them at the Bilderberg conference.) Another time he and an associate cornered the market on two-year Treasury bonds (resulting in an SEC investigation). He bought oil tankers so that he could get a better idea of the flows of oil and kept a photo of one of them on his wall. “Lee Raymond [chairman and CEO of Exxon Mobil] has a lot more information about oil at Exxon than Bruce does. But I don’t think he has done better than Bruce,” says the trader Michael Holland. (By the way, Raymond is vice-chairman of the American Enterprise Institute.)