People ask me all the time what are some of my favorite books on making money.
Without a doubt, Market Wizards is at the top of my list. People think this books is all about trading. It's not. It's about the psychology of making money. Lots of money. Like millions and millions of dollars worth of money. You gotta get it....
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Source: Amazon
Most Helpful Customer Reviews
59 of 61 people found the following review helpful:
5.0 out of 5 stars 16 Financial Market Wizards Shared Their Stories Circa 1988., December 18, 2005
By mirasreviews (McLean, VA USA) - See all my reviews
This review is from: Market Wizards: Interviews with Top Traders (Paperback)
"Market Wizards" was the first of 3 Market Wizards books in which Jack Schwager interviews top traders in the financial markets about their backgrounds, experiences, and techniques. Published in 1989, the interviews in this book were conducted while the stock market crash of October 1987 was fresh in people's minds, which I found added some interest.
Some of those interviewed made money on the crash, some lost money, and many have something to say about it. The book is divided into 5 sections, each containing a series of interviews. Jack Schwager introduces each interview by telling us a little about the trader, then we get an edited transcript of the interview, followed by a brief summary of that trader's philosophy.
The information the traders provide about their techniques is enough to give a general impression of what they do, not enough to tip their hand, but is outdated in today's market anyway.
Perhaps because Jack Schwager was a commodities analyst, the first and largest section, "Futures and Currencies", is dedicated to commodities traders. Jack Schwager provides brief explanations of the futures and currency markets, then moves on to interviews of 7 commodities traders.
Interview subjects include the great Michael Marcus, who multiplied his company account 2500-fold in a decade, and his protégé Bruce Kovner, perhaps the world's largest currency and futures trader at the time. Larry Hite tells some great stories about what not to do when playing the markets.
Part 2, "Mostly Stocks", features interviews with 4 traders of stocks or index futures, including William O'Neil, his protégé David Ryan, and the man who won big several times in the U.S. Trading Championships, S&P futures trader Marty Schwartz.
Part 3, "A Little Bit of Everything", includes Mark Weinstein and Quantum Fund co-founder James B. Rogers, Jr. Part 4, "The View from the Floor", interviews 3 traders who trade in the pits.
Part 5, "The Psychology of Trading", features an interview with Dr. Van K. Tharp, a research psychologist who studied "the psychology of winning" so as to come up with a "model" of winning traits which can then be taught to other people. He's a flake, in my view, who bases his practice on various "beliefs", but his "super-trader" classes probably provided him a nice income.
Explanations of program trading, portfolio insurance, and options, which are referred to in several of the interviews, are provided in Appendixes in the back of the book. There is also a glossary of terms. "Market Wizards" is often touted as being superior to Schwager's latest Wizard book, 2001's "Stock Market Wizards", but I don't think it is.
The names in this one are bigger, the information more vague, but "Market Wizards" has added historical interest at this point, since most of these people traded in the 1970s, when markets were more predictable, adapted to rapid change and increased competition in the 1980s, and then traded through the crash of 1987.
This review is from: Market Wizards: Interviews with Top Traders (Paperback)
I'm the Market Strategist for a NYC Investment Bank (billions under management). Someone gave me this book when I first got into the industry a decade ago; I find myself rereading it every 5 years.
I highly recommend it to anyone who is involved in the markets. Simply stated, this is THE book for anyone who wants to learn about trading or investing -- It is simply a must read.
What's so utterly compelling about the interviews is how consistent the themes are that arise from so many different traders; This is true regardless of the markets they work in (commodities, equities, currencies, bonds) or the style they employ (technical, macro-economic, fundamental, quantitative).
The basic concepts revealed by the Wizards are Discipline, Capital Preservation, Risk Management, Individual Responsibility, Flexibility, Intellectual Honesty and Consistency. Please note that these ideas have nothing to do with coming across a hot tip, or getting a big IPO allocation, or chasing the "darling of the day." It's especially relevant, given some of the speculative excesses of the most recent (March '03) rally.
This book should cause all investors, both novice and experienced, to step back and consider their strategies and methodologies. These are much more important than finding the next "flavor of the month." This is especially true now that a new group of stock pickers have been inundating the airwaves.
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What's really amazing about this book is that the psychology of these top traders applies to ANY business or strategy to make money.
1. you have to have an edge. just one will do
2. you work your edge over and over until it stops working.
Ok.... here's another awesome book..... you MUST read this book if you really want to have some insights into making millions of dollars. The good news a lot of luck is involved. That's also the bad news....lol
Fooled by Randomness makes sure you know the difference between the guys who made millions mostly by being in the right place at the right time, and the people who have made fortunes based on sound principles.
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Source: Amazon
Going further, I found Mr. Taleb's insights on the role of luck in human performance to be EXTREMELY unsettling. He talks at length about the rich idiot trader and the vastly more competent but underpaid trader (presumably himself). He goes on to ascribe most of those who are wildly successful in life to LUCK, and that individuals ascribe way too much of their own success to their own ability and hard work (which he scorns).
I find this to be frightening. I'm sure Mr. Taleb would find this reaction entirely predictable. The implications are most frightening, from a political standpoint: if most wealth is undeserved, then therefore it can be rightfully taxed (expropriated) and redistributed to those are not so lucky. Furthermore, most individuals who despise hard work do so not because they are brilliant, but because they are lazy. Evaluation of a particular person's work ethic is an imperfect but reasonably good indicator of performance.
Many of the MBAs he derides as being shallow thinkers and pluggers, while may not be (ahem) the intellectual giant that Taleb is, are no slouches themselves. They do not represent the legions of clueless option sellers that Mr. Taleb has somehow encountered throughout his career. Most young associates do have the luxury of telling their boss they did not read the Wall Street Journal in the morning because it represents nothing but random noise.
As you can tell from this review, I enjoyed the book. Otherwise I wouldn't be so critical of it. I couldn't put it down. You probably won't agree with all of it, but it will cause you to think about things in a very different way for a long time
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You can take your understanding of making money from 0 to 95 just from these two books. Just get them.
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