Friday Feature Book Review: Hedge Fund Market Wizards: Jack D. Schwager 続マーケットの魔術師 (ウィザードブックシリーズ) ジャック・D・シュワッガー

This is the author's 4th "Market Wizards Series" book, and the best by far. Luckily, it is a series of 15 direct and revealing interviews, so every compelling chapter ends while another begins every 30+ pages. Each hedge fund legend, known or unknown to the financial public, brings much to learn. 

I could not put this book down most days once started. The interview with Michael Platt, the founder of BlueCrest, a US$35BN+ AUM debt focused hedge fund firm, was the most enlightening. He fleshes out a crystal clear style of risk control and trading understanding, that many other hedge funds or internal prop teams, will try to follow more often over time. BlueCrest did 50% returns in 2016, and 54% returns in 2017. It is a trading culture of very high performance.

To my surprise, Michael explained that he started out trading his grandmother's account in equities around age 17. He did well until the 1987 crash. He then was mentally scarred for life, and never forgot. He then decided that risk control and downside drawdowns were at the core of overall trading success, not the upside of potential winning trades. It is not how much you can win, it is more about how much more you may lose. This early teen trading experience has prepared him well for markets later on.

Other big hedge fund superstars include Ray Dalio, founder of BridgeWater, a US$120BN in AUM with 1400 staff in the firm. The honesty of Ray with his staff within a culture of open criticism on mistakes, is still difficult for me to access and understand. The method and the secret internal written rules that have been assembled would be a goldmine to read. Ray's market "Principles" are now public, and widely read by many in books today. They are hard won lessons that he now shares openly, and does not keep tightly controlled as an internal form of IP.

Another great profile is Joel Greenblatt, founder of Gotham Capital, author of a well-known market bible, "You Can Be A Stock Market Genius". He has continued to share his market insight with "The Little Book That Beats The Market", followed by "The Big Secret for the Small Investor". All of them like this great book, are filled with great views with amazing insights that keep you reading. Highly Recommended!

The Top 3 Takeaways from this book that impact any reader are:

1) All big winners lose first during their career. They learn to accept the reality of losses, and then grow to learn to be better risk takers.
2) Rules can change, but principles always stay the same. Great traders can adapt their trading principles to various new markets.
3) Every great trader has an edge. They figure out what they are good at and stick with that market beating edge over time. They do not try and trade outside of their best core competence.

At the end, the author Jack Schwager, gathers a great set of patterns and conclusions that can even help the simple small scale investor. The style of reading in this book is of gathering common patterns of intelligence. There are many different kinds of traders and many different markets. The biggest challenge is finding the right market where you can trade profitably over long periods of time. No single trader can be a winner forever, but they can certainly win a lot more than they lose. That is a balance that the best traders seem to be at peace with. All readers can therefore learn from the interviews with high level hedge fund managers active in the market. All of the Jack Schwager books in this series compliment each other perfectly. You only get better by reading them all and gaining a wider more robust view of market opportunities. Highly Recommended!

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