Michael Steinhardt: Variant Perception, the Block Trading Desk, and 28 Years of 24.5% Returns

In July 1967, a twenty-six year old Brooklyn-born Wharton graduate named Michael Steinhardt opened a hedge fund called Steinhardt, Fine, Berkowitz with seven point seven million dollars in capital. He had two partners, Howard Fine and Jerrold Berkowitz, and outside backing from William Salomon of Salomon Brothers and Jack Nash of Odyssey Partners. He had been trading since his bar mitzvah at age thirteen, when his father gave him stock certificates instead of the usual gifts. He had finished Wharton at nineteen, graduating in 1960. He had spent the previous seven years working at Calvin Bullock and Loeb Rhoades, building a reputation as a young analyst with an unusual capacity to think against the consensus.

Twenty-eight years later, in 1995, Steinhardt closed the fund. Across that period, the firm had compounded capital at twenty-four point five percent net annual returns, after a one percent management fee and a fifteen to twenty percent performance fee. The figure is, by any reasonable measure, one of the most extraordinary long-term track records in the history of hedge funds. The S&P 500 Total Return Index over the same window compounded at approximately ten point nine six percent. Steinhardt’s net annual returns, after fees, were more than double the S&P’s gross returns over twenty-eight consecutive years.

The dollar arithmetic is more striking. One dollar invested with Steinhardt Partners in 1967 was worth four hundred and eighty-one dollars when the fund closed in 1995. The same dollar invested in the S&P 500 Total Return Index would have been worth approximately twenty dollars. The compounding gap between Steinhardt’s record and the broader market is the single most important number in the case for active management as a serious discipline.

And then, in 1995, after a year in which the firm had recovered from a thirty percent drawdown to finish up twenty-two percent, Steinhardt walked away. He told his investors he wanted to find something more virtuous to do with his life than make rich people richer. He returned all capital. He took a sabbatical. He came back in 2004 to chair WisdomTree Investments, but the active hedge fund career was over.

The arc from Brooklyn bar mitzvah stock certificates to one of the most successful hedge fund track records in the industry’s history is a story about a single intellectual concept: variant perception. The willingness to hold a view at odds with the consensus, sized aggressively when the conviction is high, hedged when the conviction is uncertain. This is the story of how Michael Steinhardt built that framework, what he did with it, and what his career means for working traders trying to develop variant perception of their own.

Brooklyn, the bar mitzvah, and Wharton at sixteen

Michael H. Steinhardt was born on 7 December 1940 in Brooklyn, New York. His upbringing was unusual, and the most honest profile has to engage with the family background directly. His father, Sol Frank Steinhardt, also known as “Red,” was a felon and compulsive gambler who served prison sentences for buying and selling stolen jewelry. He was a peripheral figure in the Genovese crime family of mid-twentieth century New York. He bankrolled his teenage son’s early forays into the stock market by giving him envelopes of cash to invest. The family money was, by Steinhardt’s own subsequent acknowledgment in his memoir No Bull, partly the product of illicit activity. His Wharton education, he has acknowledged, may have been paid for with funds of disputed provenance.

The family circumstances are not incidental to the trading career. Steinhardt grew up watching a father who lived by the calculation of risk and reward, who treated bets as a way of life, and who had developed the temperament required to absorb both wins and losses without losing focus. The same temperamental inheritance, channeled into legitimate finance rather than gambling and theft, would produce the trading career that followed. Whether the inheritance is something to celebrate or to grapple with carefully is a question every reader will answer differently.

At Sol’s bar mitzvah gift to thirteen-year-old Michael in 1953, the father gave the son two hundred shares of stock instead of the usual ceremonial gifts. He also periodically gave Michael envelopes of one hundred dollar bills to invest in the market. The combination of unusual capital access and unusual temperament for a teenager produced an early start in markets that few of Steinhardt’s eventual peers could match. By the time he was twenty, he was predicting quarterly earnings on individual companies to the penny. He has subsequently described doing this very well.

Steinhardt entered the Wharton School at sixteen and graduated in 1960 at nineteen years old. The age compression matters for two reasons. First, it suggests the unusual cognitive capacity that the eventual trading record would confirm. Second, it placed Steinhardt on Wall Street earlier than virtually any of his peers, with more years of compounding experience by the time he founded the hedge fund.

Calvin Bullock, Loeb Rhoades, and the analyst years

After Wharton, Steinhardt joined the mutual fund company Calvin Bullock as an analyst. He subsequently moved to the brokerage firm Loeb, Rhoades and Company, the precursor to what would later become Shearson Loeb Rhoades. The roles were standard for a young finance professional of the era. The performance was not.

Steinhardt developed a reputation in those years as an analyst with an unusual capacity to identify situations where the consensus view of a company was wrong. The pattern was visible early. Most analysts spent their time confirming what other analysts believed. Steinhardt spent his time looking for situations where the consensus had drifted out of line with the actual fundamentals, and where a careful reading of the data would support a different conclusion. The intellectual habit, formed during the analyst years, would later become the central organizing principle of Steinhardt Partners.

One detail from this period that Steinhardt has discussed publicly involves how he met his eventual wife Judy. They met in 1967 in a car pool he organized for the commute into Manhattan. During one of those commutes, Michael mentioned the name Colorado Milling and Grain Elevator. Judy mentioned it to her father. Her father invested. The company was acquired by Great Western Sugar in 1968 and renamed Great Western United, and the investment produced a substantial profit. The episode is characteristic. Steinhardt’s analytical work was producing investable ideas before he had a fund to deploy them through, and the network of people around him benefited from the information flow.

Steinhardt, Fine, Berkowitz: the founding

By 1967, Steinhardt was twenty-six years old and ready to build his own firm. He partnered with Howard Fine and Jerrold Berkowitz, two analysts of his generation, and raised seven point seven million dollars in starting capital. The outside backing came from William Salomon, the former managing partner of Salomon Brothers, and Jack Nash, who would later found Odyssey Partners. The fee structure was the relatively new “1 and 20” model: a one percent management fee plus twenty percent of profits. Steinhardt, Fine, Berkowitz was one of the few hedge funds at the time operating under that model. The structure would, over the following decades, become the industry standard.

The first full year of trading produced an eighty-four percent return. The figure is exceptional even in the context of the late-1960s bull market. Steinhardt, Fine, Berkowitz had bought what were, at the time, the dominant story stocks of the era. Anything with “data” in its name, anything with an “-onics” suffix. The market was rewarding growth, and the firm was deploying its capital into the names that growth investors were chasing.

What set Steinhardt’s firm apart from the broader cohort of late-1960s hedge funds was what happened next. By the end of 1968, Steinhardt’s analytical work was telling him that the bull market was running on momentum that no longer matched the underlying earnings. He started 1969 by shorting story stocks against the firm’s long positions. The firm was, in the original sense of the term, hedging.

This is the part of the early Steinhardt history that working traders should sit with longest. By 1969, most of the hedge funds that had been founded in the late-1960s bull market had abandoned the original A.W. Jones long-short hedging discipline. They were running unhedged long books because the market was rewarding pure long exposure. When the market turned in 1969, those funds collapsed. Twenty-eight of the largest hedge funds in the world lost approximately two-thirds of their capital between 1968 and September 1970. Steinhardt, Fine, Berkowitz held its capital because the firm had reverted to hedging when consensus had said hedging was no longer needed. The intellectual discipline to hedge against your own success when consensus rewards aggression is the foundation of all long-term outperformance.

The firm came through 1969 with only a small loss. It actually produced a profit in 1970 while the S&P fell another nine percent. Most of the era’s hedge funds disappeared. Steinhardt, Fine, Berkowitz emerged stronger.

The Steinhardt Partners years and the block trading desk

In 1979, after Howard Fine and Jerrold Berkowitz departed, the firm was renamed Steinhardt Partners. The structural change coincided with a shift in Steinhardt’s operational approach. He had spent the 1970s developing relationships with the major brokerage trading desks, particularly the block trading desks at Goldman Sachs, Salomon Brothers, and the other institutional firms that handled the largest trades on Wall Street.

The block trading relationship gave Steinhardt access to flow information that most retail traders cannot replicate. When a major institutional seller needed to move a large position, the broker would call the buyers most likely to absorb it. Steinhardt was one of those buyers. The information he received in the course of those conversations, about supply and demand pressures across the market, gave him a structural edge. The knowledge of who was selling, why they were selling, and how much they had left to sell was directly tradeable information.

Steinhardt has been clear in interviews and in his memoir that the block trading relationships were central to the firm’s edge during the 1980s and into the 1990s. The personal relationships with brokers were, in his subsequent description, sometimes verging on collusion. The information flow worked both ways. The brokers benefited from having Steinhardt as a reliable buyer of size when they needed liquidity. Steinhardt benefited from the information that came with the deals.

The model produced extraordinary returns. Across the 1980s and into the early 1990s, Steinhardt Partners compounded at returns that consistently outperformed both the broader market and most of its hedge fund peers. By 1993, the firm was running approximately four point five billion dollars in capital with more than one hundred employees. The assets under management had grown enormously, and the institutional infrastructure around the trading had grown to match.

Variant perception

The single intellectual concept most associated with Steinhardt is “variant perception.” The phrase, which Steinhardt has discussed extensively in interviews and in No Bull, captures what made the firm’s trading different from most of its peers. Variant perception is the development of a view that is genuinely at odds with the consensus, supported by analysis the consensus has not done, and held with enough conviction to deploy capital aggressively when the variant view is correct.

The structural insight is that markets price what the consensus believes. To make money, a trader must hold a view that is different from the consensus and correct. Two halves to that requirement. The variant view alone is not enough. Many traders develop variant views that turn out to be wrong, and the contrarian impulse for its own sake is one of the most expensive habits in trading. The correct view alone is not enough either. If the consensus already holds the correct view, there is no money to be made trading on it. The intersection of variance and correctness is where edge lives.

Steinhardt’s analytical work was designed to find those intersections. He read primary documents. He talked to company managements. He mapped the information that the consensus was working with against the information that was actually available. When the gap between the two was large enough, and when the analytical work supported a different conclusion, he deployed capital aggressively.

The framework also informed the firm’s hedging discipline. When Steinhardt had genuine variant perception on a position, the position was sized large. When the firm’s view on a position was not meaningfully different from the consensus, the position was small or hedged. The integration of conviction with sizing is the structural feature that produces sustained outperformance. The discipline to size to conviction rather than to enthusiasm is what separated Steinhardt’s record from the records of the many traders who held similar variant views without similar discipline.

The trading style: short-term, multi-asset, ruthless

Steinhardt is sometimes described as a short-term trader, sometimes as a long-term investor, sometimes as a macro trader, sometimes as a stock picker. The descriptions are all partly correct because the firm was unusually willing to operate across timeframes and asset classes. Steinhardt traded stocks, bonds, options, and currencies, with holding periods ranging from thirty minutes to thirty days. The willingness to be flexible across instruments and timeframes was itself a structural advantage. Most traders specialize in a single style, which means they are forced to deploy capital even when their style is not producing edge. Steinhardt could move between styles based on which one was producing edge in the current environment.

The personal style was famously demanding. Steinhardt was known on Wall Street for an explosive temper. Employees who worked for him have subsequently described an environment where mistakes were treated harshly, where second-guessing was constant, and where the pressure to produce returns was unrelenting. The culture was not for everyone. It produced extraordinary returns, but it also produced significant turnover, and it shaped the firm in ways that became more difficult as the assets under management grew.

Steinhardt himself has acknowledged in his memoir that the temper and the management style were sometimes destructive. The honesty about that aspect of his career is part of what makes No Bull useful. He does not pretend that the trading record was produced by a calm, methodical, kind manager. It was produced by an unusually intense person who was sometimes difficult to work with and who eventually recognized that intensity as a cost as well as a benefit.

The Treasury Note settlement

An honest profile has to engage with the SEC investigation directly. In the early 1990s, Steinhardt Partners and several other firms were investigated by the Securities and Exchange Commission and the Department of Justice for allegedly attempting to manipulate the short-term U.S. Treasury Note market. The case was complex. Steinhardt’s firm had taken substantial positions in particular Treasury issues during periods when the supply was constrained, and the resulting price action raised questions about whether the firm had effectively cornered specific issues.

The case eventually settled. Steinhardt Partners paid approximately seventy percent of a total seventy million dollar settlement, of which Steinhardt himself paid approximately seventy-five percent of the total. The firm did not admit liability. Steinhardt has subsequently maintained, including in No Bull, that the firm did nothing wrong and that the settlement was a practical decision to move past a distracting investigation. The trades in question had reportedly produced approximately six hundred million dollars in profit for the firm.

The episode is part of the public record, and a complete portrait of Steinhardt’s career has to include it. Working traders should think about the structural lesson. Operating at the scale Steinhardt was operating at meant operating in markets where the firm’s positioning could itself influence prices. The line between aggressive position building and market manipulation is, in such circumstances, a function of intent and execution rather than position size alone. Steinhardt’s firm crossed close to that line in the eyes of regulators, paid the price for doing so, and moved on. The retail equivalent is mostly nonexistent because retail position sizes do not move markets, but the principle that aggressive positioning carries regulatory risk at sufficient scale is worth understanding.

The 1994 European bond crisis

The single year that most shaped Steinhardt’s decision to close the fund was 1994. The Federal Reserve raised short-term rates in February 1994, ending an extended period of low rates. The move triggered a global bond market reset, with European bond markets particularly affected. Steinhardt Partners had built substantial positions in European fixed-income securities, including instruments that the firm understood less well than its U.S. positions.

When the bond markets turned, Steinhardt’s positions began losing money. Liquidity in the European instruments dried up. The firm could not exit positions at reasonable prices. Steinhardt himself was reportedly on vacation in China when the crisis hit, and he returned to find the firm bleeding capital at a rate he had not experienced in his career. By the end of the year, the fund was down approximately thirty percent. The dollar amount, on the four point five billion dollar capital base, was approximately one point three billion dollars.

Steinhardt has been candid about what 1994 did to him. The block trading relationships that had given him an edge in U.S. markets did not exist in Europe. He did not personally know the brokers handling the European fixed-income flow. The information edge was not there. And when the positions started losing, he could not catch his breath. He has said in interviews that he felt as if he was playing yesterday’s game, while the markets had moved to a different game he did not yet understand.

The psychological damage was substantial. Even after the firm recovered most of the loss in 1995, finishing the year up twenty-two percent, Steinhardt’s confidence had been shaken in ways that did not fully return. The math of large drawdowns is unforgiving: a thirty percent loss requires a forty-three percent gain to break even. The psychological math is even more unforgiving. The trader who has experienced a near-catastrophic drawdown carries that experience forward in ways that subtly change every subsequent decision.

1995: the closure

In 1995, after recovering most of the 1994 loss, Steinhardt closed the fund. He returned all capital to limited partners. The decision was, on the numbers, premature. The firm was producing returns again. The infrastructure was intact. The institutional reputation, despite the Treasury Note settlement and the 1994 drawdown, remained strong.

Steinhardt’s stated reason for closing was that he wanted to find something more virtuous to do with his life than making rich people richer. The phrase has been quoted endlessly in subsequent profiles, sometimes as evidence of moral seriousness, sometimes as evidence that he had simply lost his nerve. Both interpretations are partly correct. Steinhardt had been trading at the highest level for nearly thirty years. The 1994 experience had been psychologically destabilizing. The accumulated wealth from twenty-eight years of compounding at twenty-four point five percent had reached a level where additional money was no longer the primary motivator.

What Steinhardt did with his post-fund years is also part of the legacy. He founded the Jewish Life Network, later renamed the Steinhardt Foundation for Jewish Life, in 1994. He co-founded Birthright Israel, the program that has provided free trips to Israel for hundreds of thousands of young Jewish adults. He became one of the most significant philanthropists in American Jewish life, supporting educational institutions, cultural programs, and community development across the United States and Israel.

The variant perception that had built Steinhardt Partners had, by 1995, been turned toward something other than markets. The intellectual framework was the same. The application was different.

WisdomTree, the antiquities case, and the post-fund years

In 2004, Steinhardt returned to active markets as chairman of WisdomTree Investments, an exchange-traded fund company that had been founded by Jonathan Steinberg. WisdomTree’s strategy was rules-based indexing weighted by dividends and earnings rather than by market capitalization. The premise, which Steinhardt found analytically compelling, was that capitalization-weighted indexes are structurally biased toward overvalued stocks because the largest weights go to the most expensively priced names. A fundamentally weighted index, by contrast, gives the largest weights to companies producing the most earnings or the most dividends, regardless of their share prices.

WisdomTree launched its first ETFs in June 2006 and grew steadily over the following two decades. By the early 2020s, the firm was managing over one hundred billion dollars in assets, making it one of the largest specialty ETF providers in the United States. Steinhardt’s role was strategic rather than day-to-day, but his presence as chairman gave the firm institutional credibility during the period when it was establishing itself.

An honest profile also has to engage with the antiquities case. Steinhardt was, throughout his career, one of the most significant private collectors of ancient antiquities in the world. In 2021, after a multi-year investigation by the Manhattan District Attorney’s office, Steinhardt surrendered one hundred and eighty antiquities valued at approximately seventy million dollars that prosecutors determined had been looted from archaeological sites in twelve countries. He was barred for life from acquiring antiquities. He was not criminally charged, in part because his cooperation with the investigation produced a settlement that returned the items to their countries of origin.

The episode is uncomfortable, and the most accurate framing acknowledges both the seriousness of what the prosecutors documented and the fact that Steinhardt has consistently maintained that he believed the items had been legitimately acquired. The lesson for working traders is structural and indirect. The intellectual discipline that produces variant perception in markets does not automatically produce ethical clarity in other domains. The frameworks transfer imperfectly. A trader who is disciplined about market positioning may not be similarly disciplined about acquisition processes in other parts of life. The transfer is not automatic.

What Steinhardt actually got right

The career rests on several structural insights that working traders can adapt to their own scales of operation.

Variant perception requires variance and correctness. The contrarian impulse for its own sake is one of the most expensive habits in trading. Disagreeing with the consensus does not produce returns. Disagreeing with the consensus and being right produces returns. The analytical work required to find those intersections is the actual job. Most retail traders mistake one for the other and end up making contrarian bets without doing the analytical work required to be confident those bets are correct.

Hedge when consensus rewards not hedging. The 1969 episode is the most important strategic insight in Steinhardt’s early career. When most of the hedge fund industry abandoned hedging because the bull market was rewarding pure long exposure, Steinhardt’s firm reverted to hedging. The decision cost the firm relative performance during the late stages of the bull market. The decision saved the firm during the subsequent crash. The structural pattern repeats across history. The disciplines that look unnecessary during euphoric periods are the disciplines that determine whether a firm survives the inevitable correction. The willingness to maintain discipline that consensus mocks is what separates firms that compound through cycles from firms that produce great trailing returns and then disappear.

Size to conviction. Steinhardt’s firm was unusually disciplined about scaling position size to the strength of variant perception. Positions where the firm had genuine analytical edge were sized large. Positions where the firm’s view was not meaningfully different from consensus were small or hedged. The integration of conviction with sizing is the structural feature that produces sustained outperformance. Most retail traders size based on enthusiasm rather than on edge, which means they are putting their largest positions on their most exciting ideas rather than on their most analytically sound ones.

Recognize your edge ends at your information ends. The 1994 European bond crisis caught Steinhardt because the relationships and information flow that had given him edge in U.S. markets did not exist in Europe. He had deployed capital in instruments and markets where his structural edge was weaker. The lesson for working traders is to know precisely what produces your edge, to deploy capital where that edge is real, and to be cautious about deploying capital in markets where the edge is uncertain. The transfer of edge across instruments and markets is not automatic.

What Steinhardt means for your trading practice

Steinhardt’s career maps onto Mind, Method, Money in ways that translate directly to retail traders, partly because variant perception itself is a structurally retail-friendly concept.

Mind. Develop the habit of asking what the consensus believes about every position you consider. The retail equivalent of variant perception starts with the recognition that you cannot have edge over the consensus if you do not know what the consensus is. Most retail traders skip this step. They develop their own view and deploy capital without explicitly comparing their view to the consensus. The discipline of writing down what the consensus believes before placing a trade, and then writing down why your view is different and what evidence supports the difference, is one of the highest-return mental habits a trader can develop.

Method. Be willing to operate across timeframes and instruments. Steinhardt’s framework was not a single style. It was a family of styles deployed based on which one was producing edge in the current environment. The retail equivalent is to maintain multiple frameworks and to allow market conditions to determine which ones to deploy when. The trader who only does one thing is forced to deploy capital even when that one thing is not working.

Money. Hedge during periods when consensus says hedging is unnecessary. The structural pattern is that hedging looks expensive during euphoric periods because the hedges are losing money relative to unhedged exposure. The cost of the hedges is also what protects capital when the euphoria ends. The retail equivalent is to maintain some structural protection against tail risks even when current market conditions seem to make that protection redundant. The protection is structurally cheap during the periods when it looks redundant. It is structurally expensive when everyone wants it.

The last word

Michael Steinhardt is now in his mid-eighties. He continues to chair WisdomTree Investments. He continues his philanthropic work through the Steinhardt Foundation for Jewish Life and the various educational and cultural organizations he has supported over four decades. The hedge fund career ended in 1995, but the framework that produced it has continued to shape his thinking in other domains.

The twenty-four point five percent net annual returns over twenty-eight consecutive years stand as one of the most extraordinary track records in the history of active management. The dollar arithmetic, one dollar in 1967 becoming four hundred and eighty-one dollars by 1995, is the case for active management at its sharpest. The cost of running a fund that produces those returns is also part of the case: the temper, the pressure, the eventual psychological damage of the 1994 drawdown, the regulatory scrutiny that produced the Treasury Note settlement, the antiquities case that emerged decades later. Outperformance at the level Steinhardt achieved is not free.

What Steinhardt leaves the working trader is a concept and a framework. Variant perception. The discipline of holding views at odds with consensus, supported by analytical work the consensus has not done, sized to the strength of the conviction, hedged when conviction is uncertain. None of those elements depend on Steinhardt’s particular institutional infrastructure. They depend on intellectual discipline applied with consistency over time.

The compounding curve from seven point seven million dollars in 1967 to capital that returned four hundred and eighty-one to one over twenty-eight years was not produced by any individual brilliant trade. It was produced by the consistent application of variant perception across thousands of decisions, sized to conviction, hedged when consensus rewarded not hedging. The trader who learns to internalize that framework, even at much smaller scale, has access to the same structural edge that built one of Wall Street’s most consequential careers.

“I thought there must be something more virtuous, more ennobling to do with one’s life than make rich people richer.” — Michael Steinhardt, on closing the fund in 1995

Frequently Asked Questions

Who is Michael Steinhardt?

Michael H. Steinhardt is an American hedge fund manager and philanthropist. Born on 7 December 1940 in Brooklyn, New York, he founded the hedge fund Steinhardt, Fine, Berkowitz in 1967, later renamed Steinhardt Partners. He ran the fund for twenty-eight years until closing it in 1995, producing average net annual returns of approximately 24.5%, more than double the S&P 500’s gross returns over the same period. One dollar invested with Steinhardt Partners in 1967 was worth approximately $481 when he closed the fund in 1995. He returned to markets in 2004 as chairman of WisdomTree Investments and is one of the most significant philanthropists in American Jewish life.

What is variant perception?

Variant perception is the intellectual framework most associated with Steinhardt’s trading career. It describes the development of a view that is genuinely at odds with the market consensus, supported by analytical work the consensus has not done, and held with enough conviction to deploy capital aggressively when the variant view is correct. The structural insight is that markets price what the consensus believes, so trading edge requires holding a view that is both different from the consensus and correct. Both halves of the requirement matter: contrarian views that are wrong are expensive, and consensus views that are correct produce no edge.

What were Steinhardt Partners’ returns?

Steinhardt Partners produced average net annual returns of approximately 24.5% over its full twenty-eight year history (1967-1995), after a 1% management fee and a 15% to 20% performance fee. The S&P 500 Total Return Index over the same period compounded at approximately 10.96%. One dollar invested with Steinhardt Partners in 1967 was worth approximately $481 when the fund closed in 1995. The same dollar invested in the S&P 500 over the same period would have been worth approximately $20. The compounding gap is one of the most consequential figures in the case for active management as a serious discipline.

Why did Steinhardt close his fund?

In 1995, after the fund had recovered from a 1994 drawdown of approximately 30% to finish the year up 22%, Steinhardt announced he was closing the fund and returning all capital to limited partners. His stated reason was that he wanted to find something more virtuous to do with his life than make rich people richer. The deeper context included the psychological aftermath of the 1994 European bond crisis, which had been the most damaging year of his career and had shaken his confidence in his structural edge. He returned to active markets in 2004 as chairman of WisdomTree Investments but did not run a hedge fund again.

What happened with the SEC Treasury Note investigation?

In the early 1990s, Steinhardt Partners and several other firms were investigated by the SEC and Department of Justice for allegedly attempting to manipulate the short-term U.S. Treasury Note market by taking substantial positions in particular Treasury issues during periods when the supply was constrained. The case eventually settled with Steinhardt Partners paying approximately 75% of a total $70 million settlement. The firm did not admit liability. Steinhardt has subsequently maintained that the firm did nothing wrong and that the settlement was a practical decision to move past a distracting investigation. The trades in question had reportedly produced approximately $600 million in profit for the firm.

What was the 1994 bond crisis?

In 1994, after the Federal Reserve raised short-term interest rates in February to preempt inflation, global bond markets experienced a substantial reset. European bond markets were particularly affected. Steinhardt Partners had built substantial positions in European fixed-income securities, in instruments and markets where the firm’s information edge was weaker than in U.S. markets. When liquidity dried up, the firm could not exit positions at reasonable prices. The fund finished 1994 down approximately 30%, representing roughly $1.3 billion in losses on the firm’s $4.5 billion capital base. Steinhardt has been candid that the experience shook his confidence in ways that contributed to his decision to close the fund the following year.

What is WisdomTree Investments?

WisdomTree Investments is an exchange-traded fund company that Steinhardt joined as chairman in 2004 after a hiatus from active markets. The firm’s strategy is rules-based indexing weighted by fundamentals (such as dividends and earnings) rather than by market capitalization. The premise is that capitalization-weighted indexes are structurally biased toward overvalued stocks because the largest weights go to the most expensively priced names, while a fundamentally weighted index gives the largest weights to companies producing the most earnings or dividends. WisdomTree launched its first ETFs in June 2006 and has grown into one of the largest specialty ETF providers in the United States, with assets under management exceeding $100 billion by the early 2020s.

What is Birthright Israel?

Birthright Israel is a program Steinhardt co-founded in 1994 that provides free trips to Israel for young Jewish adults aged 18 to 32. The program has provided trips for over 800,000 participants from more than 60 countries since its founding. Steinhardt’s involvement with the program is part of his broader philanthropic focus on revitalizing Jewish identity and engagement, including the Steinhardt Foundation for Jewish Life and his support of various educational, cultural, and community institutions in the United States and Israel. The Birthright program is widely cited as one of the most consequential single philanthropic initiatives of the late twentieth and early twenty-first centuries.