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Hedge Fund Market Wizards (2012)

by Jack D. Schwager(Favorite Author)

4.38 of 5 Votes: 4

ISBN

1118273044 (ISBN13: 9781118273043)

languge

English

genre

History & Biography

publisher

Wiley

review 1: This is excellent; the best one yet in the series. Following are notes from the various interviews -- simply what I picked up as relevant on this round of reading, not indicative necessarily of what is most generally important or essential. The top three interviews to me were probably Ray Dalio (Bridgewater), Joel Greenblatt (Gotham) and Jamie Mai (Cornwall). I liked many of the others too. A few -- e.g. Jimmy Balodimas, Jeff Woodriff, Edward Thorp -- felt less relevant as their style is beyond my personality or intellect, but it was still good reading about them, Thorp in particular. Ray Dalio:Absolutely beautiful interview -- gives a sense of what Bridgewater does and why, which is valuable not because I could ever replicate it, but simply because it shows how cleverly t... morehought out the approach is.Basically, diversify -- but Dalio makes the point that buying 10 different stocks is not diversification because they are all correlated to the S&P at least 50-60%. So you need to diversify across asset class -- not just your standard stocks vs bonds, but into an intricacy of vehicles with different drivers, e.g. Scandinavian currency crosses, etc. Find 15-20 instruments with logically different drivers for their market movement, ie true diversification, not just mathematical correlation. System trader (I knew that) but uses purely fundamental and zero technical inputs (I didn't know that), based on logical theory and empiricial backtesting over time and geographies. Essentially, the fundamental approach taken to its logical and empirical extreme. Joel Greenblatt:Simply reviving for me the sense behind value investing and looking for stocks earning a return on capital that is more than what the market prices in. What fascinates me here is how he and his partner managed to quantify and then systematize the approach into value based indices that have beaten broader market cap indices. Highly thoughtful interview. Will aim to read more of Greenblatt directly. Jamie Mai: Very, very thoughtful on using options to structure trades in the most efficient way. Too complicated to list here. Was portraited in Michael Lewis' The Big Short. This interview delves into his broader approach in more depth. Colm O'Shea:Basic but good lessons:-To participate in a bubble do so in the most liquid way possible; don't hope to beat the crowd, but simply to participate, watch for the reversal, more money made that way-Empiricist at heart: the unfolding reality trumps everything; fundamentals are not about forecasting the weather for tomorrow, but rather noticing that its raining today-Big price changes are when lots of people are forced to reevaluate their prejudices, not necessarily when the world changes-Implementation is key, implementation is more important than the motivating idea-Have a method that suits your personality; you don't have to be brilliant and know everything and be correct all the time; recognise the world for what it is and be flexible to recognise you are wrongMartin Taylor:Impressive for running a long only equities fund that boasts absolute type returns. Trick is not being afraid of going to very high cash levels when he turns bearish -- still, very hard to pull off. I love this: "People who choose to go for an accounting degree at the age of 17 have limited intellectual heft and imagination". Thorp:Do what you love. Find your edge -- not everyone has the same edge -- if you are good at accounting then the value approach might work, if you are good at math/comsci then the quant approach might work. Not a new idea but I appreciate it given that it comes from a man who is basically a math genius who has invented ways to beat casinos as well as markets. Many other little tidbits and highlights from the other interviews. Worth rereading.
review 2: Hedge Fund Market Wizards has some of the most interesting interviews I have come across - most notably Jamie Mai, Michael Platt, Colm O'Shea, Scott Ramsay and of course Ray Dalio. I think this is Schwager's best since the original and I am glad it has been shared in print for the new vintage of money managers to vicariously garner some of the skills, key principles and analytical processes of some of the industry's greats.I would recommend this book to anyone interested in trading and managing their own or other peoples money. less

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