Legendary Investor Steve Cohen with Glenn Fuhrman: On Investing, Philanthropy and Art

Good evening. Hey, Glenn. So this is going to inform everything. I want to ask you one question to start. Sure. Do you like talking more about markets or talking about art?

Well, I always say that if I go out with somebody in business and they happen to be a collector, we spend the first 30 minutes on art. Then we get to business. It's usually the way it works. So let's start.

Growing up, Steve, you grew up in Great Neck on Long Island, presumably a relatively middle-class background. You grew up in a pretty big family, eight kids. That's right. Pretty unusual. And tell us a little about your family growing up, your parents.

Well, you're right. It's a lot of kids, and it was a small house. It was a little crazy, you know, typical suburban family, lots of sports. My mom was a piano teacher, my dad was a dress manufacturer, and, you know, it was a nice place to live. It was great.

Now, I would have thought that you were kind of a math guy, but everybody says you were actually a really good basketball player. Was that your kind of first passion?

Well, I mean, you know, I liked sports, so I played soccer, you know, I played basketball on the high school team, and, you know, just I played golf, and that's what you did, you know, basically, and the only season I really didn't play was baseball.

Were you also a very good student from the beginning?

I think I was better when I was younger. Then as I got older into high school, then maybe I didn't study as hard, and we were playing a lot of poker. We basically played poker almost every night, which doesn't lend itself to studying.

So now, were you cleaning out your friends? Was it like a balance? There was actually some give and take? There were a couple of good players.

You always need new money at the card table. So we did clean out people, and then you have to find new people. And actually, I made a nice living doing it.

And were you playing kids' games, like Follow the Queen? Or were you playing real poker, like Five-Card Stud?

We played everything. It started out serious, and by the end of the night, it turned into the little stupid games.

But did they play Hold 'em back then, or you didn't really play Hold 'em?

They didn't play Hold 'em. It's actually funny. I don't know how to play Hold 'em. We actually had a poker night at my house for the firm a couple weeks ago, and it must have been like 50 people. And so they kind of teach me the rules of Hold 'em, and I came in second. So that wasn't bad.

Now, you know, you say you weren't as good a student, but you must have been a pretty good student if you wanted to go to Wharton and got into Wharton as an undergrad. So you were obviously doing well enough to kind of have that.

You know, it was different then. Yeah, that's the school I wanted to go to because I was interested in business. And if I got in, I was going. But to give you like a sense of how serious we were, we were playing poker to 530 at night, you know, the night before my SAT. OK, so.

And because you come from a big family, your parents were just like... 'As long as we were alive, it was okay.' All right, so now, were you very close to your parents or not so much? I would say, okay.

You don't get a lot of time with your parents when you have eight kids. My mom was a piano teacher, so she taught regularly.

Did you pick up music at all, or no?

Well, the funny part is I wanted to play the guitar, and she talked me into the accordion.

And so I'm looking—that is a mental image. I could, yeah, I could have been cool. Instead, I ended up, like, lugging this thing around for a couple years, you know? And you, you ended up, now you have seven children. So did you kind of always think you were gonna have a lot of kids?

I mean, was that... Well, two wives, so, you know, that lends itself to more kids. And, and, and, yeah, so I was laughing at my dad when he had eight. I used to say, 'What were you thinking?' And then he started laughing at me later.

You mentioned two wives. And it is a beautiful thing that, among the many things that you are known for, you are known for having a bit of a fairy-tale marriage to Alex. Tell us a little bit about how you met, how you fell in love, and whether—maybe it's not accurate, but I'm pretty sure it is.

Well, she's a great girl. We've been married 26 years. Never an argument, never a cross word, total bliss. But she's great, and I met her at a dating service. I'll tell you a funny story. I just had gotten out of my marriage to my first wife, and so I'm just getting back in the game. And so you go to this place, and you send invitations to the person. You go through these books.

Yeah, like prehistoric. Right, right. And so I sent out like 20 invitations, and she was the only one to accept. Now, I'm not feeling good about myself leaving. And then I'm like, what's going on here? But I was lucky enough to meet her, and she's fantastic. That's great. That's great.

Now, you have pretty close relationships with your kids, and as a super intense worker, and I have an understanding for you, pretty much always knowing where the markets are, no matter where you are in the world, no matter what time of day it is. How does that work with also having a good relationship with your children and actually being a present father?

It's hard. It's really hard because, as you know, what we do for a living is a seven-day-a-week job. You're always thinking about it. And so, in some respects, especially when you have the amount of kids I have, and they're from two different families, so you've got to spend time over here and then time over here. And so it's hard. And I can't say I was the best father, but I know I tried my hardest.

And are your children interested in more art, more investing, doing something totally on their own?

Well, they're all different. It's really interesting. They're all into different passions. One is studying to be an alternative doctor. My son's here tonight, very involved with cryptocurrency. He loves it, you know, and I have another son who's a film producer, and my daughter Sophie. I mean, Josh is a film producer, and Sophie's working for Larry Gagosian, which is a nice segue to your previous interview. There you go.

Now, one of your sons went to Brown, parent's dream, Ivy League school. Recall the moment when he came to see you in person or over the phone to tell you that he actually had decided to go from Brown to the Marines.

Yeah, that was a surprise. Brown is a pretty liberal place, and you don't think that people who come out of there want to go to the military. And so I was really surprised. But what I told him is I wanted to make sure it wasn't an impulsive decision. And so we talked about it. And I said, do me a favor. He was studying political science. I said, go work for somebody in politics. Go down to Washington and work for somebody. He ended up working for, I think, Sheldon Whitehouse for one year. And I said, if you still like it, you still want to do this, you still want to be in the military, then I'll support you. He came to me a year later and said, I still want to do this. I said, go for it.

And were you on pins and needles for his entire career as a Marine?

Well, he was pretty quiet on what he was doing. He was in the intelligence area. So he didn't really tell me too much. But he came back, he's in good shape, and I'm grateful.

I mean, we'll talk a little bit later, but you've become a tremendously generous supporter of military causes, and I imagine that's directly related to either your son's experiences or things that you've heard because of your son's experiences.

Well, you know, obviously that was the prime motivator. I happened to be the chairman of Robin Hood, and they had a veterans committee, and I was the chairman of that. And we set up a clinic in New York treating veterans for PTSD and traumatic brain injury. And Robin Hood's a local charity. But when I saw what they were doing, and obviously motivated by my son's experience, I thought, why not? I could take this national. And so I was lucky enough to find great people who can help me do it. I couldn't do it by myself. We've rolled out 12 clinics. Our goal is to treat 20,000 to 25,000 people a year, the veterans and their families, for free. It's going great.

I'm excited by this. Some of the statistics are pretty harrowing. I don't know if this is accurate, but I read that more returning soldiers have committed suicide than have died in action.

Well, you know, there's a statistic that 22 vets kill themselves every day. And so it's sad and, I mean, it's amazing to me that, you know, you always hear thank you for your service, thank you for your service, but yet these people come back and making a transition to normal life is not easy, especially when you're carrying some of the invisible wounds of war. And so I thought I could do something there. And I actually think we're setting the standard of care for veterans. We're actually creating a model that I think people generally in the field are pretty impressed by. And so it's going well. We're going to roll out all the clinics. In addition, we're trying to find a diagnostic to find a biomarker.

When someone potentially has PTSD or TBI, that we can get them off the battlefield and be safe as opposed to... If they have DNA or some sort of inclination. Well, if they're presenting that way through the biomarker diagnostic, then it's good to know whether you're at war or when you're back, and so then you can be treated. We're jumping around a little bit, but one of the things, just because you're mentioning biomarker, is you've done a lot and you're interested in doing more biotech investing, is that right? Well, I'm doing a lot of private investing and, um, you know, I haven't really done much in biotech, but, you know, we do, we are, um, I'm financing privately, not through the—through the hedge fund, but through my own, uh, financing.

We've got three verticals running in AI, machine learning, FinTech, and cybersecurity and enterprise. And my goal is to build out a complete VC operation. And we happen to, you know, so far we've, I'm surprised how quickly we can get involved in this field and lead deals. And so, which means either one, you know, we're really doing a good job or we're really investing in bad deals. And we'll find that out.

And do you think that your skill set really is the same, whether, you know, being a good investor is the same whether you're deciding to invest in a healthcare technology company or a venture capital high technology software company or trading a public company stock?

Well, I think there's some commonalities, but you also need an expertise. I've set my firm up to have experts in verticals, and I did the same thing here in venture capital. These people know these spaces so much better than I do. Now, I'm pretty good at grilling them on investments and trying to figure out if the deals make sense or not, so it's a nice working collaboration partnership.

And in the grilling, how would you say the culture of the firm is? Are people scared of you? Is it more like kind of like, how does that happen?

Well, you got to ask them. I bet you they're a little scared. I tend to ask probing questions. And so it's, you know, if I'm going to make a significant investment, I'm going to... I ask them tough questions.

If you're not prepared, then I'm not going to be happy. That doesn't work very well. One of the things on the public side is you have PMs that are essentially running their own capital. I assume you'd like to hear them say, I want to buy this with my own portfolio or my own capital.

Your people can't really do that on the private side because that's just your own capital. Well, you could. I mean, you could allow them in. And they essentially do have skin in the game because they're getting paid on that. And you've got to remember that in a public security market, you can buy and sell a stock in a day. When you do a private investment, they're devoting years to this type of stuff because it takes a while to find out whether the investment paid off or not. So they have skin in the game. And, um, and are the people all integrated, or are these, like, the private people really separate from the public hedge? Well, the private, they're separate, but everyone—we will bring in public people when there's an industry or something that we think we have some expertise in both places, so there's knowledge sharing across, across the firm.

There's some that's developing. The goal is to make more of that sort of cross-fertilization. We have quality people all over the firm, and you want to use their expertise any way you can.

So back to Greenwich and Great Neck in high school when you're playing poker before the SATs. You say you, you know, poker clearly—oh, Great Neck. Sorry, Great Neck. Clearly, poker is a risk-reward kind of a skill that you're developing. Yes. And your father was in business in some capacity. Right. So—but actually, my grandfather used to play in the '30s

poker games and win or lose $100,000 a night. Really? Your grandfather?

My grandfather, yeah. Wow, so you come from, like, a ritzy family.

It could be in the genes. I don't know.

But that's big money for a grandfather. That was big money. What was his business? He was a dress manufacturer. Wow. Yeah. So when you were doing this, what was your vision? What did you think you would do after Wharton? Did you have an idea that you would go into the markets? Or did you think you'd go into some sort of a corporate environment?

Well, I always knew I was going to be in the markets. I mean, I'll just tell one story. I mean, I didn't go to class a lot at Penn. What I used to do is go down to the local brokerage firm. And I would stand outside, no matter what the weather was, and look through the glass and watch the ticker tape go across. And so I'd be out there every day. And eventually, they invited me in to sit with the brokers. And so, literally, they just saw this guy outside looking in every day.

Yeah, bring him in. What's he out there every day for? So, in fact, I'll take it a step further, that getting involved in looking at the markets and looking at the ticker tape started when I was 12, 13 years old. Because there was a precursor to CNBC, and it used to be on during market hours, so obviously I had to go to school. But when I was off on vacation and maybe I'd miss a day at school, I'd just watch it all day long. And there was a local brokerage firm that was in downtown Great Neck, and they'd have front-row theater seats, and every chance I'd get, during the summer or whatever, I'd go down there and sit there, and actually got a job next to the brokerage firm so I could then go in and see what's going on.

So while you were at Wharton and you were looking at the ticker tape, were you making money as an investor?

Actually, I'll tell you another ridiculous story. My father puts my tuition in my checking account at the beginning of the year, so what do I do with it? I don't pay the tuition; I'm trading it. And I didn't make any money, but didn't lose any money, and I went to get my diploma at the end of the year, and they said, "We'll give it to you. It'd be nice if you paid."

And so were there no painful learning lessons in that period? Did you kind of get killed on a position? I mean, was there? Oh, yeah. What was something that you remember that you really learned about trading?

We were buying options in some energy company or something, and betting on some exploratory well, and that well ended up—" "And this was just on your own, or you had a little group of friends?" "We were in Wharton. You've got to remember that these guys are in the business.

"I went to Wharton. I wasn't doing any of this stuff." "Well, we were."

We were. And there was a group, my fraternity. And we'd literally sit there every day, read every paper we could. And that's what we did. I learned more from reading The Wall Street Journal and other publications than I did actually in the classes that I took, specifically on the markets.

And when you graduated from Wharton, you went to Gruntall, which was not the most well-known firm, but not Goldman Sachs or Morgan Stanley. Something specific you were targeting was there something about grunt all that you liked and then there's some Kind of well-known story about your first day on the job when he tells about that.

It's simpler than that. One of my best friend's brother's best friend was running the option arbitrage department at this firm, so he was the guy who started, and he brought me in as a second. And I was using them as a broker during college, so there was a little nepotism going on there. So I came in, first day I made money. They had me doing arbitrage, buying stock, buying puts, and back then the markets were a lot more inefficient, so it was easy to make money. And so I did that, and they paid me like 12 grand a year to start, which wasn't a lot of money, even—" "This is in the '70s?" "This was '78." "Okay." "And then by the end of—you know, I graduated early, December of '77. And within a couple months, I'm telling my buddies, I go, 'Yeah, I think I'm going to make 100 grand this year because, you know, I'm doing well and I can see what they're doing.'

You could almost play poker for one night with your grandfather.

Exactly. Maybe one night. I would have liked that. That would have been fun. Then by the end of the year, I think I'm going to make a million dollars a year, which was real money in 1978. I'm 21 years old, 22.

"That's where it started. They gave me a lot of rope." "How long did you stay there? Were you just like, 'I've got to go do my own thing now'?"

I was there 14 years, which is a long time, but it was a great situation. But I eventually outgrew it, and I wanted to do something more. And, you know, so listen, 14 years is a long time.

So when you left Gruntal after 14 years and you just started S.A.C., what was the vision? What were you going to do different than any other firm out there at that time?

Well, I mean, the vision was to do what I was doing at Gruntal, just do it bigger. And I already had a team in place. I was already hiring people to trade money outside of me. So essentially, the business model was already established. And then what I needed was more money to keep building it. And so I had no idea. We started with $20 million. I put up half the money. And I had no idea what it would turn into. If you had asked me that question in 1992, I would have said, "$100 million. That would be amazing." But it just shows you, it just keeps going.

But there's not a lot of people that have been able to transition from being not just a great investor, but clearly also a great entrepreneur, a great manager, and a great business builder. I mean, how many employees do you have right now? I have about 1,400.

Yeah, I mean, to oversee 1,400 people. And I know everyone's name. But, yeah, it's a lot of people. You've got to build an organization. That's a different skill set. I've always had good people help me run the business.

But you're still trading every day. You still have a book, and you still are in there trading.

I'm still trading every day.

That really does differentiate you from most of the other firms that are of your scale and size. A lot of the people like you that used to be you have transitioned to being really more CEOs. You are the one that's really still there, and it probably affects recruiting and people that want to be trading next to the boss as opposed to just working and reporting to the boss.

It's recruiting. People want to know that I'm still interested in the markets. I can teach them. They can talk to me, ask questions. I'm right in the middle of the floor. So I'm not sitting in some office someplace by myself. I'm right there. I'm very accessible.

And the intensity, you can keep this going? Well, I feel good. 62 isn't still feeling pretty good.

10 years from now, I told somebody, if I'm still sitting there, someone get a gun and shoot me.

So the firm evolved quite dramatically. I mean, at the beginning, you were known as a very short-term trader. You were in there, arbitraging situations, whether it was a pure arbitrage or just you thought the stock was cheap and then it got back to fair value and you were happy to take advantage of it. You really have morphed into a much longer-term, more patient investor. Still, you're not Warren Buffett, but you're still... And Warren Buffett's not me.

That's true.

That's true. So talk a little bit about how you've evolved the firm and just kind of how your view on investing is different today. Even you yourself said it's more efficient today, so it's a little bit different.

Yeah, well, when I was at Gruntal, when I started the firm, we didn't have any analysts. I was doing everything just looking at the tape and trying to figure out just by essentially pattern recognition. Right. But that wasn't scalable, so then I started hiring analysts and PMs and what I would say is the precursor to what I have today, which is a fundamentally driven firm. And it was a lot less crowded, the hedge fund industry, 20 years ago. And I started in 1992. There was a bull market from 1992 to the year 2000. The S&P was up almost every year 20%. So it was incredibly easy. And there wasn't a lot of competition. So our returns were great. And I think I kind of snuck up on people because I think there was a different model, sort of the Tiger model and maybe the macro model with George Soros.

And so this was a different—it was a trading model. And then people started saying, "What's going on here?" And they started copying, which is typical business. Excess margins get competed away. And so the returns that we generated in that period, we still did really nice returns the next 10 years after that. But it was definitely less. And we're running more money. And it's a much more complicated business. And the thing I take great pride in is that I kept changing the business. Even when we were doing well, I kept trying to change the business to where I think it was gonna go next. And I'm doing it again today.

Well, if you're not changing, you're dying. I mean, there's no doubt.

Well, you know, if you're resting on your laurels, the game's gonna pass you by.

Now, one of the kind of buzzwords today and the big differences about investing today is the use of data. How do you guys use data at Point72? How do you differentiate the data you're getting and how are you using the data differently than anybody else?

Well, you know, data is, we consider it a tool. And it's one tool amongst many that one can use to, you know, look at companies and try to figure out trends. And so I've devoted a lot of resources to it because I do think it gives you a, you know, sometimes a real-time look, relatively real-time look at what's going on in companies and what's going on in sectors. It's tough to do. We must have 50 people doing it from a standpoint of data cleaning, from structuring the data. So there are a lot of firms doing this.

Just maybe give an example, because some people in the audience may not be familiar, but the type of maybe credit card data or shopping center analysis from satellite images of cars in the parking lots of malls.

That's why we tell everyone it's all satellite. It isn't. All companies generate data. There are firms that have credit card data and they'll sell it to you. And they're not selling people—I don't know the person's credit card, it's more of a generalized data set—but you can see trends. And trends from a week ago, two weeks ago, and so it gives you an idea of what's going on in the economy. Now, it comes in in a very unstructured format, and it doesn't come in easily so you can look at it and try to get some knowledge on what the trends are. So it takes a lot of work to work with it. And I actually think it's gotten to the point now where the easy stuff has been commoditized. And you really have to—what we call—you need to interrogate the data.

You have to get down into the data. I'll give you one example. McDonald's is running a beta test of some new product. And they're doing it in Houston, Texas. So if you know the ZIP codes, you can see what's going on there. And if it's successful, you can probably extrapolate that they're gonna roll this out to the rest of the country. And so you're sort of real-time trying to figure out what their next move is gonna be. And if they may not do it, who knows? But it gives you like an inkling that this is something that's going on that's a potential differentiator in that particular company.

How many people worked at the firm in 2016?

When was the family office? 1,100? 1,100.

So you had this incredibly successful business. The firm had this situation with the SEC. The firm made a settlement. What happened? I don't know what happened. The firm made a settlement. You never were involved yourself individually. And so for four years, you're running your own money as a family office. Now, I'm from the perspective that that's the be-all and end-all, to run a family office. There's nothing better than that. Especially when it's not your own money. Why did you want to come back?

Why did you want to come back and run other people's money? Well, it never bothered me having other people's money because I had a lot of my own money. So in some respects, it is a family office. I have outside investors also. And so, frankly, we couldn't grow. There's only so much capital I had to devote to the business and I had lots of ideas and lots of things I wanted to do and grow our international business, grow our quant business and things like that. And so it just made sense to bring in outside capital. And it was actually not hard. I mean, I only did like 10, 15 meetings. It was really easy. I made one trip overseas to one client. My staff did an amazing job. And we've raised probably, I don't know, $5 billion, something like that, so fairly quickly.

Let's transition a little bit to talk about art for a second. Take us back. What do you view as the first work of art that you bought?

It was a Fauve picture, which is a period around 1905, 1906, very colorful, very pleasing to the eye. Like a Franz Marc or something? No, like an Albert Marquet, a very beautiful French beach scene.

And you just stumbled upon it? Or how did you come to that?

I was taken into a gallery in Paris and shown this work. And I had people in my firm who were collecting. One was collecting contemporary art. Another person was collecting Old Masters. I thought the Old Masters were, eh, I didn't love that. It seemed a little kind of out of date.

So how soon from that first purchase did you really get the kind of, "I'm now a collector," and really get into the art?

Well, I got into it pretty quickly. Once I commit to something, I tend to go at it pretty hard. And I went at it hard. And it was at a moment where there wasn't a ton of competition.

So I was getting offered a lot of great things. And this is great works by dead artists, or this is contemporary right off the bat?

This was generally Impressionist and Modern art, so maybe it was one or two people.

And so what was the transition? Because you're really now more of a contemporary collector now.

Well, I do all. You do both. I run the gamut. I bought an Impressionist picture earlier this year. So I think most of it is post-war and contemporary today, but I will go back for something I like.

And on the contemporary side, do you enjoy going to studios and meeting artists? Is that something that you have the time and the ability to do?

I wish I could do it more, because it's really cool getting into the studio and talking to the artists. A lot of times you look at pictures, you don't have context. And once you get context, then you kind of understand why someone was doing something. I bought a Robert Indiana, and it said, 'Eat, Die.' And you look at it and go, 'What is that?' And what it turned out was the artist, his mother, on her deathbed said, 'Did you eat?' And she died. Like, you know, that's the story behind it. It may not be a good story, but at least you have context like what this is, because it made no sense otherwise.

All right, tell us a good studio—like a really good studio visit you've had recently that was really memorable to you.

Recently? Last few years. Well, I'll tell you one I did which was cool. In 2006, I was in Damien Hirst's studio in England, and we did a spin painting together, which was—much, I don't know if he's done that with other people, but I'm sure he has. So I have a feeling that work is not worth as much as his work. And so you made it with him? Yeah, I made it with him. You poured the paint? Poured the paint. It was like one of those spin art things.

But it was a big thing. It was essentially a commission that you were buying the piece? I wasn't commissioning anything. You didn't even buy that piece?

No, he said, 'Let's just do it.'

And he gave it to me. Right. Oh, that's cool. Well, when you're getting gifts from Damien Hirst, there you go. That's a good gig.

I should go do that. So, all right, tell us the story of—one of the most famous works you've bought is the Picasso Le Rêve from Steve Wynn. Sure. It took a couple of tries. So it's a pretty spectacular painting. But talk about the first time you tried to buy it, and what happened, and then how it came back around.

Yeah, I was shown this painting. It was obviously a phenomenal painting. And I'd seen it for years. He had it in the Bellagio Gallery, and just gorgeous picture. And he decided to sell it. I bid for it, and I bought it. And I get a call—I bought it on a Tuesday—I get a call Wednesday night from the dealer saying, 'You're not going to believe this.' And I go, 'What's going on?' He goes, 'Steve Wynn just put his elbow through the picture.' I go, 'Come on. That's ridiculous.' And sure enough, he doesn't see very well. And what was really interesting later on is that there were multiple people there when it happened. Barbara Walters was there. Nora Ephron was there. Nick Pileggi. David Boies was there.

They were all there when it happened. And I've seen them all telling me about this later on. And they said it was really like they just sat there stunned. And he kept talking, 'I did that,' whatever. And so they actually sent it to New York, and I inspected it. And obviously, it wasn't a big hole, but it was an obvious hole. And for that type of money, you try to buy a picture without a hole. You know, if there's a hole, you maybe get it for a little less. But they fixed it. They called it minor surgery, and he ended up keeping it. And he promised me if he ever sold it, he would offer, you know, give me first shot, and they decided to sell it. I bought it in 2012. For more money? Well, a little bit more money, not a ton more.

Right. I bought it. That was that.

Amazing. And then more recently, you bought an incredible Lichtenstein for $165 million. Yeah, that price is not correct. OK. I just want to correct you. I appreciate that. From Aggie Gund. I don't want you starting rumors. A spectacular piece. When you're dealing in a work of that magnitude, is it the same thing as buying something for $2 million? How is it different? It's like buying this cup. No, I'm kidding.

You know, it's... You know, obviously it's a lot of money, and you gotta be... It can't be flipping. I mean, it can be flipping, but, you know, I take it serious, and I wanna make sure that it's something I really want, and for that type of money, and you don't wanna make a mistake, and so... These are big decisions, and you don't make a lot of them over time. You make some, and so you think about it. But then you just look at it, and you go, "My God, this is an amazing, amazing thing." See, that's the problem. This is such a nasty habit. And you know, because you collect. And it's just the collector's mindset. When they see something they love, they want it. And money is important, but it's special.

Now, in that situation, Aggie took much of the 150 million or so proceeds that she got and started this criminal justice reform movement. Was that relevant? Did you even know about that? Or for you, it was really just you wanted the picture and that's it?

She didn't ask me to donate to it. I have my charities and philanthropy; she has hers. You usually can't buy—oh, wait, my futures are down. Dan, I'll be right back, I gotta sell something. You can't buy a great piece of art unless you have a great collector selling it. Right. I mean, you gotta get lucky. You gotta be in the right place at the right time. And there's more competition than ever for great things today.

And how often is somebody calling you with a masterpiece? And how many people are even allowed to call you? I mean, do you have, like, a handful of dealers that they really have a direct line to you? Or how does it work?

You know, the art world's fairly small. It's not a big place. And so people who transact in that arena is pretty small, and you know who they are. And so I have relationships with them, and I'm sure—listen, they have lots of clients, so they don't have to offer it to me. I'm sure they're offering it to lots of things to lots of different people. So I get offered maybe once, twice a year max. I don't buy everything that's offered to me.

And you do sell sometimes. So what makes you sell something? How does that process work?

Well, I mean, as a collector, you can't own everything, right? I mean, you've got to make choices. And sometimes you're selling because you're upgrading your collection. Sometimes you're selling things to buy something else. You're sort of deciding, for one reason or another, you can live without that work and there's something you want more.

And do you have to have sensitivity if it's a living artist, if the dealer will be upset? I mean, do you worry about that or not too much?

Well, most of the stuff, I'm sensitive to that because I value the relationships I have with the people I work with. And I don't want an artist mad at me because I sold something that he thought I was going to keep. And so, in my mind, it's not worth it to burn a relationship. And I don't think that way. So if I decide—and every once in a while I will sell something—and I'll tell them, and I'll give it back to the dealer and say, "You sell it and do it the right way." And maybe I'm sacrificing some profit by doing it that way, but to me, it's the right way to do it.

You're viewed as one of the greatest traders in the history of Wall Street. You have this incredible sensibility and a natural gift, maybe, for how to trade securities and how to manage investments. Do you have to battle some inclination sometimes when it comes to art that, "Oh, man, I know this is the time to sell this, but it's just you can't treat art the same way" type of thing? Art's different.

I'm not even thinking from, like, "Oh, how do I trade this and make money?" I buy it because I love it. And I'm doing it for different reasons. I was lucky enough to buy things and they went up in value. But if they didn't go up in value, it would have been fine. And that's the way I do things. This is not a business for me. This is a hobby. I got a business, and I do that over there.

Have you ever done the math? Has the return on your art collection been better or worse? Do you have an idea how it's been?

I haven't done the return analysis. I can tell you that, in general, you know the stats. Art goes up 5%, 6% a year. I bet you've done better than that. Well, probably. But also, I bought great things, but I also bought it at a time where the market was, it's been a bull market. And you know in a bull market that anybody can make money, as long as you're putting money to work.

Is there something about your collection that makes it a Steven A. Cohen collection? Is there anything that's consistent across, as opposed to just a bunch of really great works?

You know, I tend, I like bold works. I tend to like things that are like in your, a little bit in your face. My Francis Bacon is like that. The de Kooning Woman's like that. You know, they're incredible pictures, but they're strong pictures. And I tend to like abstract a lot, and they tend to, the best painters tend to be fierce painters. You know, they tend to be really strong in how they go about their work.

Now what about next steps with the art collection? I mean a lot of people have opened their own spaces. Glenstone just expanded with Mitch Rales and Emily Rales collection and obviously everybody in Miami. Is there an interest at some point in having a Steven A. Cohen place to have some of your collection?

That's a tough one. I don't know, because in the area we live, there's only MoMA, the Whitney, the Met. You've got some pretty stiff, you've got a lot of art sitting in this area. You know, perhaps down the road, it's not a major driver for me now. At some point, I guess I got to think about what I'm going to do with this stuff. I mean, I'm sure my daughter would love some of it, but myself? But, you know, I'll figure it out.

And is collecting something that you do at all with the kids or with Alex?

I'm doing it with Sophie now a little bit, and she's working at Larry Gagosian's and has gotten into the art world and seems to be enjoying it. I think the other ones are, you know, they have their own things that they like to do, and art's not one of them.

All right, cool. Let's get to a couple of these questions on the index cards. A couple of other things, though. Billions. You watch Billions?

What is that? Is that a good show?

I'm asking you.

I watched it the first season. I mean, it's a composite of multiple people. Did they call you in advance and give you any kind of heads up? They wanted to talk to me, and I didn't do it. I know other people did it, but I didn't do it. I can remember being in Les Moonves' house, and he was apologizing to me already. I said, come on, Les, relax. It's a composite of a lot of people. But I'll tell you one funny story with that. I was in China looking at private companies about a year ago, and I'm talking to every CFO who wanted a picture with me because they wanted to bring it to their wife and say, that's the Billions guy. There you go.

I mean, in general, do you have a problem protecting your privacy? Is that something that's an issue or not really for you?

Well, I don't know what that means, protecting your privacy. There is no privacy anymore. I get stuff written about me every day, every other day, and it tends to be sensationalized. And that's just the way it is. That's the world we live in today. There's nothing you can do about it, so you can't let it bother you.

Interesting. Good philosophy. All right, let's see about some of these questions. You can't ask that.

Oh, come on. That was the one question I didn't want to answer. What do you think of cryptocurrency? I feel like that's like, you know, everyone talks about cryptocurrency. What do I think? I think it's dicey right now. I think the use case is still to be—outside of Bitcoin, which is, you know, some people believe it and some people don't. My son certainly believes in crypto. But the use cases are still being developed. And at some point, the blockchain is going to really matter. The question is, can you make money off the blockchain? And I don't know the answer to that.

Do you think they'll ever use blockchain or any other technology to carve up bits of paintings and sell 0.01% of a Picasso?

Yeah, I saw something—that was the other day—that some crypto company wants to do that in real estate. No, Novogratz wants to do that. So everyone—I've heard that one a hundred times, you know, securitization of pictures and selling pieces. I doubt it. I don't think, you know, you want to talk—art's pretty liquid already. You're going to make it even more liquid by owning the left part of the corner of the picture? Who's going to want that? I'll tell you what might work, though, and I've had conversations: the idea of creating digital images and owning the image, as opposed to—I've heard that. Sounded more... I don't know. But everybody can just make a digital image. That's right. That's right. But it still could be.

But if you own that particular image, unique image, that might be interesting.

This question is, which investor do you most admire?

I would say, at least my contemporaries, I would say Stan Druckenmiller is the real deal. Whenever you talk to him, you get insights and thoughts that you don't hear any other place. A lot of us are synthesizing a lot of people's thoughts and putting them into figuring out what we think is important and what isn't. He's creating those thoughts.

And he decided not to take any more outside money. He was happy to run his own money.

Yeah, he gave up his firm and decided to go a different way. And listen, it works for him.

All right, next question is, 'Please name two or three emerging artists you are interested in.' 'I want names.' 'You want names? Wow.'

The person's going to hold me. I'm wrong. That guy's coming back hard. Who do I really like? Who I think is really great? Urs Fischer.

Emerging? I'm not going to let you get away with it.

I'll give you a big gap below Urs Fischer before we have to get down to two emerging. Who's emerging that's really interesting?

Yeah, my daughter's yelling out Marcus Jahmal. I like him, he's okay. You know, I think Jen Guidi's pretty good. You know, I think she's interesting. Those pictures are really nice to look at. Happens to be Mark Grotjahn's ex-wife. What, wife? Oh, the ex-wife. And, God. You know, nothing crazy. I'm finding a lot of art today that I'm going crazy for. It tends to be sort of similar type artists that you and I both know. And frankly, my time is so stretched. Rashid Johnson, I think he's an interesting artist in Brooklyn. I like him a lot. I think he's doing great work.

All right. There you go. You got a member of his fan club in the front row. Is this the beginning of a bear market? And if not now, when do the bears start?

That's a tough question because we're in a weird situation. I don't think any of us have seen a set of facts that we're seeing today where there's a stimulus with unemployment at 3.7%. And wages are starting to go up, which means the Fed's going to lean against that. And the market's starting to get worried that, one, the stimulus is gonna roll off, so we're seeing peak-ish earnings, and at the same time, employment is still pretty strong, and wages going up, and the Fed's primary mission is to fight inflation, or potential inflation. So we have this kind of box that the markets are in, and how it plays out, it's hard to know. It's gonna play out—I mean, if the economy continues to grow, wages are gonna continue to go up, and the Fed is gonna continue to tighten, and normally that's how a cycle ends.

And the question is, do they take their foot off the gas and give it—you know, oil's down a little bit, so, you know, $15, $20 over the last month, so that helps inflation. And so you can come up with scenarios, because the dollar's strong, that the Fed decides to pause and maybe the markets get a breather here. But ultimately, I think that cycle's going to happen. And so we're definitely late-cycle, and so at some point we're going to enter a bear market, and it's going to happen, I don't know, next year and a half, maybe two.

This is another market question. How do you determine inflection points versus a dead cat bounce?

Well, that's what we get paid to do. We get paid to figure out what's going on and try to figure out why stocks are moving the way they're moving. And a lot of that has to do with doing really solid work. I mean, you can get a financial crash—we saw that in '87—but most of the time, the reason markets go down is because the economy turns bad. And so I have 150 analysts. I'm monitoring thousands of companies. And so from that, you can get a sense of what's going on in these companies. Are things slowing? And they talk to investors. They report their earnings and their transcripts and stuff that you can read, and in addition, we have our own data that we follow and see if things are changing, and you can start to build a picture of what's really going on in the economy.

But there's a lot of variables.

But so for right now, you still are pretty comfortable with the market. The market goes down 600 yesterday. You're more a buyer than a worrier.

I'm not comfortable. I'm not uncomfortable. I'm sort of in the middle. I can come up with a scenario where we go up first, then go back down again. I can come up with a scenario where the Fed pauses. The economy's still growing 2.5% next year, which isn't bad. And the markets hang in there. Sometimes it's not that easy. I don't think the returns over the next two years are going to be very good. If the market hangs in there, there's just going to be marginal returns.

But you're still investing every day, and that's your job.

We're long/short, so we're on both sides of the market. Hopefully, in a normal world, we can make money on the upside, we can make it on the downside. Got it.

Okay, this question is, what was your worst investment ever? Oh, my God.

I'll tell you a funny story. I was long a healthcare company, and we had a massive position. They missed, you know, I don't know, lost $100 million or something. This was in 2002, which at that time was a decent amount of, you know, percent of our, you know, it was a big loss relative to our capital. And my wife is taking pictures at home that night, and she's got me putting on this costume, and I'm like, and I am livid. And I turned to the photographer and said, "You got five minutes, and that's it, I'm out of here." And because that was a miserable day, but, you know, let's say you're going to have bad days. You stick around long enough, you're going to have bad days.

And an art question. How do you view the recent Banksy stunt?

I thought it was cool. People get so serious about art. Art can be fun. Do you collect any Banksy? I don't, but I bet you my kids will. I thought it was cool. The person who bought it probably got lucky there and owns something that has a story behind it. Do you think Banksy was the seller? I have no idea. I have no idea. I do. Okay. Well, you could tell us.

Just a view. What's your view on the—how come I'm revealing it? What's your view on the China TMT space? Are Alibaba-like companies taking over?

I mean, that's an interesting situation because I was over—I told you before, I was over in China last year. I met with Tencent, I met with JD, I met with a bunch of companies, large companies, and you get blown away by what's going on over there. And the only risk is the government. When you talk to people in China, you talk to entrepreneurs, they acknowledge that the government can take all their assets at any time. And that's a little bizarre. And what's happened this year is the government's really started cracking down, you know, whatever reason, out of fear, out of control, or whatever their motivations are, on these large companies. So I thought it was weird that you have this incredible entrepreneurial spirit in China,

you know, partnered with a communist society, you know, which is bizarre. It's not, you know, when you go to college and you think economics, that doesn't seem to fit. Yet it was coexisting, but we've seen this year where the government has taken a heavier hand. And so, but these are the clear winners. I think the government likes these large companies where they can control the information and sort of be in partnership with these companies. And so, yeah, I think Alibaba's a winner. Now, the only question is, will the government allow them to keep the money, or... You can say the same thing about Amazon, Google, and Facebook, though.

The political risk there is probably the biggest risk right now.

Well, I mean, they're under pressure, too, obviously, from both sides, Republicans and Democrats. Republicans don't like the fact that they think that companies are biased against them, and Democrats don't like the privacy issues. So there's not a lot of fans for social media companies in the world today in politics. But you can make an argument that they're going to regulate them, and obviously that would constrain them to some degree, but also prevent other people from entering their business. The barriers of entry become tougher, so they become more entrenched. So we'll see how that plays out. But in the long run, I don't think it's, even if they were regulated somewhat, if they broke them up or something or something else, I actually think they'll benefit in the long run.

So this question just has to do with the overall markets. You talked about the inefficiencies in the markets in the '70s being an opportunity. There's obviously less low-hanging fruit, so to speak, in the public markets today. Is that just something that's changed? Obviously, a lot of people are moving to index funds. Hedge funds are closing. Most people, value managers in particular, have been underperforming for half a decade. Where do you see the future of public asset management versus indexes?

It's a trend that I don't know when it's going to break and if it ever breaks. I mean, it's obviously people have decided, just as investing, as in other areas, to make things low-cost and spend very little on their investments. Used to be a broker would charge big commissions. And listen, my hedge fund charged a big fee and still charges a decent-sized fee. Now, we get compared to the S&P sometimes, and I think that's not a fair comparison because we're long-short and the S&P is long. I mean, they're long stocks. And so in certain markets, we'll outperform, and when the market's in a bull market, the S&P will outperform. My investors are looking for a certain safety of capital in addition to earning a decent return.

And so I'm marketing to a different group. But to your point about hedge funds are closing and people are going to index investing versus active investing, I think that's a trend. I don't think it's going to go away. And so we see it on a daily basis where the liquidity in the markets are not what they used to be. And so that forces us to change what we do.

So Steve, what lies ahead for you now? You're back in business. You've got a giant firm again. You've got this great art collection. You've got a great family. You strike me as a guy that sets goals and achieves them and moves to new goals. What are some of the goals left to achieve for you?

Well, you know, it's a good question. I mean, I'm trying to rebuild my firm right now and think about things not just from a fundamental point of view, from a quantitative point of view. I do a lot of these salon dinners where I invite, we usually pick a topic and invite the experts. We did one recently in quantum computing. And that's coming down the pike over the next few years. A quantum computer can theoretically calculate stuff thousands of times faster than the best computer existing today. Well, you can imagine with that type of compute power what you could potentially do. And the type of people who have the ability to create software and program in the markets are going to have a distinct advantage.

And so it's important for me to know these things and figure out, okay, if this is coming down the pike, how am I going to take advantage of it? And how am I going to hire the people who are going to help me do this? But, you know, that's the nature of the world. The world keeps changing. And if you want to stay in this business, you've got to keep changing. You've got to keep adapting. You've got to keep up on what's going on or else you're going to be out of business.

And are there any big goals that you have or ambitions outside of your work?

Well, I like to live a long time. That'd be good. You know, I mean, you know, I want to enjoy my family and, you know, there's no doubt philanthropy is becoming a more important part of my life and, you know, obviously that'll grow and I got a great life. I mean, I could pinch myself. I feel really blessed. I just want to have fun, meet interesting people, and look back and go, 'Wow, that was awesome.'

No better way to end than right there. Thank you all for coming. Steve, thank you very much. Thank you.