Jack D. Schwager first entered the market in 1971. Since then, he has become a highly respected director of futures research and also a well known profiler of investment greats – many of whom he met while trading for Commodities Corporation. As a profiler, he has penned a number of successful books, such as “Market Wizards” – a term that spawned a whole Wall Street Wizard series – and also “Getting Started in Technical Analysis.” He has since made his mark in the hedge fund industry where he applies many of the lessons learned from his interviews and successfully manages the Fortune Group’s Market Wizards Funds.
In 1971, Jack D. Schwager joined Reynolds Securities for a period of two years. With his MA in economics firmly in hand, he initially worked as a research analyst in a position that allowed him to delve deeply into the movements of the stock market. From 1973 until 1979, he worked as a director in charge of researching futures with the firm of Loeb Rhoades Hornblower. From there it was only a short leap to the position of director of research at Smith Barney, a position that Schwager filled from 1979 until 1983. This position served as a springboard to the famed Commodities Corporation for one year, then in 1984 he joined Paine Webber, and in 1988 Prudential Securities; he remained with this company in a number of positions until 1999.
Jack Schwager and Commodities Corporation are virtually synonymous. Not only did he work for this financial services corporation, but during his tenure he rubbed elbows with a number of investment and trading greats. He familiarized himself with the methods of Ed Seykota, Bruce Kovner, Louis Bacon and also Michael Marcus. After researching their methods and systems, Schwager came to the realization that trading profitably is not random success or the luck of the draw. While compiling his works on Wall Street trading and stock investing – the famous Market Wizards series comprised of “Market Wizards,” “New Market Wizards,” and “Stock Market Wizards” –
Schwager soon noted that savvy trading requires an intimate knowledge of human psychology. Moreover, methodical investing far surpasses kneejerk reactions to market ups and downs when trading.
In a 2003 interview, Jack Schwager revealed that successful stock traders must be disciplined and experienced money managers with an eye on controlling risk; they also must employ methodologies that are in tune with their individual personalities. This seasoned stock trader and author has come to learn that simply applying another investor’s systems or trading methods will not yield similar results, especially if this system does not fit the individual trader’s unique mental and intuitive approach to the stock market.
Jack Schwager opines on his takes on investment strategies and cautions readers not to get caught up in the details of other traders’ successes but instead maintain a steady eye on the underlying current that appears to be synonymous. As such, he cites that virtually all of the successful traders with whom he had a chance to speak would have a well defined ceiling for their position size when it came to the short side. This served as a failsafe and would not allow their portfolios to become unbalanced with a short position that went over a predetermined percentage.
It is Schwager’s take on the reason for so many fiscal losses – especially in recent months and years – that have elevated his books to cult status: with the help of copious interviews and meticulous comparison of facts and data, he suggests that loss prevention is equivalent to disciplined risk control. As such, he cautions traders to not just manage risk, but instead control it from the get go. Schwager urges traders to stay away from staying in a position past the point of reason and overtrading.
He believes that an attempt of regaining losses rather than cutting them leads to a lack of discipline when it comes to risk control, and as such losing investors and traders fail to see market conditions and declines which are obvious to others. Jack Schwager has taken all of the lessons learned from his interviewees and is now applying them to hedge fund management, which he considers to be a viable and profitable alternative to standard investing. Not surprisingly, today he manages the Fortune Group’s Market Wizards Funds.
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