Paul Tudor Jones on Long-Term Trends, Buffett, and AI Risks

Article by: Long Yue

Source: Wall Street Journal

Recently, in an in-depth interview, legendary investor and founder of Tudor Investment Corporation, Paul Tudor Jones, reflected on his 50-year trading career and shared sharp insights on key topics including AI risks, the U.S. stock market valuation bubble, the gold market, and Warren Buffett’s investment philosophy.

He uses his 50-year trading career to tell you: compounding is the most underestimated force, Warren Buffett is the most underestimated genius, and AI is the most underestimated threat. Excerpts from the interview:

• Buying the S&P 500 at current valuations, historical data shows a negative return over 10 years.
• We are currently in a sovereign debt bubble. The stock market capitalization-to-GDP ratio stands at 252%—compared to 65% in 1929 and 170% in 2000.
• Gold has an annual new supply of about 2%, while Bitcoin has a limited, decentralized maximum supply.
• On the day of gold's largest single-day drop in history, silver plunged 33% in a single day. On days like that, you must focus entirely on every minute of price movement.
• The consensus answer to AI safety concerns is that we won’t truly take action until 50 million or even 100 million people die in an accident. That’s insane.
• I entered this field because I want to make a lot of money and then donate it. I feel this is pursuing a noble cause.
• Anyone who truly succeeds in investing or trading must first be a great risk manager.
• The most important rule is: you make money by staying with the trend over the long term. All great wealth is built by holding onto a trend for an extended period.
• Warren Buffett is the OG of compound interest. He understood the power of compound interest at age nine, while I brilliantly avoided it throughout my entire career. I deeply apologize to him.

At the start of the interview, Jones immediately addressed the fundamental difference between investors and traders, offering a humorous "confession."

"I used to sit there, year after year, criticizing Warren Buffett," he said. "My thinking was: he was just in the right place at the right time, catching this bull market. If he had been in Japan, starting from the Nikkei index in 1989, it would have been an entirely different story."

However, after listening to a podcast about Berkshire Hathaway, his understanding was completely overturned.

I immediately thought: Wow, this guy is a genius, and I’ve been the biggest fool all along. He understood the power of compound interest at age nine, while I skillfully avoided it throughout my entire career.

He specifically mentioned the partnership between Buffett and Charlie Munger: "Buffett would go out to buy something worth 50 cents, while Munger understands the power of compounding in companies with sustained growth. Together, these two are incredibly powerful."

Finally, he said: "Warren, if you happen to hear this episode, I’m truly sorry. You are the father of compound interest, and I wish I had even a tenth of your wisdom."

Jones compares his trading approach to a right tackle on a football field: “I’m like a right tackle who’s played in the NFL for 50 years, fighting in the trenches every day. Whenever someone says they want to get into trading, I tell them: go long and short stocks, and practice value investing.”

When asked about his daily routine, Jones provided an impressive schedule—he has been following it for over 40 years:

• Wake up at 6:15, work until 7:00
• 7:00–7:45 Workout, 45 minutes of high-intensity cardio
• Monitor the market from before open until 10:00
• 10:00–12:00 Meeting
• Afternoon: Lunch and meetings, with one hour each before and after market close for review and planning tomorrow’s strategy.
• 17:00 Go home and take a one-hour walk with my wife.
• 19:00 – Work for one hour in the evening, catch up on news, watch Netflix
• 21:30–22:15 Work again
• Wake up at 2:30 or 3:00 AM, work for half an hour, and watch the London open for about 45 minutes.

“I’ve probably been like this since the 80s,” he said. “I feel like I’m working harder than I did 40 or 30 years ago because there’s so much more information now. I can receive up to 800,000 emails in a single day.”

He admitted that information overload is eroding his ability to execute with precision: “What does execution with precision mean? It means buying when the market is bleeding and selling when the market is euphoric. When you’re trading 25 assets at once, and 48 emails are coming in—all potentially actionable information—information overload distracts me and prevents me from executing with precision.”

In terms of market outlook, Jones has issued a clear warning signal.

When you buy the S&P 500 at its current price-to-earnings ratio, historical data shows that the 10-year return is negative.

He said, "The S&P 500 is an excellent investment tool over a century-long horizon, but that’s an average over 100 years, including eras when price-to-earnings ratios were only six, seven, or eight—about one-third of today’s levels. Valuation matters greatly; the stock market is really expensive right now."

What concerned him even more was the overall leverage level.

“In our country, equity ownership is overly concentrated,” he said. “The ratio of stock market capitalization to GDP is now 252%. At the peak in 1929, it was 65%; in 1987, it was 85% to 90%; in 2000, it was 170%; and now it’s 252%.”

He further extrapolated an extreme scenario: “If our valuations revert to the price-to-earnings ratios of the past 25 to 30 years, that would imply a decline of approximately 35%. Thirty-five percent multiplied by 250% of GDP equals 80% to 90% of GDP disappearing. The wealth effect reverses, capital gains tax revenue drops to zero, budget deficits explode, bond markets collapse, and negative self-reinforcing effects snowball—this is deeply concerning.”

He explicitly stated: "We are in the midst of a sovereign debt bubble. In the stock market, individual equity holdings in this country are at the highest levels in history."

He also highlighted the liquidity risk of private equity: “In 2007 to 2008, private equity accounted for about 7% of institutional portfolios. Now it’s 16%. Liquidity is much worse than in 2008. You must be aware of this when allocating assets.”

On the topic of artificial intelligence, Jones demonstrates a systematic concern that goes beyond that of an ordinary investor.

He described a small, closed-door meeting about 18 months ago with around 35 to 40 attendees, including one modeling expert from each of the four major AI model companies.

“When I directly asked them, ‘How do you think AI safety issues should be addressed?’ the nearly universal response was: ‘We won’t truly take action until 50 million or even 100 million people die in an accident.’” He said, “That’s insane.”

He defines the core issue of AI development as the danger of the "build-break-iterate" model in this field: "This has been humanity's invention pattern since the dawn of civilization—build, break, iterate. But we have never been in a situation where the 'break' tail event could result in the deaths of hundreds of millions or even billions of people."

Jones emphasized that AI regulation is the most urgent test of leadership today: "If this were an issue at one of my companies, it would have been contained long ago. That’s what a good risk manager does. Yet right now, there is absolutely no risk management here."

He proposed a specific policy initiative: “I believe the most important and direct thing we can do is require all AI-generated content to be watermarked. Make it a federal felony—imprison anyone who intentionally violates this rule three times. I want to know what is genuinely human-created and what isn’t.”

He also mentioned that shortly before the interview, he had received two serious phone calls from individuals inquiring about a particular video or statement—both of which turned out to be deepfakes.

“If we can return to some genuine, honest, and normal ways of speaking, I believe we must do so,” he said.

When discussing specific trading opportunities, Jones highlighted the USD/JPY as a significant opportunity currently developing.

“The yen has been severely undervalued for a very long time,” he said. “Japan holds approximately $4.5 trillion in net international investment position, about 60% of which is in the U.S. and mostly unhedged. This represents a massive dollar exposure. Now, Japan has its most dynamic leader in half a century, who champions ‘Japan first’ and will reshape the economy in a highly entrepreneurial manner.”

He compares trading to boxing: “You and your opponent—the market—step into the ring. You feint, test, sense your opponent, and look for an opening. Occasionally, you’ll find a perfect opportunity and land a powerful punch.”

For extreme market moments, he described the conditions on the day of gold and silver’s “largest single-day decline in history”: “Silver surged 33% in a single day (including volatility). You had to be fully focused on every minute of that day—what you did at open, how you reacted when price broke levels you hadn’t anticipated. You needed a plan in advance, and that plan had to be automated and thoroughly thought out ahead of time.”

Legendary investor Paul Tudor Jones engages in an in-depth conversation with Patrick, reflecting on his 50-year career in markets and his life philosophy. Paul contrasts the vastly different life states of traders versus long-term investors, shares firsthand insights from the 1987 stock market crash and the 1980 silver crash, and details his evolving understanding of Warren Buffett. He outlines his disciplined daily routine, his macroeconomic assessment of today’s sovereign debt bubble, and his deep concerns regarding the safety and regulation of artificial intelligence. Beyond finance, Paul recounts the founding story of the Robin Hood Foundation, the transformative power of kindness, and offers advice to the next generation: seek deeper meaning in life beyond professional achievement.

Paul: My most important insight is that the way to make big money is to stay with a trend for as long as possible—go with the flow and stay persistent. Of course, you can also choose to be a value investor like Warren Buffett, spending not a penny frivolously. For years, I criticized Buffett, thinking he had simply been in the right place at the right time, catching this bull market. I used to mutter to myself: “Goodness, if only I could be like Buffett—just believe in America, and even if my portfolio drops 50%, it doesn’t matter because America will eventually pull you out of the downturn.” Warren, if you happen to hear this, I sincerely apologize. You are unquestionably the pioneer of compound growth.

Patrick: The last time we met, we discussed something that left a strong impression on me, and I think it’s the perfect way to kick off today’s conversation—the difference between investors and traders. You mentioned then how much you wished you could be an investor, as it would make life so much easier. I’d love for you to describe the differences between these two lifestyles and what a trader’s daily routine is like.

Paul: No problem, I’ll speak. We’ll cover the market, artificial intelligence, and many other topics. But there’s one segment on your podcast that I think is the most important—if you don’t mind, I’d like to start with that question—the one you always ask guests at the end of each episode.

Patrick: No problem, I love it!

Paul: Here’s why—once, while giving a talk at what is now Rhodes College in Memphis, I suddenly had a thought while preparing my speech: Who was the commencement speaker at my own graduation? I couldn’t remember at all, and I found it funny. Nobody remembers, right? Do you remember who spoke at your graduation? You’re younger, so maybe you do.

Patrick: He was the then President of Ireland. I studied at the University of Notre Dame, and as you know, I'm Irish.

Paul: Okay. But this is interesting—no one remembers the commencement speaker at their graduation because the occasion itself is easy to tune out. I was thinking to myself: “Wow, I’m going to be on stage talking for 15 to 20 minutes, and no one will remember a single thing I say. How can I make it stand out?” In the same way, I imagine listeners of this podcast hear so many shows every day, and most of it fades away—only a few fragments stick. So if this episode leaves you with just one thing to remember, I hope it’s what I’m about to say next.

Patrick: Alright. As always, at the end of each episode, I ask the same question: What’s the kindest thing anyone has ever done for you?

Paul: That’s such a great question, because the kindest thing is also one of my earliest memories. I was about two and a half or three years old, around 1957. I was with my mom at a place called the Curb Market, and I got separated from her. Can you imagine? A two-and-a-half-year-old child losing their mother—that fear was unforgettable. I stood there crying uncontrollably, convinced my mom had abandoned me.

At that moment, an elderly Black gentleman approached and asked, “Little one, what’s wrong?” I said, “I can’t find my mom.” He replied, “Don’t worry, let’s find her together.” Then he took my hand and led me through the rows of stalls. It was an open-air produce market. Even now, I can still faintly recall the scent of fruits and vegetables there. We turned a corner and finally saw my mother.

I was overjoyed. When my mother saw me, she burst into laughter and couldn’t stop. She came over, picked me up, and tried to pull out five dollars to give to the old man—in 1957, five dollars was a significant amount of money. He waved his hand and said, “No need, ma’am. You’d do the same for my child.”

It was such a simple act of kindness, yet it left a deep impression on my heart that night. That evening, Mom joined me in our nightly bedtime prayer, reciting our fixed list of names: “God bless Mom, Dad, Peter, Paul, Alberta, Grand, Pete, Judy Lin, Sid…” I asked Mom, “What’s the old man’s name?” She replied, “I never asked.”

Since then, for exactly ten to twelve years, the old gentleman’s name remained on my prayer list as “that gentleman,” repeated roughly four to five thousand times. Every night, he was there.

Time flew by, and we arrive at 1986. I was 32 years old, living in New York, lying on the couch watching "60 Minutes." Harry Reasoner was interviewing a man named Eugene Lang. Eugene Lang was a businessman who returned to his old elementary school in Harlem to give a speech to the graduating class. Over the previous 60 years, the neighborhood surrounding the school had transformed completely—from an affluent area into a community almost entirely composed of African American and Latino residents.

Eugene asked the principal, “How many of these 12-year-olds will go on to college?” The principal replied, “Statistically, it’s probably around 8% or 9%.” Eugene was stunned—he himself had graduated from that school, gone on to college, and built a successful career. He immediately decided to promise every child present that he would cover their college tuition if they graduated from high school. This deeply moved me.

He funded that cohort of students and launched a program called "I Have a Dream." I thought to myself: I can do that too. The next day, I called him, and he said, "That's interesting—three or four other people have reached out to me too. Let's get together at my place Tuesday night." I arrived a bit late. I had assumed I'd be assigned to Harlem or Manhattan's Lower East Side, but instead, I was sent to Bed-Stuy—the neighborhood with the highest crime rate in New York at the time, even more severe than the Bronx.

And so, a journey began. I fully immersed myself, going there every Tuesday, attending the elementary school’s graduation ceremony, and like Eugene, promising the children that I would fund their college education if they graduated from high school. In that moment, everyone cheered, and the parents were overwhelmed with emotion.

This journey lasted nearly 14 years as I continuously funded new cohorts. I enthusiastically organized after-school tutoring, sports activities, and life skills training. About three years later, I noticed that the children were struggling academically after moving on to different middle schools, so I began hiring private tutors.

About four years later, we had lost a child to gang violence and several girls had become mothers during their teenage years. I realized that I was not only facing academic challenges, but also far more complex social issues than I had imagined. Along the way, I learned so much from my failures and gained a deep understanding of what it truly takes to escape poverty.

By the way, the following year, in 1987, the Robin Hood Foundation was established. This personal experience profoundly inspired me and deeply shaped the foundation’s subsequent direction. As Robin Hood grew, we introduced quantitative evaluation systems, set clear goals and standards, and ultimately, in the late 1990s, founded a charter school near Bedford-Stuyvesant—the Bedstuy Charter School of Excellence.

Originally, it was an all-boys school. We named it "Excellence" to let these boys know that we expected excellence from them. We assembled a dream team of educators, and within about four to five years, the school ranked first among 543 elementary schools in New York City.

The lesson here is that while passion is important, you must have a well-defined methodology. In education, methodology is crucial.

Why is all of this connected to that question? Think about it—a simple act of kindness, an elderly man helping a lost child, an African American gentleman helping a lost white boy. When I saw that story on TV, it felt like a reflection of my own childhood experiences, resonating with me instinctively. This is the power of kindness—a single act of goodwill can create ripples, generating far-reaching effects and multiplying in impact.

I have no doubt that those four or five thousand prayers of gratitude for the elderly gentleman sparked my inner response when I saw Harry Ritzner’s interview with Eugene Lang, inspiring me to emulate him.

I’ve often wondered how wonderful it would be if each of us consciously started with one small act of kindness every day. It doesn’t have to be something big—just as small as the gesture I encountered when I was three. But consider the possibilities: what kind of world would it be if 350 million Americans intentionally performed one act of kindness each day?

What I want to say to young people is: Around the year 2000, everything changed. The atmosphere of mutual hostility, malicious criticism, and life-or-death conflict didn’t exist before then. That wasn’t how our generation was raised, nor was it the social climate of the 70s, 80s, or 90s. Back then, there was a higher level of civility and respect between people. I believe we will return to that state.

So, I want to tell young people: You don’t have to accept today’s reality as the norm for this country. It hasn’t always been this way, and it won’t always be this way.

Patrick: This story is incredible—possibly the best answer I’ve ever heard to this question. And it’s the first time I’ve opened the show with it, which adds a nice twist. So, what was the core message you conveyed in that commencement speech?

Paul: I walked on stage and asked the people over 50 or 60 there: “Do you remember what was said in your college graduation speech?” Not a single person remembered. Since I enjoy hunting and fishing, I also talked about some of the ordinary challenges life will present, as well as my thought process in trying to leave behind something meaningful while preparing this speech.

Finally, I said, “No matter what you do in the future…” then I drew my bow, nocked an arrow, and said, “No matter what you do in the future, aim high and shoot straight.” As soon as I performed the action, the audience erupted in cheers. Next to me was an apple, which I shot through.

Patrick: Really?

Paul: It’s true. I don’t know if they still remember now, but everyone was dodging at the time, and I thought to myself, “They’ll definitely remember this.” I had warned the principal ahead of time: “You don’t need to rush over and stop me—it’s part of the speech. I just want to give them an unforgettable night.”

Patrick: This story also makes a great segue back to my earlier question—what exactly is the difference between the lives of investors and traders?

Paul: I started in the industry in 1976, when inflation was rampant. I began at the trading floor of the commodity futures exchange, where commodity prices were utterly wild, doubling or halving every year with staggering volatility.

For example, Bunker Hunt was manipulating the silver market at the time, purchasing approximately 200 million ounces of silver at an average price of about $3.12 per ounce. From 1976 to 1980, monetary policy was extremely loose, inflation began to surge, and silver prices skyrocketed. I had already moved from the trading floor of the Cotton Exchange to COMEX—the metal exchange at the time—executing part of their orders in the trading pit.

The entire market was an epic bull run. By around 1979, the price of silver had risen to about $30 per ounce, propelling the Hunt brothers’ net worth to become the third-largest in the world—approximately $5 to $6 billion, three times the wealth of the second-richest person. The Hunts declared, “I believe silver is the most valuable asset and resource on Earth.” When asked what they planned to do with all that silver, they replied, “We’re going to bury it. We’re going to bury it. In fact, we plan to buy another 20 million ounces and bury those too.”

He bought 20 million ounces at $35 per ounce. As soon as the news broke, the price surged to $50. At that point, his net worth was approximately $11 billion—five to six times that of the second-wealthiest person. I simply couldn’t believe how much money this man had made.

However, at this point, COMEX decided to allow only closing positions, not new long positions, as physical holders were backed into a corner—forced to post daily margin calls, and banks could no longer sustain the pressure. Silver collapsed from $50 to below $10 in just about eight weeks. Witnessing Bunker Hunt go from the world’s richest man to nearly bankrupt had a profound impact on me and deeply shaped my investment philosophy thereafter.

From that moment on, I decided I would never hold anything long-term or blindly trust any asset. My grandfather told me when I was very young: “Child, your net worth is only equal to the checks you can cash tomorrow.” Those words became deeply ingrained in me. So liquidity has never been just an idea to me—it’s an instinct carved into my bones.

My early trading career also confirmed this. Back then, I had a $10,000 account that could grow to $100,000—or vanish to zero. In my early twenties, I had a friend who could turn $2,000–$3,000 into $2 million, but the market volatility back then was unprecedented. We were both brokers at EF Hutton, and we nicknamed him “The Funeral Director” because he could turn a $10,000 account into $1 million, generating $100,000 in commissions along the way, only to bring it all the way down to negative.

So, the importance of liquidity is ingrained in my DNA, because volatility is so extreme and we’re all living on the edge.

Back then, the idea of "holding long-term" seemed like a joke to me because the returns from short-term trading were simply astonishing.

One of my mentors later taught investment courses at Virginia and invited me to be a guest lecturer—that was in 1982, and I went every semester after that. My favorite story to tell that class was about how the greatest wealth in history was accumulated. I would always ask the students: Who is the richest person in the world? At the time, it was Bill Gates and Warren Buffett. How did they do it? My conclusion was that they achieved it by riding long-term trends. That was my most important lesson.

I’ll summarize it in two or three key points: the core idea is that to make serious money, you stick with a trend for as long as possible. The paths to achieve this vary—you can own a company like Bill Gates or Steve Jobs, or practice value investing like Warren Buffett, spending nothing frivolously.

For years, I criticized Buffett and took pride in thinking: he just happened to be in the right place at the right time, catching this bull market. It could never have happened if he were in Japan; it couldn’t have happened if he had started from Japan’s Nikkei index in 1989. It was purely timing and circumstance—just a genius born of a bull market.

This year marks approximately my 50th year in the industry. The key difference between my trading and investing is that my BBI Fund has had a correlation of -0.12 with the S&P 500 over the past 40 years. As you can see, 100% of our returns are alpha—none of our gains come from market beta.

I’ve thought more than once: I wish I could be like Buffett—just believe in America, and even if my portfolio drops 50%, it doesn’t matter because America will eventually pull you out of the downturn. Of course, he works hard like anyone else, but that belief system is incredible. In contrast, I feel like I’ve spent 50 years playing right offensive tackle in the NFL, fighting day in and day out in the trenches with no break. Whenever someone tells me they want to get into trading, I always say: go with long/short strategies, trade stocks, do anything else. I’ve always envied that belief system—it works so well and has endured for so long.

But I must admit that if I were Buffett and experienced a 50% drawdown in 2008, the psychological impact would be enormous. I don’t believe I possess his level of calmness, patience, and resilience.

Later, while listening to the Acquired podcast episode on Berkshire Hathaway, I heard for the first time that Buffett understood the power of compound interest at age nine. Upon hearing that, I could only think one thing: this man is a genius, and I’ve been an idiot all along.

I’ve always wanted to write a book titled “Now I Understand,” documenting the series of misconceptions I’ve had throughout my life. Now I realize just how foolish I was. That person was an absolute genius—he grasped the power of compound interest at the age of nine, while I went to great lengths to successfully avoid compound interest throughout my entire career. He understood it at nine, and at seventeen, he went to Columbia University to seek out Benjamin Graham as his mentor. What extraordinary foresight.

That podcast also made me realize how clever he was to partner with Charlie Munger. Charlie was clearly a genius in his own right: while Buffett’s approach was to buy a dollar’s worth of value for fifty cents, Munger deeply understood the power of compounding in businesses with sustained growth. Together, they were a perfect match.

Warren, if you happen to hear this, I’m truly sorry. You are the undisputed pioneer of compound interest, and I wish I had even a tenth of your intelligence.

Patrick: Did you later talk to him about AI? What did he say?

Paul: Whether you're a trader or an investor, to truly succeed in this industry, you must be an excellent risk manager. All truly successful people are first and foremost exceptional risk managers.

About 18 months ago, I attended a conference where I heard something that deeply shocked me. I later mentioned it on CNBC, and since Buffett watches CNBC every day, he sent me a message saying, “I completely agree with your view, but the devil is out of the bottle, and I don’t know if we can put it back in.” I believe he fully recognizes the real threat we face from artificial intelligence.

The biggest issue with artificial intelligence is that the continuous stream of news over the past 12 hours has only made me more uneasy. The current approach to deploying AI follows a "build-break-iterate" model: build it, let it fail, fix it, and iterate. This is simply the age-old pattern of human invention—not anything new.

But we have never faced a situation where that tail risk of “disruption” could result in the deaths of hundreds of millions, even billions, of people. At that meeting, around thirty to forty participants were present, including a modeling expert from each of the four largest model companies. When I directly asked them how they believed AI safety concerns would be addressed, they almost unanimously replied: we’ll only take real action after fifty or a hundred million people die in an accident. This is utterly reprehensible.

My greatest concern about artificial intelligence is this: first, this development has undergone no public vote, and no one has had the opportunity to say “yes” or “no”—unlike most technological innovations, the tail risks of this technology are unprecedented.

Recall that just 18 months after the atomic bomb was dropped, the U.S. Congress and government had sufficient foresight to establish the Atomic Energy Commission to begin regulating a technology with enormous tail risk. Yet now, three years into our development of artificial intelligence, you're talking about regulation? What are you saying?

If there is one leadership issue that any president must prioritize immediately, it is regulating artificial intelligence—now and urgently—not only in the United States but by bringing together all other relevant parties to ensure we do not take actions that lead to catastrophic consequences. And this is merely a matter of safety; it does not even address the profound impact AI will have on social order.

Matt Shumer recently published a lengthy article detailing how two new models released six days ago could inflict unimaginable disruption on the labor market. To me, these developments are becoming increasingly alarming. If this were a risk in any other field, it would have been strictly controlled long ago by internal risk management standards. That’s what a competent risk manager would do. Yet here, we see almost no risk management at all.

Patrick: You said that great investors and traders are great risk managers. How do you think about artificial intelligence as this massive exogenous variable?

Paul: I believe the simplest and most important thing we can do in the next election is to require all AI-generated content to be watermarked. This would be the most transformative step we can take for our country and for the world. And it should be made law: anyone who knowingly violates this rule three times should be charged with a felony and sent to prison.

I need to know which content is created by real humans and which is not. Once this is achieved, there will be a foundation for discussing the restoration of social trust—which is precisely one of the biggest issues we face today.

This year, I’ve received two calls from influential people asking if I’d seen a certain piece of information—only to discover both were deepfakes. I believe watermark legislation is essential to restore honesty, respect, and healthy public discourse.

There is another reason why this issue is so urgent. At that meeting 18 months ago, many scientists envisioned a future in which human brains would be implanted with chips to access vast amounts of knowledge and capabilities. I looked ahead and realized we urgently need to understand what we are reading and seeing—because that group, without consulting anyone else in the United States, deemed human-machine hybrids not only acceptable but the inevitable future, deserving of inalienable rights.

For me, I don’t think so—I would vote against it, and I believe most people would too.

Patrick: Let’s return to the topics of the distinction between investors and traders, and risk management. I know you learned a lot from someone named Eli Tullis. These experiences were crucial in shaping you into the trading legend you are today. What did he teach you? Was there a particular experience that had the deepest impact on you?

Paul: He’s incredibly skilled, excelling at making precise moves when both fear and greed reach extreme levels. He trades almost exclusively in cotton, sitting quietly and attentively, waiting for the exact moment when market sentiment becomes either wildly euphoric or utterly terrified—then he acts. This ability is extremely valuable.

The most important lesson I learned from him came from an incident: one weekend, we held a large long position in cotton. At the time, the region was suffering from a severe drought, but rain fell heavily over the weekend, bringing much-needed relief across the entire growing belt. On Monday morning, the market opened at its daily price limit down. We were completely wiped out. I thought: It’s over.

Yet right at noon that day, his wife arrived with four female friends for lunch. His office was the most impressive I had ever seen. He walked out, beaming with a radiant smile, charmingly chatting with the ladies, exuding elegance. I sat there, stunned: “This guy just went bankrupt, and he’s still playing Rock Hudson?”

That moment, I’ll never forget: the harder things get, the more you must hold your head high. Keep the pain inside and show confidence outwardly—believe with all your heart that you will rise again. This is absolutely crucial.

Patrick: It feels like the right time to ask you—what does trading mean to you? You’ve said that the entire world is a network of interconnected capital flows, and the job of trading is to position yourself at the highest vantage point of this network, making moves based on what’s happening in the world. But most of the people I’ve interviewed are investors who buy equity in companies; I rarely speak with someone like you, who takes large positions across multiple asset classes and trading instruments. I’d love for you to describe what trading means to you—what exactly is it that you’ve been doing day after day, for decades?

Paul: There are a few analogies I find particularly fitting. Let’s start with boxing—you have an opponent, which is the market. You step into the ring, and your opponent is constantly attacking. I’m not thinking of something like Mike Tyson’s brute force, but rather a more classic duel: you’re feinting, jabbing, studying your opponent’s patterns, looking for openings. Occasionally, you’ll spot a perfect opportunity and land a powerful punch—maybe even hit it right.

If we’re talking about knockout examples, Bitcoin in 2020 was a KO; the two-year interest rate in 2022 was also a KO. These once-in-a-lifetime opportunities arise only after long periods of waiting and accumulation. Most of the time, you’re gathering information, looking for weaknesses, and trying to gain small advantages in each round—but the chances to make truly major moves come only a few times.

Patrick: I really like this boxing analogy. You’ve seen so much—Bitcoin, two-year rates, precious metals... Could you pick just one example? I want to know what you were actually doing, observing, and researching during those critical windows—and what kind of supply-demand imbalances did you uncover?

Paul: If you look back at all the major market moves, the underlying causes are often similar: the market went too far, some imbalance persisted for too long, or a central bank or government took an action it shouldn’t have. This is the root of most major moves, and they’re often driven by central banks or governments.

There’s a promising opportunity currently developing that deserves attention: the USD/JPY pair. The yen has been significantly undervalued for an extended period. The key question is: What’s the catalyst? Very recently, Japan elected a new prime minister who embodies the qualities of Ronald Reagan, Margaret Thatcher, or Trump during his second term. Historically, during the tenures of these leaders, their respective currencies appreciated by approximately 10%. Japan holds roughly $4.5 trillion in net foreign investment positions, about 60% of which are in the U.S., and most of these are unhedged—meaning Japan carries substantial dollar exposure. Now, Japan has its most dynamic leader in half a century, pursuing a “Japan First” agenda and aiming to revitalize the economy through entrepreneurship.

Therefore, you’re looking for an asset that is undervalued, has low holdings, and is significantly mispriced, while waiting for a catalyst to emerge.

The same opportunity existed for two-year Treasury yields in 2022. We had massive excess fiscal stimulus, and Fed Chair Powell maintained an accommodative policy for too long in an effort to secure President Biden’s renomination. Once Biden nominated him, it became viable to short two-year Treasuries, as the Fed was certainly set to begin normalizing interest rates.

In 2020, seeing the massive interventions by central banks and treasuries, you knew inflation trades were about to take off. Back then, among all inflation-hedging assets, the best one was Bitcoin. Bitcoin is unquestionably the best inflation hedge, even better than gold, because its supply is capped.

Of course, Bitcoin has its vulnerabilities: once a hot war breaks out, cyber warfare is inevitable, and all assets managed electronically—including Bitcoin—could become inoperative; this is the first risk. The second risk is quantum computing—no one can predict whether quantum computing will truly become a reality amid the rapid advancement of artificial intelligence. If quantum computing becomes viable, anyone could break into any bank or infiltrate any system. From this perspective, gold’s annual supply increases by only a few percentage points, whereas Bitcoin has a finite maximum supply and is decentralized, giving it unparalleled scarcity value.

Patrick: You’ve lived through the 1987 crash, the global financial crisis, the COVID-19 pandemic, and various asset bubbles throughout history. Could you start by sharing your firsthand experiences of those major events? Of course, you’re best known for 1987, and I’d love to hear your personal account. Then I’d like to understand how those experiences shaped your perspective on today’s environment. “Are we in a bubble?” is a very hot question—usually answered by investors—but traders’ perspectives are less common—I’d really value your take.

Paul: Looking back at the major crashes, they almost always share the same root cause: excessive leverage somewhere in the system. And in the major events I’ve experienced, that leverage was mostly driven by derivatives—whether futures or options.

The 1987 crash was 100% caused by portfolio insurance strategies—100%. If there had been position limits at the time, the decline would have been at most 10% or 15%, but this was entirely the result of derivatives.

In 1998, Long-Term Capital Management (LTCM) held massive derivatives, had an extremely large balance sheet, and was entirely wrong in its positions.

The year 2000 was different—it was the easiest bear market I’ve ever witnessed. It shares many similarities with today: the bear market from 2001 to 2002 was a consequence of the massive number of IPOs in 1999 and 2000. As those stocks gradually unlocked, selling pressure followed in a continuous, recurring cycle.

A similar situation is currently unfolding. I estimate that the planned IPO volume over the next year will amount to approximately 5% to 6% of total market capitalization. Over the past decade, stock buybacks have annually removed about 2% to 3% of market capitalization from circulation, providing support for stock prices. Now, this dynamic will be completely reversed.

This won’t necessarily happen immediately, but once those IPO lock-ups expire, a rolling top pattern could emerge—whether 18 months later or 6 months later. It’s crucial to continuously monitor buyback programs and lock-up expiration schedules, as they will steadily increase share supply. Meanwhile, hyperscalers have already committed to significant capital expenditures, which will erode their cash flow and reduce their capacity for buybacks. Therefore, I believe tech stocks have remained stagnant and will continue to face pressure, as a substantial portion of IPO proceeds will be drawn away from existing tech stocks.

As for whether we are in a bubble, I’m not sure if it’s technically a “bubble” in the strict sense, but we are clearly highly reliant on the stock market to sustain the economy. By “high leverage,” I mean the total market capitalization of the stock market is now 252% of GDP. At its peak in 1929, it was around 65%; in 1987, it was about 85% to 90%; in 2000, it was roughly 170%; today, it’s 252%.

If you examine all major bear markets since 1970, significant mean reversion has occurred approximately every 10 years. Mean reversion refers to the price-to-earnings ratio returning to its 25- to 30-year average. If this were to happen, it would correspond to a roughly 35% decline in the stock market—and 35% multiplied by the current 250% of GDP exposure equates to $800 billion to $900 billion in wealth evaporating. After the wealth effect reverses, capital gains tax revenues would drop to zero, budget deficits would surge dramatically, bond markets would suffer severe damage, and a negative feedback loop would reinforce itself. It is concerning—very concerning.

So, are we in a bubble? We are certainly in a sovereign debt bubble. In the stock market, the percentage of individual ownership in this country is the highest in history. The bigger issue is liquidity: between 2007 and 2008, private equity accounted for about 7% of institutional portfolios; today, it has risen to 16%. Real estate allocations have increased, as have infrastructure investments. Our liquidity is far lower than it was in 2008—a factor that cannot be ignored when considering asset allocation.

A friend of mine is a wealth management advisor who dislikes hedge funds due to their high fees and advocates investing everything in the S&P 500. He asked me: “If you were investing for the next 20 years, what would you recommend?” He assumed I’d say, “Buy the S&P 500 and forget about it.” But here’s the issue: if you buy the S&P 500 at today’s valuation levels, historical data shows that purchasing at a P/E ratio of 22 results in negative nominal returns over the next 10 years. The S&P 500 is indeed an excellent long-term investment tool—but “long-term” refers to a hundred-year average that includes periods when P/E ratios were as low as 6 to 8—just one-third of today’s levels. Valuation matters greatly; the current stock market is highly valued, and generating returns from here will be extremely difficult.

Patrick: If I were to shadow your day today, what would your routine be like? I know you’re always reachable by your execution traders and that it’s intense—could you walk us through your day?

Paul: Wakes up around 6:15 a.m. and works until 7 a.m.; exercises from 7 a.m. to 7:45 a.m., striving to maintain 45 minutes of high-intensity cardio daily; then sits down at his screen waiting for the market open. He typically has no meetings before 10 a.m., holds meetings from 10 a.m. to 12 p.m., usually has lunch with others, and has another meeting in the afternoon. He ensures one hour before and one hour after the market close are reserved for reflecting on the next day’s strategy and considering the evening markets in Tokyo and Hong Kong.

I get home around 5 p.m., take a one-hour walk with my wife, go upstairs to work for an hour, then come down for dinner; I usually watch the news and some light entertainment—before the internet, I used to read a book and a half per week, but since its arrival, I can’t read a single page in the evening. Last year, I only read one book—highly recommend it: the author is David Wood, a newsletter writer who penned a book on globalization and markets. I believe it will become a bestseller and possibly even be adapted into a Netflix series.

Then I work again from around 9:30 to 10:15, after which I go to sleep. I wake up at 2:30 or 3:00 a.m., work for half an hour, watch the London open for 45 minutes, and do some analysis—it’s a quiet, productive time—before going back to sleep until waking up at 6:15 a.m.

Patrick: Have you been doing this for 50 years?

Paul: It’s been like this since at least the 1980s. I feel like I’m working harder now than I did 30 or 40 years ago because there’s so much more information. Goodness, I receive up to 800,000 emails a day.

When I was a floor trader, even back in the 1980s—when information was already abundant—I could still devote more of my time to one thing: watching the day’s highs and lows, which was crucial for execution; like my boss Eli, I would calm down, wait patiently, and focus intently: Is this the peak of pain? Is this panic the best time to buy? Does it look like prices will rise forever? Is this the ideal moment to sell? Capturing these precise moments within a single day required intense focus.

When managing 25 different trading instruments—some correlated, some not—you must consciously evaluate each one individually. At the same time, 48 emails may flood in, each potentially containing actionable information. Today’s workload, in my view, is harder than ever, because information overload interferes with precise execution.

Patrick: What does "precise execution" mean?

Paul: It means buying when blood is running in the streets and selling when there’s cheering in the streets. Take last Friday, for example—the largest single-day drop in the history of gold and silver. Silver swung 33% in one day; you had to stay focused every second, planning your opening moves and how to respond if prices broke through unexpected key levels. This brings me back to the lesson I learned in Bedford-Stuyvesant: you must have a plan, think ahead, and be able to execute automatically. My macro trader friends feel the same—they’ll say, “I always feel two or three hours behind.” Last Friday was a classic example: being just a step late could mean massive losses.

Patrick: To do this day after day requires immense passion for the market. Could you discuss the importance of discovering, nurturing, and maintaining this passion throughout your career?

Paul: When it comes to traders—specifically the kind of alpha creators I’m referring to, not ordinary investors—we had a debate at a Christmas dinner about a year ago: Are great traders born or made? Almost everyone at the table agreed that 70% is innate.

At 21, I was already addicted to games—chess, backgammon, parcheesi, Monopoly, war games, gin rummy... I played every game I could find. In college, I began gambling; I earned a degree in probability theory, but I didn’t learn it from math classes—I learned it through experience.

If you were to distill the most essential trait from trading talent, it would be: Type A personality—extremely curious, insatiable in the pursuit of knowledge, passionate about competition and games—because our industry is essentially another form of probability theory. Even today, I still feel this way; I frequently play bridge with friends and never get tired of it. I love all games of chance, and I love trading.

I have another reason I love trading. My wife is Australian; we got married in 1989, and she always said, “You live in New York, but I grew up by the sea. Once our youngest child graduates from college, you’re taking me to live by the ocean.” And sure enough, in 2014, when my youngest son turned 18, we moved to Palm Beach. She set me up with a family doctor who was already 83 years old and still practicing. I asked him, “You live here—everyone here seems fossilized. What’s your secret to longevity?” He replied, “It’s simple—you die the moment you retire.”

This statement resonates deeply with me, as I’ve come to realize that with age, if you don’t use it, you lose it—and this truth becomes only more evident over time. That’s why I dedicate two hours each day to physical exercise, and it’s another reason I stick with trading—I need to keep my mind sharp. My father lived to be 100, and I have too many things I want to accomplish in my 90s. Trading is an excellent mental workout for me.

In addition, I love trading for another reason: I want to make a lot of money so I can give it away. There are so many causes I want to support that I genuinely feel earning money is a noble pursuit. I enjoy the process and consider waking up each day a privilege—I only hope to work hard, make big gains, and then donate the money.

Patrick: Can you tell us the story behind the founding of the Robin Hood Foundation? It’s a very important part of your life and legacy.

Paul: The Robin Hood Foundation was established the day after the 1987 stock market crash. Ironically, right after that crash, I made what might have been the worst macroeconomic call of my career—I was convinced we were heading into a great depression. I had spent an entire year studying the historical patterns of 1929, and as I watched it unfold before my eyes, I thought: This is a perfect historical replay.

So I called my friends, and we took action together. This journey was truly amazing. I strongly encourage everyone to get involved in a cause you genuinely believe in. One of the most beautiful things about charity and philanthropy is the people you meet—I’ve encountered the most extraordinary, kind, and generous individuals, and they make every corner of life brighter.

At the time, we believed the economy would sink into a severe recession and poverty would dramatically worsen, yet there were almost no charities specifically dedicated to eliminating poverty. So I’ve always believed: if you want to do something, it’s best to do it yourself. We started small, applying basic business principles to find the most effective ways to reduce poverty—experimenting, making mistakes, and learning along the way—until we realized this was, in fact, a science. That’s when we began recruiting top talent and building an organization.

In the 1990s, there was a unique spirit in finance—people were eager to engage and give back to society, and the era’s atmosphere of generosity was deeply moving. I don’t know exactly when it happened, but we nurtured so many outstanding philanthropists during that time. It wasn’t like that in the 1980s, when everyone wanted to associate themselves with institutions like the Philharmonic, having their names engraved on buildings in pursuit of status-driven philanthropy. After the market crash, people began to find meaning in helping others. Perhaps because, at that time, individuals had accumulated truly immense personal wealth and felt a deep inner desire to give back. The support from the entire financial and hedge fund community for Robin Hood is moving—and it still is today.

Patrick: From the broadest perspective, what aspects of the world today fill you with the most optimism, and which ones make you feel most vulnerable?

Paul: I’m trying to envision a “post-work era”—where artificial intelligence has done so much for us that we no longer need to work. I used to have a very pessimistic view of this, because for many of us, work is how we define our sense of purpose. The idea of a world where a vital component of human happiness—“meaning”—disappears because work is no longer necessary worries me.

But recently, I’ve become more optimistic because I’ve noticed that athletes find meaning in their sports, and I find meaning in playing bridge with friends through competition. Perhaps humans have enough adaptability to find meaning in other forms—perhaps it’s doing one good deed each day, or something else. I believe that as a species, we are resilient and intelligent enough to discover new paths to happiness.

I believe that in four or five years, when so many jobs have been replaced by artificial intelligence, this will be the greatest challenge—how we will live and how we will find meaning.

Patrick: Many young people are confused about their career paths. You’ve discussed and written about the importance of communication skills, and journalism is an effective way to develop them. What would you say to young people seeking direction about why this matters?

Paul: I've always believed that journalism 101 should be a required course at every university, more valuable than a business degree. It was essential to my development.

My father owned a small trade and finance newspaper in Memphis with about 2,500 subscribers. I worked there as a copy editor, front-page editor, and wrote numerous articles, while also taking a journalism writing course. Journalism writing teaches you one of the most important lessons: lead with the conclusion.

This is vastly different from other writing styles—it requires you to state the most important information in the first sentence. The format is extremely strict: the first paragraph must be no more than two sentences and must cover who, what, where, when, why, and how. This is the lede. The second paragraph contains the next most important details, also limited to no more than two sentences, and so on.

This is essentially a form of principal component analysis: presenting any event in the most concise and logical way possible, placing the most critical information first and progressing sequentially. In today’s era of extreme attention scarcity, time is money—you must convey complete information in the shortest possible space. There’s an old saying: if you can’t explain your story in 15 seconds, no one will stick around to listen. Today, this is more true than ever.

As a macro thinker, this training is essential for every trading decision I make. I can quickly perform principal component analysis on various variables to distinguish what’s primary from what’s secondary and identify the most critical drivers. In trading, there are ten important factors, and each one takes turns becoming the most significant at any given moment. The yen is an example: it has been undervalued for two years, but the timing never aligned—until the election of this new prime minister became the catalyst, propelling valuation, a factor overlooked for two years, to the top of the list as the most critical variable.

The newspaper writing style is crucial for building any logical framework: At every specific tool and moment, what is the most actionable information? What’s on my checklist? How should I prioritize? That’s the entirety of trading.

Patrick: If you were to use the same framework to describe the key components of a good life, what would they be?

Paul: God, family, friends—when it comes to friends, I think of joy—so God, family, friends, joy, and serving others.

My meaning does not come from trading. My meaning comes first from my family. Sometimes I even look forward to my own funeral, because I’ve carefully chosen the songs I want performed that day. I almost wish I could be there to see it myself, because it would be a wonderful gathering, and I believe my family and friends would truly enjoy it.

In my final moments, I won’t think about the 1987 stock market crash or Bitcoin—I’ll think about: Who did I love? Who loved me? What relationships did we share? What moments did we experience? Professional achievements are merely tools that enable you to do more meaningful things—what did you do for your family? What did you do for your friends? How did you serve others? What legacy of happiness and kindness did you leave behind for those fortunate enough to cross paths with you?

And when I say "legacy," I don’t mean words—I mean actions. What have you done to make other people’s lives better and happier? For me, this is the most important thing, nothing else matters.

Patrick: Have you always believed in God?

Paul: I sometimes waver. I believe, but my faith is tested, and I think that’s true for everyone. I wish I could be 100% certain I’d go to heaven, but I do pray every night.

I believe faith is important because you need a set of guiding principles and a foundation for life. Christianity, Judaism, and many religious traditions beautifully bring stability, order, and kindness to people’s lives, enabling them to live sustainably and joyfully alongside those around them.

Patrick: What does Africa mean to you?

Paul: I love Africa because I love nature. Speaking of which, let me share something I’ve taken 70 years to realize: what I love most now is seeking the “peak of spring” and the “peak of autumn.” It doesn’t have to be in Africa—you can find it in your own neighborhood. When spring is at its most brilliant, vibrant, and fragrant, you can pinpoint the exact minute and location where you feel that surge of life, and you’ll feel more alive than ever before.