The 'Lazy Guy' Strategy That Made This Hedge Fund Founder Rich | WSJ The Money Interview

TL;DR

Bill Perkins built his fortune by maximizing leverage in commodities trading, framing it as a 'lazy guy' strategy of minimum effort for maximum financial return.

Key Points

• 1.Perkins built his career by chasing leverage, not salary. Starting as a sub-clerk on the New York Mercantile Exchange, he pursued commodities because 10-to-1 or 20-to-1 leverage meant a 10% asset move could double his money, something impossible on an hourly wage.
• 2.He hit his first million before age 30 while also driving a limo at night. Perkins drove his boss's limo for extra cash but valued the trading job for where it could lead, eventually getting recruited by El Paso Energy as a head options trader after being observed without knowing it.
• 3.Perkins made $1.1 billion for John Arnold's fund after being fired and rehired. His first-year returns were 100–200%, which Arnold called too volatile; after rehiring him, Perkins became the second most profitable trader, and Arnold seeded his own eventual hedge fund.
• 4.His fund nearly went to zero in its second and third years, but he refused to quit. Down over 50%, he passed the hat among friends to meet margin calls while his CFO urged him to shut down; his rule was 'stay in the game and the returns will come,' validated by a massive 2022 winning year.
• 5.He spent his 2022 windfall on Ernie Barnes' 'The Sugar Shack' painting, winning it at $13 million. The painting, famous from the TV show Good Times, sparked a frenzied auction where Perkins told his wife to keep bidding even if he fainted, and told his final rival 'I'm going to make you pay.'