Steve Lescarbeau – Mutual Fund Trading Strategy

Last Updated on April 18, 2023

Steve Lescarbeau is a mutual fund trader. Jack Schwager’s interview with Gil Blake in the New Market Wizards inspired him to try out the mutual fund timing approach – holding his equity positions while they are gaining and switching to money market funds to avoid downside risks when the equity market is about to crash.

This article looks at the trading career of Steve Lescarbeau, and we end the article by taking some of the most interesting quotes from Jack Schwager’s interview.

Steve Lescarbeau’s life and trading career

Steve graduated with a degree in chemistry from Boston University. He got a job as a salesman using his chemistry background. “I think that a physical science degree is as good as, if not better than, a financial degree because it trains you to be analytical. If there is anything I am really good at, it’s being a researcher”, he said.

Steve was a salesman, selling filtration systems to pharmaceutical and electric companies. He won the salesman-of-the-year award for three consecutive years. He got involved in the financial market in 1983 when he worked for a mutual fund company. He switched to this field because he thought that was the place he could make the most money as a salesman. He had a degree in chemistry which helped, but he had no prior experience in financial trading.

He loved the job, but because of the restrictions placed on him by the company, he realized that if he wanted to take the next step, he would have to do something different from what he had been doing. So he became a stockbroker. He was hired by Shearson Lehman Brothers.

He met Tim Hoik in the managed futures department — an area he did not know about. One day, Steve and Tim went down to meet with some traders at Commodities Corporation. And after that meeting, he told him, “Screw the retail money; let’s go after institutional money.” He cold-called Eastman Kodak, which led to opening a $50 million account — the most significant investment ever in managed futures. They eventually increased their investment to $250 million.

They were making lots of money off the account, but they had a problem — the fund was managed futures with an up-and-down movement in profit, which he said was sickening to watch. So, he started looking for an alternative to the managed futures.

In 1993, Steve got interested in a newsletter written by a guy in Texas. He put out recommendations and tips on mutual funds and had a good track record. Steve called him up and suggested they do a fund. He agreed, and they launched the fund in September 1993. Steve raised the money while the guy traded.

By late 1994, Steve was discouraged by the returns they made. So he began researching mutual funds timing. He later split up with the trading manager and took over the management of the trading account.

During the five years he traded, Steve had realized an average 70% annually compounded return. What was genuinely outstanding about his results was that Steve had achieved them under extraordinary risk control. His worst month ended with a bit of 3%, but his consistency ensured he was profitable.

Lescarbeau works alone at his home in a small rural town outside of Albany, New York.

Other famous traders and their trading strategies

Steve Lescarbeau trading strategy quotes

Here are a few excerpts from Jack Schwager’s interview with Steve Lescarbeau:

The same qualities that make you a successful person in whatever you’re doing are going to make you successful in trading. You have to be very decisive, extremely disciplined, relatively smart, and above all, totally independent.

——-

Ninety percent of my success is due to not doing things that are stupid. I don’t sell winners; I don’t hold losers; I don’t get emotionally involved. I do things where the odds are in my favor.

——-

Don’t confuse activity with accomplishment. I think one mistake novice traders make is that they begin trading before they have any real idea what they are doing. They are active, but they are not accomplishing anything. I hardly spend any time trading. Over 99 percent of my time is spent on the computer, doing research.

——-

I think that a physical science degree is as good if not better than a financial degree because it trains you to be analytical. If there is anything I am really good at, it’s being a researcher. I’m not a particularly good trader.

——-

I don’t attempt to prognosticate the market. I react to what happens in the market.

——-

I’m laughing about the people who do make predictions about the stock market.

——-

Trading systems definitely have a life span. When too many people jump on the bandwagon, the market takes it away.

Similar Posts

Michael Carr – Strategy Trader, Motivator, And Speaker

ByQuantified Trading

Last Updated on April 18, 2023 Michael Carr is an American investor, a Chartered Market Technician (CMT), writer, and speaker with a successful career in financial service. He is a Certified Financial Technician (CFT), a long-term member of the chartered market technicians association, where he served as a contributing editor for smart profits daily. Mike…

Jesse Livermore – The World’s Most Legendary Trader? (Trading Strategy Quotes)

ByQuantified Trading

Last Updated on April 18, 2023 Jesse Livermore was a legendary trader and investor that ended his life by suicide after a boom and bust cycle throughout most of his life. One of the most legendary trading books is based on his life: Edwin LeFevre’s The Reminiscences Of A Stock Operator. In this article, we…

Larry Williams – Indicator Innovator, Strategy Trader, And Tax Rebellion

ByQuantified Trading

Last Updated on April 18, 2023 Larry R. Williams is an American Investor, author, and politician from the state of Montana. He has been actively involved in trading the commodities, futures, and stock market for over 53 years and is the only futures trader to trade $1 million of his money at live events worldwide….

Bruce Kovner – Trade Small And Manage Risk (Trade Many Trading Strategies)

ByQuantified Trading

Last Updated on April 18, 2023 Bruce Kovner is an American investor, philanthropist, and hedge fund manager. In 2012, he founded and chaired CAM Capital, which is responsible for investing his private assets, and Kovner Foundation, which oversees his philanthropic activities. He served as Chairman for Caxton Associates, a global macro hedge fund. Bruce Kovner…