Uncovering the Secrets of Top Traders: A Tale of Two Friends and Briarwood Capital Management

The Serendipitous Encounter

Two decades ago, a chance meeting between a coffee trader named Paul (Bucky) DeMarco and an instructor at the New York Institute of Finance, Fred Schutzman, sparked an enduring friendship and collaboration. Although they were different as night and day – DeMarco being the extroverted trader and Schutzman preferring peace and quiet – their shared passion for trading brought them together. This fortuitous encounter eventually led to the creation of Briarwood Capital Management, a successful firm managing over $200 million in assets.

The Learning Curve: Technical Analysis Meets Trading Reality

When DeMarco and Schutzman first began working together, they had much to learn from each other. DeMarco introduced Schutzman to the realities of trading, while Schutzman shared his technical analysis expertise. As they honed their skills, Schutzman expanded his studies to computer programming, enabling them to program their trading concepts and develop a diversified, systematic approach to managing funds.

Briarwood's Systematic Approach: Three Independent Systems

Briarwood Capital Management's trading program, launched in 2001, is built on three independent systems: a long-term system, an intermediate system, and a pattern recognition system. These systems enter and exit trades at different times, allowing for risk management and diversification. Schutzman's admiration for Jesse Livermore's pyramiding approach is evident in the way Briarwood adds to winners while minimizing exposure to failed breakouts.

Navigating Volatility: A Risk Overlay Strategy

DeMarco's experience as a floor trader led him to develop a risk overlay strategy, which tightens trailing stops or takes profits when risk becomes too great. This approach has helped Briarwood Capital Management maintain solid risk profiles and avoid down years, even during market volatility.

Simplicity and Success: Eight Lines of Code

One of Briarwood's most successful models is built on just eight lines of code. This simplicity, coupled with double-digit average returns since 2001, demonstrates the power of straightforward, well-designed trading strategies.

A Winning Collaboration: The Power of Two Minds

The story of Briarwood Capital Management is a testament to the value of collaboration and the blending of different skill sets. By combining Schutzman's technical knowledge with DeMarco's trading expertise, these two friends have built a successful firm that continues to thrive in the ever-evolving world of finance.