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Page 151

As with most disruptions, JWH was hurt in the beginning but ultimately had the best quarter of Henry's career. The dollar eventually declined precipitously, and financial and metals accounts open the entire year all made in excess of 200 percent net.

The Russian/LTCM crisis in 1998 caused large market disruptions leading to excellent profits. All of the JWH programs did well during this time frame. The financial and metals program made more than 30 percent in August and September while the stock market suffered losses. For 1998 as a whole, the financial and metals program was up 7.2 percent.

In 1999, JWH's financial and metals program was down 18.7 percent—its largest annual drop. Regarding the markets in 1999 and most of 2000, Henry says it is frustrating that the sectorwide moves that he is accustomed to seeing have not emerged. "Every time we have poor periods of performance you hear the cry, 'Trend following is dead. The markets have changed.' That's an oxymoron. I strongly believe that the markets are ever-changing and the time will come again for our basic philosophy to bring us to new and higher performance levels."

Henry kept to his methodology and strategy in a difficult 2000. After declining 25.9 percent through September, the financial and metals program rebounded sharply in the fourth quarter by 45.5 percent, giving the program a 12.9 percent gain for the year. JWH attributed the strong trading in the fourth quarter to strong trends in bonds and the dollar.

Identifying trends is key. Not that many people may be good at identifying trends, and in some periods they are more difficult to identify than in others. Examples are the past few years as well as the 1960s. During these difficult periods, you try to survive by keeping leverage low. This is where Henry's discipline becomes evident. His philosophy is "what is" is more important than "what should be," especially regarding price and direction.


Henry says that he always perceived himself as a conservative investor, and that is one reason why he prefers his diversified programs. The aggressive financial and metals business, driven by client demand, overwhelmed the firm, however. At its peak, he estimates that 60 percent of their business was in financial and metals.

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