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sense of accomplishment when I get it right. This is interesting and satisfying."

MOST MEMORABLE TRADING PERIODS

Kovner borrowed $3,000 on his MasterCard in early 1977 and began trading on his own. He made $1,000 on his first two trades—copper and interest rate futures.1

Kovner says his earlier trading experiences were the most memorable. The first time he lost control of the trading process was in the soybean market. "It is seared into my memory."2 A shortage developed in soybeans, running his $4,000 position up to $45,000 in six weeks. "In a moment of insanity, I discarded a hedge limiting losses if prices turned down, which they did." In a panic, he liquidated his position, escaping with a loss of $23,000. Yet he still had $22,000, five times what he started with.3 "I had a huge gain but lost half before getting out. . . . I lost half the profit in an hour. I closed out the trade and was physically sick for a week. In retrospect that was a very good thing," says Kovner. "It helped me understand risk and create structures to control risk."

Other memorable periods? During the 1987 crash, Kovner recalls how the markets were disoriented in unison for 72 hours. He remembers watching each market after another cascade all around the world; they were limit-down and there were no bids in sight.

The year 1987 turned out to be one of his best, with a net return of almost 100 percent. The gain was mostly in currencies. "I made lots of profits in currencies and fixed income . . . I made profits on light short stocks. The volatility was horrendous . . . I made millions on small short stock positions but made hundreds of millions of dollars in currencies and fixed income."

INSTITUTIONAL INTEREST

Kovner sits on many endowment committees. He observes how the role of bonds is now being questioned by endowments and other institutions. Because bonds have generated very low returns and many institutions allocated about 30 percent of their portfolios to them, the institutions are getting something like a 3 to 4 percent rate of return. After inflation, fixed income return is very low. As a result, some of the