How to win: Steve Cohen on markets and the Mets

Welcome to another episode of Goldman Sachs Exchanges Great Investors. I'm Tony Pascarello, Global Head of Hedge Fund Coverage in Goldman Sachs' global banking and markets business. I recently had the great pleasure of sitting down with Steve Cohen, founder, CEO, and president of Point72. Steve is one of the world's greatest hedge fund managers, and he'd be on anyone's list of the most formidable traders of all time.

We sat down in early June at Goldman Sachs' Apex Symposium, where Steve discussed his path to investing, the traits that led to his investing success, and his broader views on the markets and the hedge fund landscape. He also shared some insight. on what it's been like since he became the majority owner of the New York Mets and his approach to leading the iconic franchise over the past five years. We hope you enjoy this conversation.

Steve, thank you so much for taking the time to be with us today. Happy to be here. Let's go back to the very beginning. How do we remember it? So what was it that led you to a career in the markets? Yeah, I mean... My interest in the market started really young. I had grandparents that used to talk about stocks they owned, and when I was 12, 13, I'd read the sports page, and then right the next page was the stock exchange listings.

And so I was sort of math oriented and just started looking at the prices. And then I started hanging out in a brokerage firm in my hometown. I actually found a job right next to the brokerage firm. So I can go in there and I used to sit there with the... old traders and we just i was 14 years old where was this was in my hometown great neck okay and um yeah and it used to be like a a show that you know before cnbc and so i used to want to stay home from school and watch the tape

And so this was when I was 14, 15, 16. You know, maybe the grades suffered a little bit, but I learned to watch the tape. Now the world's different today and you can't do that type of stuff. And essentially what it really was was pattern recognition. And I noticed things that I could actually start predicting what prices would be 10 minutes, an hour, two hours ahead of time based on the patterns on the tape.

and at least a higher probability of getting it right. And so I was lucky enough to be hired by a local broker's firm when I was 21 years old to do option arbitrage. But then I decided, why hedge if you're getting it? the pricing right i was able to buy stocks and i said why am i hedging because i could sell it higher the next day so at 21 22 they actually the firm allowed me to take risk without hedging i would never

ever allow anybody in my firm at that age to do that. It's almost remarkable they allowed me to do this, but it gave me a great opportunity to demonstrate and develop my style. And it was new and different in the markets. No one was really doing it that way. When I entered the hedge fund industry, it was more of a macro world with Soros and Steinhardt and Julian Robertson, all these great names. And I was doing it different. And after a while, people go, what is that guy doing?

So kind of developed a new way of making money that maybe Wall Street hadn't seen before or hadn't seen much of. It just, you know, went from there. And in the time since then, you've seen a lot of...

traders come and go you've seen a lot of money managers come and go i've seen a lot of traders come so what do you think are the traits that kind of correlate with those who have been successful well first you gotta love it You know, I used to say I couldn't wait. I hated my weekends. I couldn't wait to get into work Monday. I mean, because I just found the markets so dynamic and so exciting.

And you got to listen. You got to have a process that you believe in. You know, whatever it is, you got to have a core competency. And as long as you have that, a core competency, something you do well, keep doing it. And then you have to be adaptable.

The markets change. I mean, most of the people I was either hired or competing against in the 90s are not in business today because they didn't adapt. They had one way of doing things. And so you've got to be in a constant state of learning, evolving.

You have to be highly adaptable. And if I wasn't flexible and adaptable, I'd be out of business today. So let's jump off that point. The hedge fund industry has evolved hugely since 1992 when you founded your firm. What's different about your approach today versus the early years? Well, I mean, the early years, there was so much more alpha 30 years ago. And I actually started the hedge fund right at the beginning of a big bull market.

And so it literally was an eight-year bull market, which was phenomenal. And so you had the wins behind you, and there was just tons of alpha available. Now it's much more competitive. And we used to take so much risk. Okay, I mean, almost remarkable when I look back at how much risk we took. But there was so much alpha out there, even if you were wrong, you were able to make it up in other ways. And today we run completely differently. We're much more...

conservative, we run long, short, very tight, and the business is much more scalable. So I want to stick with the hedge fund industry for a moment. The multi-strap model has achieved a huge amount of prominence today. Why do you think that is? Well, I mean, God, we have scale. We can provide credible resources to our people. I mean, if you're a single manager, you've got to market.

You got to hire people. You're the one interviewing all these people. You probably have a very narrow specialty that if it's for some reason, not a moment where that strategy is working, what do you have to fall back on? We're very well diversified. We're diversified. sector-wise, geographically-wise, strategy-wise. It's just, ultimately, just a much better model as far as, so my people, my investing side can just focus on what they do best, which is on finding great ideas.

I have to focus, and I do the marketing, or obviously managing the firm, right? So 100% of their time is focused on creating alpha. Within your space, within the multi-manager neighborhood, it's super competitive. What does it take to win?

Yeah, listen, I mean, my competitors are fierce and in a constant state of wanting to grow. And so the acquisition of talent has gotten really expensive, which means... You know, you've got to find other ways to develop talent. We have many significant developmental programs. Starting at the beginning when we hire people right out of school for what we call our academy, we get...

Like 30, 40,000 applicants with 40 jobs. It's remarkable. So we're able to hire the best and brightest. And then once you're in the firm, education continues and evolves. You know, we're always trying to teach our people new things. We have PM. and analyst programs, developmental programs. So basically, an analyst can become a PM one day. I equate it to sports. I have a farm system versus you can go out and get free agents. Well, listen, I got one free agent last year. It wasn't cheap.

And, okay, and so it's, you know, if I could have developed that guy, it would have been a lot cheaper. So our goal is to, you know, and I think we do a lot better developing talent. We have a higher hit rate as far as... Because we know the people coming through our system. We know who they are. We know what they're capable of. When you're hiring somebody on the outside and it's usually competitive and it happens pretty quickly, you can make a mistake. Let's talk about market dynamics today.

What do you make of the cycle and how do you feel about the opportunity set? Yeah, so we're in those, we're all somewhat headline driven right now, which is a hard way to run money. But actually, I think, you know, I'm talking about tariffs right now. I actually think it's kind of consolidating around a number. Most people think, and I agree with this, the average tariff will be in the 13%, 15%, 16% range.

And what we do then is take those numbers and roll it into our economic forecast. And we expect slowing growth. And my economist thinks 45% chance of recession. I'm not sure if it's that high, but I... To me, recession, not recession, not really relevant. We're talking about decelerating growth over the next year. And even in 26, we only expect growth in, say, the 1.5% range. So in a world where multiples are high...

I'm somewhat concerned on a short-term basis. That doesn't mean we have to go down a lot. I mean, we could be in a trading range. And when I look out a little bit, I think the offset is what's happening in AI. you can already start hearing about the margin benefits that companies are going to accrue from implementing these tools. And so I think that's what holds the markets together, is the thought that margins will improve down the road for companies.

Now, what it does for employment, what it does for white-collar employment will be interesting, and that may be a topic for another day as this develops. But from a company-specific perspective, If you're not implementing these tools now, you're falling behind. So my guess is that there's real benefits. This is a technology cycle that's probably going to be long lasting, have duration, and going to have a massive effect on it.

how we live our lives today. Let's stick with AI for a moment. I'd be curious, how do you think about AI in the context of we're going to deploy capital? And then how do you think about it in terms of evolving your business? I mean, obviously there's lots of...

private companies that are being developed today i mean it's amazing you hear about these companies that are ramping up revenues incredibly quick maybe a company would start and have five ten million revenues in a year or two now you're talking about Hundreds of millions. So clearly these companies are attacking problems that companies want to be involved with them as far as creating solutions to their problems. But, you know, listen, you can express these bets in all the big names.

All the obvious names. They're not expensive. They're going to be really major beneficiaries of their investments that they're making now. And probably the winners, which, if you play it out, is probably why the indexes are going to hold together. And have you seen any productivity enhancement within the operation of the farm in terms of how they operate the farm? I mean, you know, we're, I would call still nascent as far as in our investment side. We're embedding AI people within our units.

watch, see how our people work and then try to develop tools that can help them become more efficient. That should be like the base case. Can we make our people more efficient? Can they do more higher valued judgment type thinking as opposed to manual work?

And so lots of projects going on now and real participation from all our investment professionals. They understand this is going to really help them. So I think that's the base case. And then all the data that we produce in the firm, what can we do with it? And how do we use these tools to enhance our ability to create alpha? I mean, that's really the gravy, the holy grail, and that's sort of where we're highly focused also.

So given everything we've discussed so far, you have a bunch of businesses within the firm. You have a fundamental long short business, a client business, you have a macro business. Yeah. How much does the calibration of your risk kind of change over time? And given what you just said about, are you pushing chips?

firmly in kind of one of those businesses versus the other, not necessarily. Yeah, I think it's really hard to predict the future. So if you have three good businesses and call them three pillars of the firm, you kind of want to support them all. And they tend to kick in at different times. When macro is kicking in, maybe equities is having a tougher time. So there's a real nice balance there. And now I'm thinking about private credit as maybe a fourth pillar.

I think there's a real opportunity there. A huge TAM and opportunities to attract great talent that do a strategy that I think we can embed in the firm. I'm really excited about that possibility too. So let's spend a minute on that. It's a pretty different business in a way than a...

public business yes so what drew you to it and how do you think about the risk management of it as distinct from your other businesses yeah listen i think the way you got to manage risk is you got to diversify over many types of strategies within the space

No different than what we do in our traditional fund. And, you know, everyone's talking about data center investing. Okay, well, if you put all your chips into that and for some reason there's overbuilding, you're in trouble, right? But if you can spread bets over... whether it's the consumer, corporate sector, maybe real estate. So you get the diversification. And then what I'm looking for are strategies that create extra alpha. So about a year ago, I sat next to you at Citi Field.

And I'll tell a quick story. And you said, you know, I'm thinking about not trading a book. And I said, I bet you a beer you'll keep trading a book. And you said, you're going to lose that beer. And about a week later, I lost that beer. You haven't paid the beer. I have. I owe you a beer. You owe me a beer. So you're no longer trading that book? I'm not trading, no. What are you doing with the time that you got back? Well, actually, I mean, it's actually remarkable. I mean...

My life is so much better. I mean, I basically had three jobs. I was trading, I was running Point72, and obviously heavily involved with the Mets. And so now freed up, obviously still the CEO of Point72, and obviously... We're trying to grow the firm, and that takes up a lot of time. Then the Mets take up more time than I would have thought. But it's interesting. Being involved with baseball actually makes me think about things that then I bring back into Point72.

And so it's a great example of spreading your wings a little bit, getting involved in other things and realizing the skills that you developed in one place, you can bring other places. And that's very empowering. It's fun. So I'm kind of enjoying this whole... New life. And as it relates to markets, I presume you still keep one eye on them? I'm always looking at the markets. And I'm not as involved on the individual name level that I used to be.

But I'm doing a lot more macro meetings and looking at things from top down. And so, you know, listen, I'm going to be 69 next week. And I started when I was 21. I mean, that's 47, 48. Those are dog years. And I actually think the firm's benefited from now being freed up for... so I can get much deeper into firm issues and mentoring our PMs and helping them think about their businesses. So, you know, I always have a saying, nature pours a vacuum. You know, you close one door, other doors open.

So I'm having a blast doing it. And in your mind, do you think, probably go back at some point to training? There's no shot. No shot. there is absolutely no shot okay that's not going to happen okay okay i mean double or nothing no no listen i yeah i've been there done that and i'll say it again the firm benefits so much more by me being free

to have these conversations with our people and have impact on them. And I think that really matters. And so that's not good. And in that context, do you find you have more Clearly more time to mentor and train and share your wisdom with your risk takers. 100%. Okay. And help them think about their businesses. I mean, these are still young people and they really haven't managed people and really haven't built any.

And just helping them think about why are they doing what they're doing? How are they making a decision? They're young, they haven't managed anybody before, and they need help. And so I'm happy to provide it. I mean, everyone... has constraints on how they think and you know what's possible and if you can get them thinking in sort of a more proactive not aggressive but

Because everyone around you is always going to hold you back and say, you're doing great. You don't need to run more money. You're making a really good living. And the reality is, if you're constrained by that, you don't know what's possible. I've seen people develop my firm and done some amazing things. If they, you know, had a mindset of being conservative and holding back on what they're capable of doing, then they never would accomplish what they accomplished. And people get excited by that.

They want to start thinking about what's possible. Let's go back to the Mets for a minute. You mentioned, in a way, baseball has led you to certain thoughts or conclusions on the markets, on the hedge fund. How about kind of the opposite? In other words... When you first stepped in in 2020, what did you bring with you from the business world? Yeah, I mean, I took over an asset, you know, New York Mets that was under invested in sort of old school and how they did things.

And so I described my first year at the Mets as like, it's like a hazing. That was a hell of a first year. And the team didn't play well, too. Playing much, much better. We're playing much better. It's like trading. I presume only a team has its kind of own unique sets of ups and downs at the long season. So what's been your favorite part and what's been the toughest part? Listen, without question.

Going through a pennant race last year was just incredible. And how we were doing it was just remarkable. We were winning in the ninth inning. We were winning in incredible, extraordinary ways. I mean, we'll be in the playoffs.

lot I hope but it will never I don't think ever be quite like that month and that month was remarkable so I have never felt so alive in that month I mean the emotions that i was going through on a daily basis and those games were just something i probably never experienced and then my daughter got married like she decides to set her wedding and it turned out that was the week of the world series

and we were in the championship series i'm like gotta go to the wedding so huh so how am i going to do this you know so we lost i never had to deal with it but But, I mean, it was pretty remarkable. I think the odds of us being the World Series was like 2%, 3% at that point when we were losing earlier in the season. So that's the week she wanted it, and thank God I didn't have to make that decision. Obviously, I would have been at the wedding.

Let's stick with one more off-the-field question. You want to bring a casino to Queens? Yes, we do. Yes. Well, I call it the integrated resort. It's more than a casino. It's a 5,000-seat amphitheater bringing the best music acts. We're going to build a 25-acre park. We're going to build an area for Mets fans if they want to go to the hotel to eat and drink and enjoy themselves. I mean, the biggest complaint from my fans is that they come to a game and there's nothing to do at the stadium.

And I always kid because there's lots of chop shops around. I don't know if you've been to Citi Field. There's nothing around the stadium other than chop shops. So I always joke, there's plenty to do. You can get your hubcap fixed. You know, you can maybe get your catalytic converter back that someone stole from you. You know, so there's plenty to do there, but this is a real opportunity to transform the neighborhood and do something for Queens and the city that I think is nothing that...

anybody's done before. I'm pretty excited about the opportunity. We just got our land rezoned in the state legislature so now it's just about winning the license and we'll know probably by the end of the year so I'm pretty hopeful. Point 72, the Mets, Metropolitan Park. When are you going to sleep? How's that going to work? Listen, I've got good people around me. I've actually had not had to spend a lot of time on the integrated resort. I've got a great staff around me.

led by mike sullivan and they've handled a lot of this so it's a perfect example when you have the right people around you you can do a lot you can scale a lot and i'm lucky enough to have great people another good business lesson yeah 100

One last question. You've managed a lot of businesses, a lot of people. What's the one lesson that you've learned over the kind of arc of your career about managing all of that? Trying to figure out what's going on in people's minds is really tough. I mean, like, and what you think is going on is probably not what's going on. So I think you got to ask, you know, and get them to talk. And you get them to talk, then you can help solve their problem. So I tend to think about...

running business and creating solution. And if I can create solutions to their problems or their issues, I'm way ahead of the game. Thank you, Steve. That was masterful. Thank you. Thank you all for listening to this episode of Goldman Sachs Exchanges. Great investors. which was recorded on June 4th, 2025. I'm Tony Pascarello. If you enjoy this show, we hope you'll follow us on Apple Podcasts, Spotify, YouTube. or wherever you listen to your podcasts and leave us a rating and a comment.

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