Competition, Capital, and Chess: Boaz Weinstein

**Isaac Ohrenstein** (0:07)
Hello and welcome to Voices of Impact. I'm your host, Isaac Ohrenstein, a WJC-Lauder Fellow and student at Harvard University. On May 29th, I spoke with Boaz Weinstein, the founder and chief investment officer of Saba Capital Management, a New York-based investment firm focused on credit and relative value strategies. Boaz founded Saba in 2009, following the spin out of Deutsche Bank's proprietary credit trading business, which he built into one of the bank's leading trading platforms. Before launching Saba, Boaz spent 11 years at Deutsche Bank, where he became one of the youngest managing directors in the firm's history at age 27
In 2008, he was named co-head of global credit trading. Boaz graduated from the University of Michigan with a degree in philosophy and earned the title of National Master in Chess at age 16
Please join me in welcoming him to the podcast. Good morning, Mr. Weinstein. Thank you for joining the podcast.

**Boaz Weinstein** (1:07)
I am very glad to do it. Hi, Isaac.

**Isaac Ohrenstein** (1:10)
You grew up deeply engaged with chess and later studied philosophy at the University of Michigan. When you look back on your early years, what kinds of questions, problems, or patterns were you drawn to?

**Boaz Weinstein** (1:24)
Well, you're presuming a lot because maybe I just like to play chess, but I liked competition. I didn't mind team sports. I played it in little league, but I really was drawn to the beauty of chess, the geometry of it, and the absence of luck.
Also, it has an element of creativity that I think people underappreciate. If you think about other great games that people understand to have tons of skill like backgammon, or Go, or poker, well, let's just take Go and backgammon. The pieces, though the game can be complicated, the pieces are all the same. They all move the same way, connect four, checkers, most games. But in chess, you have these pieces that move very differently, whether it's vertically and horizontally versus diagonal, or special rules like en passant, so that even many chess players don't, beginning chess players don't know, or the way the knight moves. So that interaction that you have, in many ways, something much more similar to war, where you have the air force being very different than what the Navy does, that in chess allows for, I think, more artistry in terms of combinations where the pieces have a, they may have an average value of X. A pawn is one, a knight is three, a bishop is three and a quarter, but there are times when a pawn can be mightier than a knight.
And so you might sacrifice one for the other. So I was drawn, I think, to this inherent beauty that is special in chess. It's a game that has more written about it than all other games combined. And philosophy was really me being interested in learning about the great thinkers more than the great writers. I didn't want to study finance. I didn't even want to study economics because I knew I was going to end up on Wall Street. I'd already been working from the time I was a teenager. And so I just thought, let me study when I'm interested in.

**Isaac Ohrenstein** (3:27)
Very interesting. And our audience, of course, is very much comprised of students and young adults. You became a managing director at Deutsche Bank at a really young age. You were 27
Had you navigated the tension between formal authority, the hierarchy, and the quick credibility and responsibilities you built at the firm?

**Boaz Weinstein** (3:47)
Yeah. So sometimes when I'm speaking at a conference and I get introduced in that way and someone asks it up and they say, okay, he was a managing director at 27 If I'm talking to students, I like to kind of, maybe it's faux humility, but I tell them actually it took me a long time because I started on Wall Street when I was 15 So it took me 12 years.
But of course, I didn't really start in earnest full time till the same age as everyone till I finished college.
I ascribe a lot of that getting there and your question is a little bit particular about how I felt with management structure or authority, with remembering something that people do but not sufficiently, which is the role of luck. So I'll give you my example. There's times where if you weren't at a certain firm and that firm was great at something, you wouldn't have learned how the sausage was made. And you can say, OK, if I worked at Goldman Sachs, I learned very differently than if I was at Nomura or something like that. But mine is much more special because I not only needed the luck to be at a place interested in a new area. They were willing to be early in, which was Deutsche Bank. This is 1998 I joined January 98 But I needed also this new product to be met with a real need, which was the global financial crisis of 1998 So only six, seven months later, people remember 8 super well because of Lehman Brothers and all that happened. In 1998, we didn't have Lehman Brothers default, we had Russia default. We had a hedge fund that's super interesting to read Roger Lowenstein's book on long-term capital management when Genius failed. In 1998, long-term capital blowing up, which had two Nobel laureates in their ranks, caused because of their leverage, enormous volatility in certain products, crazy moves that may never have been repeated again. And so I got to be at a place where the product I was involved with, trading credit and often from the short side using credit derivatives, was very much in need during a time of great fear. And so that was the second, that's like the luck of the lucky timing. There's lucky place and then there's lucky, let's say circumstance, I guess there's dozens more. The luckiest of all was that I had two bosses in a three-person group. So I was the junior guy as I should be.