Scott Bessent

You know, it's a lot of that. There's another great macro investor called Bruce Kovner. And he had this saying that he said, you know, I succeeded because I could imagine a different future and believe it could happen. So the keys to believe it could happen and then manage the risks. So could you imagine what would happen if the Iron Curtain came down? What would happen?

You know, it's a lot of that. There's another great macro investor called Bruce Kovner. And he had this saying that he said, you know, I succeeded because I could imagine a different future and believe it could happen. So the keys to believe it could happen and then manage the risks. So could you imagine what would happen if the Iron Curtain came down? What would happen?

I mean, you all do as venture capitalists, but how could the world live in a different state?

I mean, you all do as venture capitalists, but how could the world live in a different state?

So it's a great historical example. And it also kind of brings in three dimensions. So I was the analyst. Stan was the portfolio manager. And then in a way, George was the risk manager. So I was running the UK office. I was on the ground in the UK. And I had this light bulb go off. And I thought, the fulcrum thought, or my differentiated view was that the UK had just had a big housing boom.

So it's a great historical example. And it also kind of brings in three dimensions. So I was the analyst. Stan was the portfolio manager. And then in a way, George was the risk manager. So I was running the UK office. I was on the ground in the UK. And I had this light bulb go off. And I thought, the fulcrum thought, or my differentiated view was that the UK had just had a big housing boom.

And UK mortgages at that time, they didn't have long-term mortgages. They were all floating rates. So if the Bank of England raised rates on a Wednesday, your mortgage went up on a Friday. The UK had hooked into something called the exchange rate mechanism. They had to balance versus the Deutsche Mark. They had to stay within a band.

And UK mortgages at that time, they didn't have long-term mortgages. They were all floating rates. So if the Bank of England raised rates on a Wednesday, your mortgage went up on a Friday. The UK had hooked into something called the exchange rate mechanism. They had to balance versus the Deutsche Mark. They had to stay within a band.

I noticed that if they raised or I thought if they raised rates to try to stay in the band and protect the currency, it would be unsustainable because British homeowners would get bankrupted. Stan's great feat of analysis was figuring out that these bands set up this incredible asymmetric bet because

I noticed that if they raised or I thought if they raised rates to try to stay in the band and protect the currency, it would be unsustainable because British homeowners would get bankrupted. Stan's great feat of analysis was figuring out that these bands set up this incredible asymmetric bet because

I can push them up against one side of the band, and their mandate is just to push me back to the other side. So we just lose 2.5%. And Stan tells this great story of, like, telling George Soros, oh, well, here's what I want to do. And he says he told him, and George says, well, how much do you want to do? And he said, probably 100% of the fund. And he said, Soros gave me this really sour look.

I can push them up against one side of the band, and their mandate is just to push me back to the other side. So we just lose 2.5%. And Stan tells this great story of, like, telling George Soros, oh, well, here's what I want to do. And he says he told him, and George says, well, how much do you want to do? And he said, probably 100% of the fund. And he said, Soros gave me this really sour look.

And he thought that he had said something wrong. He goes, well, why wouldn't you do three times that deal? So anyway, it was, we pushed him against,

And he thought that he had said something wrong. He goes, well, why wouldn't you do three times that deal? So anyway, it was, we pushed him against,

the bank of England, the British government had to buy this unlimited amount of pounds and they started raising interest rates and this was September of 1992 and eventually they just weren't able to sustain the pressure from the high rates and came out and then the asymmetric risk reward was we made about 20 something percent in a day.

the bank of England, the British government had to buy this unlimited amount of pounds and they started raising interest rates and this was September of 1992 and eventually they just weren't able to sustain the pressure from the high rates and came out and then the asymmetric risk reward was we made about 20 something percent in a day.

And back to what was really Stan's genius, I don't know if either of you played backgammon, but in backgammon, there's the move after the move. And so Stan, we'd made all that money, and we were kind of euphoric. Okay, now what? Because there's going to be the trade after the trade. So we made that much in a day, but then it was actually the trade after the trade. This isn't well publicized.

And back to what was really Stan's genius, I don't know if either of you played backgammon, but in backgammon, there's the move after the move. And so Stan, we'd made all that money, and we were kind of euphoric. Okay, now what? Because there's going to be the trade after the trade. So we made that much in a day, but then it was actually the trade after the trade. This isn't well publicized.

I think we made another 20%. during the rest of the year.

I think we made another 20%. during the rest of the year.