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Hedge Fund Uses Japan to Predict International Equity Growth

By Benedicte Gravrand

GENEVA (TheStreet) -- Equipped with a couple of engineering degrees, Robert Page started his career at Lehman Brothers' interest rate derivative option desk. In the early 90s, the bank offered him the whole Yen derivative book to trade; he moved to Japan and built the book into a large business with 12 currencies.

"It was a very interesting time to begin trading in Asia," he says in a recent Opalesque TV interview. "I arrived in Japan the week that the Japanese Government Bonds market began its collapse of 1994. In my first week of trading, I learned that the market absolutely collapses for unforeseen events; that was my first trial by fire, the first time running a large amount of risk."

Page ended up being Lehman's most profitable trader. One of his most lucrative trades was on floors on Yen interest rate in the mid-90s. There was an element of arbitrage trading at the time. "What I took away from that," he notes, "is that sometimes models can be wrong and you really have to do your homework, extensive amount of research and then spot these opportunities."

Apart from the benefits of extensive research, his other lesson he gained from his experience is not to overtrade.

"Later on I moved to Credit Suisse, and there, they definitely had the appetite to run large risk, both in swaps and government bonds, in government bond futures," he explains. "What I found about running large positions is you don't need to overtrade them.

"You just have to do extensive research and be really confident in your position and that having done your homework allows you not to overtrade a good trade, and just sit back and let the trade work itself out. If you have done your work, you'll be the first or one of the early adopters of a trade, and then everybody who comes after will push your trade into profitability."

These lessons have taught him how to run significant positions in the macro space. Which is where he decided to go.

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