When John Arnold was a trader, he had a serene — some would say bloodless — way of seeing the world. He wanted the truth, the cold, hard truth, and embraced the power of an idea no one else was seeing. Then he bet nearly everything he had on it.
In 2006, Arnold’s hedge fund, Centaurus Advisors, took a huge contrarian position on natural gas prices and made a fortune. In 2008, it anticipated the commodities crash.
Three years ago, at the tender age of 38, married with three children and $4 billion richer, Arnold shut his fund and decided to spend the rest of his professional life giving away his money as counterintuitively as he had earned it. He had made millions at Enron and billions at Centaurus, zigging when others zagged. Now, that rare person who grows less popular the more he gives away, he is focusing on dilemmas dragging down the nation that no one else wants to confront.
Sitting in the Houston offices of his foundation, he explained, “I was troubled when I was trading that it’s hard to make that direct tie between the financial industry and the greater good. My life was 100 percent trying to make money in the first phase, then 100 percent trying to do good in the second.”
Arnold and his wife, Laura, a former corporate attorney, are targeting contrarian, underappreciated causes, things like research integrity, drug-sentencing reform, organ donations and broken pension systems, an especially radioactive issue. This is partly, they say, because while a billion dollars sounds like a lot, it isn’t when applied to a multi-trillion-dollar conundrum.
“I try to look at it from supply and demand,” Arnold said. “Where is the need being met today, and where is there unmet demand?’’ Of cultural facilities, research universities and hospitals that raise money briskly, he said, “I’m not saying those are bad things to fund, I just think the value of an incremental dollar to these is lower than other avenues.”
Arnold is a private man who doesn’t engage in a lot of pleasantries. He has grown a beard that disguises a trademark boyishness. He chooses his words deliberately and folds his hands together.
Pension reform appealed to Arnold the moment he first read about it. The problem is complex, seemingly unsolvable, and just about no one else was willing to get involved. And Arnold, a moderate Democrat who believes a rich country like the U.S. should provide a high safety net for its citizens, sees the stakes as being no smaller than the survival of the very governments that provide that net.
Quality of Life
“The financial health of a city or a state is directly attributable to outcomes in education and outcomes in public safety and quality of life,’’ Arnold said. “This isn’t just an accounting problem. It directly leads into all the things people care about.”