It’s down Hille all the way to $10m
April 16th, 2008 Posted in Pet PicturesOh, and hes well on his way to making a million dollars this year.
Actually, hes shooting for $10 million %26ndash; but whats another zero when youve broken six?
Above the slick, stainless steel, cafe-quality espresso machine in his spacious office in Christchurch seaside suburb Sumner, a photocopied cheque for $10 million is taped to a wall adorned with world-trade time clocks.
Mr Hille wrote it to himself and post-dated it December 31, 2008.
The stylish 43-year-old smiles as he admits his extremely out-there, difficult, but not impossible, goal.
It would be a colossal year by anyones standards but traders do that because you can make that sort of money, he says confidently, relaxing into a leather sofa.
The method to his money-making madness? Currency, commodities and a hedge fund strategy known as global macro.
When you trade global macro, you can make money just as easily when markets go down as they do when they go up. If youre willing to trade anything around the world, you dont really have to be concerned with falling equity markets or falling property markets %26ndash; theres always something going on with currency, theres always something going on with commodities.
At the moment, he is hot on the short New Zealand dollar against the Australia dollar but is otherwise lightly invested after a good run in the first quarter of the year, turning $150,000 into $370,000.
Most of those gains came from agricultural commodities, which enjoyed a massive run-up from the middle of January till the end of February.
The secret, he says, is buying high and selling low %26ndash; the inverse of the usual stock market convention. The strategy is predicated on a commodity or stock hitting a new high then going even further.
When something gets to a new high, or a new 20-day high, by definition there is no one holding that commodity or stock who is in a losing position, because they must have purchased it cheaper.
Unknown forces also factor in, he says. These reasons may come out weeks or months later, or not at all. But if there is a groundswell of buying that pushes prices to a new high, there is likely a good reason for that and so buying at that high will often result in prices going higher still for those reasons that you dont know, but that the groundswell of buyers do know.
Needless so say, he does a fair bit of reading on the subject and during the course of a day studies up on trades, successful traders and market trends.
At the moment Im sitting on the sidelines, he says.
The only commodity I have that Im trading is corn and the reason Im trading corn is that at the end of last week, it reached an all-time multi-year high. Im simply waiting for the other food commodities to hit new 20-day highs and, when they do, Ill be in again.
A dabbler since the age of 18, Mr Hille took up fulltime trading in 2007. Working an average 15 hours a week, he made more than $170,000 net profit from 51 good trades.
Thats a good year by any measure but he has already made triple that in the first three months of this year, so his $10 million daydream may not be a total fantasy.
So is it luck, skill or good karma? Mr Hille, who gives a not insignificant amount of his disposable income to charity, chalks it up to sheer determination. He says anyone with an inclination can make more money than they can lose as a trader.
To hear him talk, he makes it sound easy: Trading is the most fun you can have at the computer, using your skills and knowledge to turn $100,000 into $275,000.
The prospect of losing at the same rate doesnt seem to faze him.
Sure, youre trying to predict the future but as you gain knowledge and experience you learn to stack things in your favour, so instead of being a 50/50 coin toss, it can be a 60/40 or a 70/30 and once you get into a 70/30 if you do the same trade 100 times in a row you know youre going to make money seven times out of 10.
You may lose money three times out of 10 but you can handle that because you cut your losses. If you can put yourself in a situation where youve an even 55/45 chance, its plenty to be able to trade on.
Despite his cool-headed calculations, there arent many Kiwis willing to place their bets making a living in the same manner. The consensus is under 100 nationwide, he estimates, ironically taking the number as an encouraging sign. Compare that with the large number who make an income from property and that gives you an idea of the upside potential of the increase in numbers if and when more people embrace trading as an income source.
THOUGH he has degrees in accounting and commerce, he professes to be mostly self-taught when it comes to trading and says you dont need an education to do well.
I wouldnt suggest that anybody immediately quit their day job and try to make a living, but if youve got an interest and passion, then I think its something just about anybody could start doing.
Reading up on the subject, is the starting point, he says.
To that end, he has written extensively about the tricks of his trading experience in chapter 8 of his pet project: a lifestyles book (www.author.co.nz) aimed at helping people fulfil their dreams.
In the book (he also writes fiction and childrens stories), he propounds his home-spun philosophy and strategies to create the ideal life, modelled on his own.
Sometime in my 30s I woke up to the fact that life is about lifestyle, and life isnt about working your butt off for somebody else, collapsing into your chair at the end of the day and watching television for a couple of hours, going to bed, and doing it all over again.
By maximising his earning potential in contracted business hours, he has carved out an enviable amount of leisure time.
He also handles the accounts for two charitable organisations, one a Christian international aid agency, the other a local charity that helps children. He doesnt hide his religious beliefs (biblical quotations festoon his office) or his ambition to make more money so he may do more good %26ndash; though without sacrificing the lifestyle.
He subscribes to the tithing principle of giving away 10 per cent of his disposable income and hopes one day to be in a position to flip the equation, giving away 90 per cent and keeping a tenth.
As for giving up work, as far as hes concerned, he has done that.
In a sense, Im retired now because one definition of retirement is doing what you want to do. And so Im doing that now. If you gave me $100 million to trade Id trade it. I wouldnt trade all of it but Id trade just because I love it.
While waiting for the $100 million to materialise, he is staying focused on the $10 million marker. Its an extremely out-there, difficult goal, but its not such a daydream that its totally impossible. If I visualise it and believe in it . . . who knows!
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