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Tuesday, May 1, 2012

Does Being a Chessplayer Mean You Have the Potential to be Rich?


There was an article in the New York Times a few months ago about a star hedge fund manager on Wall Street named Boaz Weinstein who was also a master. And then there is Peter Thiel, the billionaire co-founder of PayPal who now runs the hedge fund Clarium Capital, who also happens to be a master.

 Many good chess players were also good at bridge; Reshevsky for one enjoyed the game. Top of Form Warren Buffet is an accomplished bridge player and David Einhorn, president of Greenlight Capital finished 18th in the main event of the 2006 World Series of Poker. But being skilled at games is no guarantee of success. James Cayne, the former chief executive of Bear Stearns, is a world-class bridge player who has won many international bridge tournaments. OK, Bear Stearns collapsed in 2008, but still…

IM Norman Weinstein (no relation to Boaz Weinstein) also had a successful career as a Wall Street Trader. GM David Norwood was also a trader for a brief period of time, but quit after a couple of months because he didn’t know what he was doing. But a year later he got back into the banking business and in 2008, at the age of 40, retired a multimillionaire.

 The Web site of the hedge fund manager D.E. Shaw Group lists among its employees a life master at bridge, a past “Jeopardy!” champion and Anna Hahn, the 2003 US women’s chess champion. Ms. Hahn is a senior trader.

Patrick Wolff, a two-time US Chess champion, worked as an analyst and rose to become one of the managing directors at Clarium. This year, he set up his own fund, and, in a reference to his chess background, named it Grandmaster Capital.

 At Talpion, a hedge fund started earlier this year by billionaire investor Henry Swieca, one of the fund’s senior traders is Matthew Herman. Never heard of Matthew Herman? For many years, Herman’s international rating was 2,149, mostly because he rarely played and almost never entered tournaments.

Herman graduated from the State University at Albany at 15 and received a master’s degree in mathematics from Brown two years later. When he was 18, he went to work at Goldman Sachs. That is when he started playing chess again, but only in small US tournaments. In late 2010, he took a hedge fund job and treated himself to a European vacation before he started. While in Europe he entered several tournaments and performed well. He tied for first with four grandmasters at the Memorial Crespi tournament in Italy and won the title on a tie-breaker. At the Ascona Chess Festival in Switzerland, he tied for third and beat Mihajlo Stojanovic, a Serbian grandmaster.

Then there is GM Maxim Dlugy. Dlugy was born in Moscow and arrived with his family in the US in about 1979. Dlugy was a late developer and was only an average player until he shot up in strength in the early 1980s, winning the World Junior Championship in 1985 and becoming a GM in 1986.

Dlugy was also involved in chess politics and was elected President of the USCF in 1990. Banker’s Trust placed an ad in the New York Times for young chess masters believing that they would make good securities traders and Dlugy answered the ad and was hired. He worked on Wall Street, eventually becoming a principal of the Russian Growth Fund, a hedge fund. Kasparov was formerly associated with Dlugy's Russian Growth Fund.

In 1991 Dlugy stopped playing chess and went to financial business back in the Soviet Union. Things went pretty well until 2005 when he was arrested by the Russian police on fraud charges.

He was detained by police at the Moscow airport after immigration records revealed that there was an outstanding warrant for his arrest and after a year-long investigation prosecutors accused him of trying to defraud the owners of Russia's second biggest magnesium plant. He was accused of issuing more than £4 million worth of bonds backed by the plant without the knowledge of other board members. The prosecutors claimed that the bonds were sold to three companies that had been illegally registered using stolen passports or documents of dead people. Finally,on December 20, 2005. Dlugy was acquitted of all charges, after spending eight months in jail.

Another promising US player, Ken Rogoff (1953- ) became a Grandmaster in 1978 and then retired from chess, earned a PhD in Economics from M.I.T. in 1980, and became the chief economist at the World Bank. Early in his career, Rogoff served as an economist at the International Monetary Fund and at the Board of Governors of the US Federal Reserve System. He is an elected member of the American Academy of Arts and Science as well as a Fellow of the Econometric Society and a former Guggenheim Fellow.

Rogoff also served as the Charles and Marie Robertson Professor of International Affairs at Princeton University and later served as Economic Counsellor and Director, Research Department of the IMF, from August 2001 to September 2003.

In 2002, Rogoff was in the spotlight because of a dispute with Joseph Stiglitz, a former Chief Economist of the World Bank and 2001 Nobel Prize winner. Stiglitz had criticized the International Monetary Fund in his book, Globalization and Its Discontents, which got Rogoff’s dander up.

Before them, Al Horowitz had been a securities trader on Wall Street with some other chess masters: Maurice Shapiro, Mickey Pauley and Albert Pinkus. Horowitz gave it up to devote himself to his chess career. Maurice Wertheim was an investment banker who financed much of the activity in American chess during the 1940s.

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