The Derivative - Wisdom from the Wizard Maker with Jack Schwager

Episode Date: January 21, 2021

Welcome to the Wizarding World of Market Wizards – and today’s special guest is head wizard who wrote the actual books on market wizards, Jack Schwager. Jack has written 6 books on the markets including his original: Market Wizards and the newly released: Unknown Market Wizards. In addition to his authoring (is that even a word?) Jack has served as a Director for futures research - meaning he knows soybean contract from a Spac. In today’s episode, we’re covering all things Market Wizard books, along with some fun conversation including Colorado, FundSeeder, favorite interviews, and more. Chapters: 00:00-02:00= Intro 02:01-15:45= Fundamental Analyst to Author 15:46-32:14= The Market Wizards Interviews 32:15-47:45= Unknow Wizards 47:46-01:00:26= You Can't Train Talent 01:00:27-01:14:57= Favorites & Words of Wisdom Purchase Jack’s books here including his new book: Unknown Market Wizards, and follow along with him on Twitter. And last but not least, don't forget to subscribe to The Derivative, and follow us on Twitter, or LinkedIn, and Facebook, and sign-up for our blog digest. Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Thanks for listening to The Derivative. This podcast is provided for informational purposes only and should not be relied upon as legal, business, investment, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations nor reference past or potential profits, and listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk

of substantial losses. As such, they are not suitable for all investors. Welcome to The Derivative by RCM Alternatives, where we dive into what makes alternative investments go, analyze the strategies of unique hedge fund managers, and chat with interesting guests from across the investment world. So, you have extraordinary athletes, not to take anyone, they're skilled. They're tremendously skilled in that particular sport. Well, fine, nothing wrong with that. And you get people

enjoying watching them, but they've made fortunes because they're particularly skilled. Same with some of these traders. They've made fortunes because they're particularly skilled. I think the sports analogy is probably a good one. And in fact, in some ways, the mindset of these traders is a little bit reminiscent of what some professional athletes do. Hello, fellow Wizarding World fans. No, we haven't gotten Harry Potter fan club pot on you. We've got the guy who sat down with more money than you'll make in 10 lifetimes, the guy who coined the term Market Wizard,

and has now written six different books in his Market Wizard series. In addition to roles as Director of Futures Research for some top Wall Street firms, and a partner at a London-based hedge fund advisory firm. We've got the wizard maker himself, Jack Schwager. Welcome, Jack. Hey, thanks. Appreciate it. I put on my plaid shirt because I've seen you in that plaid shirt in other videos, so I'm glad I nailed it. Yeah, you're pretty safe on that. And you're out in Colorado?

Yeah, Winter Park. safe on that and uh and you're out in colorado yeah winter park winter park i know it skied there a few times um and where you just mentioned offline you also do boulder in the summertime yeah well boulder actually boulder spring my intention was this our intention was to stay in boulder uh for half the year winter park half the year there are two seasons here winter winter and summer because summer is a lot more pleasant here than Boulder. Just because of the higher elevation, it's very comfortable in the park. You basically skip the mud season.

Right, and skip the traffic's become unbearable, right? You can't live in Boulder and try and get up into the mountains with any frequency. No, Boulder isn't bad. You know, actually, I've lived in multiple places, and Boulder's actually pretty good traffic-wise. No, I mean getting in and out of the mountains.

Oh, yeah. Well, if you're going on a weekend, but I have the luxury of working on my own, so I'm never going with the traffic. I hear you. And my brother's actually a realtor out in Boulder, lives in Louisville. He does, yeah. So when you're going to buy your next $10 million house, give me a call and I'll set you up with him.

You should email me his contact because I might sell the Boulder place, but anyway. All right, done. And I always joke with him, Illinois here, Chicago, it's gray or sunny or raining or snowing. Colorado is either bluebird skies or snowing. It's usually, it's like 300 days a year is sunny, you know. Yeah, that's unbelievable. I love it. So give us a little background before we get into the book. So what'd you do? You kind of had a life before you were an author, right?

Yeah. Yeah. So my first book was not a Marker Wizard book. So what'd you do? You kind of had a life before you were an author, right? Yeah. Yeah. So my first book was not a Marker Wizard book. It was a book called A Complete Guide to the Futures Markets, which was a big tome, like an 800-page book. My effort to write a decent book on analysis of futures markets, which I didn't think existed at the time, was in 1984. That's why I took a sabbatical to write it. But before I did that, before that was the first one, I got into markets. I get my first job was in the markets, a research, futures research analyst job. Does that still exist? I don't know. And with a firm that's long merged multiple times at the time. I mean, the firm was Reynolds Securities. Anyway, that was in 1971. So I spent two years as a research analyst,

and I stuck my head out and looked for a better job and got a research director job. And I did that for over 20 years. What did that entail? Like back in the old days, printing out charts? Yeah, well, it was fundamental and technical, yeah. So it was, yeah, like printing the weekly

reports and fundamental reports and technical reports and being late, being in the office like till midnight on Fridays, getting the stuff out so I'd be ready first thing the next week, beginning of the next week. Yeah, kind of a different world, you know.

Did you ever have to – some of these groups would write both sides of the market. The same guy, right, would write in their report basically here's the bull case, here's the bear case with the same data. I didn't do that. I was just wrong or right, you know. And that was all commodity markets or – Yeah, yeah. So I was strictly all futures.

In fact, yeah, I mean, I was always only involved in futures. I didn't get involved on anything to do with stocks until, I guess, well, yeah, probably when I was with a hedge fund advisory firm, which began in 2001. So at that point, you know, it was more managers doing equities than futures. So that was the first time I really had to be involved with people doing them. Well, to be fair, all the Marker Wizard books have a lot of equity traders. So I guess probably that was the first Marker Wizard book, 88,

was when I first started getting involved with people who were doing equity strategies. Right. And your commodity background was futures was also like currency and fixed income futures. Yeah, everything. Yeah. So I'm old enough. I'm old enough. I came in before doing financial futures. Yeah. It was kind of a different world. It was truly then the term commodities was not a misnomer as it is now i mean it still applies to what maybe a quarter of all trading uh but back then it was only commodities strictly uh grains and livestock and gold and stuff you know metals um first first futures among currencies i guess were first around 72 or 73. Very, very low liquidity in the beginning. And then we got the first interest rate market, which was Ginnie Mae's, which was a really obscure contract. It always amazed me of all the things depicted for first contract that took Ginnie Mae's.

But, you know, that was successful to some degree and then got supplanted when well originally it was t-bills but eventually euro dollars kicked t-bills out and yeah and became so became t-bonds and t-notes and euro dollars but all that and stock indexes they also came in in fact when i wrote my you know the stock indexes came in also quite a bit later, you know, a bit later. So there were no financial. Yeah. These days, right, you have to delineate between grown in the ground commodity futures and quote unquote commodity futures, which include the bonds and everything. And where were you during all this?

Oh, I was in New York. So, yeah. So my career, that early career, I was in New York so yeah so my career my that early career I was in New York. I was in New York you know I started up yeah for probably 25 well not in New York City I was in New York City part of the time then I moved out to the ex-Serbs. Yeah were you ever tempted or they want you to go to Chicago to be a futures guy? No, no I mean I'm nothing against Chicago but I actually if I was going to be in a city I did like New York you know. I mean and you're from Brooklyn. There's no Central Park in Chicago. I mean that's a equivalent yes to me that's a big deal because

I was a runner and you know it gave you kind of the access to being in you know outdoors even though you lived in the city. So I kind of always liked New York as a city. All right. We'll argue Chicago versus New York another time. But you grew up in New York? I grew up in Brooklyn. Yeah.

And went to college, Brooklyn College. Went to Brooklyn College. And then I went to Brown University for graduate school. I was just arguing with someone on Twitter who puts the endowment performances on a nice chart of all the Ivy League schools. But the chart is different colors for each school, and brown is like purple. And I'm like, what? You have to make brown brown, right?

Make Dartmouth green, make Cornell red. Like, come on, this is easy graphics here. You would think. So then you mentioned you started some of these first books that was, it just came out of those early career and early, tried to get more people looking at your research or what was the motive there? Well, you know, I, I really, when I first got in 71, there was really no book there probably were some books but there really weren't any there wasn't much and I

never thought there was a good book out on on really comprehensive on both fundamental and technical analysis so I took a sabbatical this is pre-PC so it was an enormous amount of work to do. Because I would do charts by hand. I would do multiple regressions on the calculator. One of those old calculators would be a bunch of ridiculous. So things took a lot longer. And then I would dictate everything and send it to a secretary for my previous job who was freelancing and you

know would send me back you know the the type versions and luckily my first drafts were not bad so they made it somewhat that was actually the smoothest part was the actual writing but all the illustrations and analysis was what took a lot of time. Yeah it seems like in those days there was they would fight with each other? Like you wouldn't see a fundamental guy want anything to do with a technical analysis. Yeah, no, no. So, yeah. So I had been exposed to both. I started out as a fundamental analyst and gravitated to technical analysis,

but still had the knowledge on the fundamental side. So I was kind of well positioned to do one. And so did anyone buy those books or what? Yeah, you know, it actually, it did pretty well. I mean, for that type of a book. I mean, it's not a mass audience for 800 page analytical books, but, you know, given what it was, and I wasn't writing it to sell copies, you know I kind of say half jokingly but it's really true that the sales of the book are inversely correlated to the formulas in the book and so could have sold a lot more copies with fewer formulas um but it you know it did reasonably

well and was actually the catalyst for the market wisdom book because book because another publisher was familiar with the book. And because it did well for that type of book, they invited me to lunch and they wanted me to be an editor-in-chief for a whole series of analytical books. And I said, you know, no thanks. I've done that. I mean, I just wanted to write one book on analysis of the futures. I had no desire to do more. I said, I'm going to do anything else. I want to be on analysis of the futures. I had no desire to do more. I said, I'm going to do anything else.

I want it to be more broad audience. And I said, and I had that idea of The Market Wizards for years, but as a research director, it's more than a full-time job by itself. So I just never got around to it. And I said, if I was going to do anything else, and I threw out this idea. He said, fine, do it. So that was the catalyst.

And so the first Market Wizards book got done on weekends and nights, and I threw out this idea. He said, fine, do it. So that was the catalyst. And so the first Michael Wizards book got done on, you know, weekends and nights, basically. But what was, so you'd had that idea while you're working on all this other stuff. What was the kernel of that idea? I got the idea somewhere, you know, I knew some great, I knew some of these traders and I had written a book. And I thought, hey hey if I do another book probably a neat idea would be how about a book where you go around the country and interview

you know some of the best traders I thought that'd be like a fun book to do especially sorry they were using your research or something no no no I mean I just oh well well, I had actually worked at Commodity Score for years. I knew some of those traders. Okay. And, you know, Michael Marcus, who was Chapter 1 in the first Mark of Wizards book, by fate, and I always say so much of life is luck. You know, I've been successful, but, you know,'ve i've been successful but you know i could have been i could have been a nobody too it just happened to have some lucky breaks um and one of those lucky things was i was going into a job which marcus was vacating to become a trader and

we he was in new york for a couple of years we We met when I was coming in. He was cleaning his desk out. And we kept on getting together for lunches. So I knew him until he left. I mean, I kept in contact with him until he left for the West Coast. And then through Marcus. Marcus was the one who brought me into Commodities Corp. And then through Marcus, I knew Kovner. And so that was like the lead-in to some of these traders who were in the first Mark Lewis's book.

So I knew I had those traders that I could interview. And then I figured I would just find others. Did you ever think, hey, I should just profile Commodities Corp? That would have been an interesting book in and of itself. It would have been, but I never did. I never did. This is when I was, back then, it wasn't yet the legend that it became, ultimately. I guess, yeah.

Hindsight, right? So, I never, there was somebody, somebody did do a book on it, sort of almost a pamphlet, not a big book, but a pamphlet-type book, and I think it was called Up, Down, Up, Down, Up, Down, something like that, and it's a pretty good book. It's, as somebody was there, it's accurate in its depiction, but there was never a really comprehensive book written that I'm aware of, you know, really fully. I want, I'll throw out an idea for your next book to uh trace and interview all the people that have come out of the o'connor tree here in chicago right that were option

market makers that created all these option prop firms in chicago like every third person you talk to here is very successful and one way or the other links back to that tree. Yeah. Well, yeah, I did interview CRT, you know, the founders of CRT, which was, you know, Conor CRT, they're pretty much similar firms, similar operations. So that first Market Wizard book, how many traders were in there? I've read it. It's been a long time since I read it. I think it was 17. 17.

And that was just, you were like, all right, this is fun. Like, one more, one more, one more. I know. First of all, I don't use all the interviews I do. Okay. It sort of comes out in the process. And, yeah, you don't know how long the book's going to be because, you know,

for every, every chapter, the interview is far longer than the chapter. So there's a lot of editing and distilling that goes on. Otherwise the chapters wouldn't read, wouldn't read very well. So you never know how much you're going to come out. And,

and so, yeah, I could, I could have an interview that if you, and I did, in fact, back in the first Mark Wiss' book, I think I did have the, because I have this image of going through all these pages of transcripts.

And you can have a couple hundred pages of transcripts and the chapter ends up being 20 pages. So you don't really know how much, how long the book's going to be. It just kind of evolves. And so I don't really know how much um how long the book's going to be it just kind of evolves and so i don't remember how i decided when i decided to stop i guess i just do it and figured well i've got enough of this i got more than enough right and uh and that first book ended up i think being over 500 pages i probably had more than enough and in that first one was Bruce Kovner, Paul Tudor Jones, Sequoia, Bill O'Neill, Richard Dennis.

Yeah. Was there anyone you were most kind of intimidated to go sit down with? No. You know, this is I don't want to sound. I mean, all these people were, you know, way a million times better traders than I was, which is the reason why I'm interviewing. But I was never, you know, I was, which is the reason why I'm interviewing. But I was never intimidated to interview anybody, really. I just kind of figured I had some knowledge of my own,

and I was going to probably be as sensible or informed an interviewer as they're likely to get anyway. So I never felt you know I never felt intimidated I always had at least I had knowledge so you know any of them um once you walked in the door right right with some of their setups and everything like oh no I mean the only yeah there was some I mean, I can remember the toughest interview, well, there were a couple of tough interviews, but like Tom Baldwin, I can think of specifically, who was kind of reluctant to do it.

And Baldwin, for listeners, viewers, whatever, who don't know Tom Baldwin at the time was like, you know, this incredible trader on the, mostly in the T-bond pit. I think he was probably, I believe he was just in the T-bond pit at that point. But trading really enormous size for an individual trader. And this is a guy who started out with nothing and I think he had a supermarket job or something. I don't know. I mean, that was part of the story.

It was kind of incredible. I mean, he really came from nothing. And then he's trading this huge amounts of T-bombs in the pit. So I really knew I wanted to interview him. He didn't want to do it. He agreed to do it. As luck would have it, he was March. He was St. Patrick's Day.

And he, you know, so here he is after the markets. He's in the office, really on a kind of just ready to spring out, you know, and guys keep coming into the office saying, we'll meet you at the bar, you know, whatever. He's in Chicago on St. Paddy's Day. Yeah, yeah. Chicago St. Paddy's Day. He didn't want to do the interview and he wants to go to the bar with his friends. Right. So that, bad his day. He didn't want to do the interview and he wants to go to the Bonnet with his friends. Right. So that was like really tough.

And I knew that if I hesitated for a second, I mean, you know, most interviews, you can, it's more relaxed. You can, you know,

somebody answers, you can think about, you know, but with Baldwin, I knew I couldn't allow a half a second between his finishing. Am I asking the next question? And the first time there was like a second pause, finishing and my asking the next question. And the first time there was like a second pause, boom, he was gone. So it was like literally a half an hour or 40 minute interview.

But that was tough because I had to be intensely focused. And I knew I just had to keep the questions coming or else he was split. And he did. So that was a tough one. You'll find this amazing. so that's come full circle so my first forehand of the futures markets i was a clerk on the in the bond pit oh really yeah yeah so i've worked for another group but um baldwin yeah you knew you quickly knew who he was i think he had a purple coat if i remember correctly maybe a listener can correct me if i'm wrong but a big guy right and yeah he's trading 500 000 2000 5000 lots against goldman against all these big players

moving the market um and i was more of an analytical guy and i was trying to learn while i'm down there and i'm like why is the market moving and invariably you'd get the answer because baldwin's buying right there was no like because yeah japan cut rates or the euro dollars doing this it was just because baldwin's buying do it i'm like that doesn't quite make sense but he was that big before yeah he was um and speaking of that another time ironically the other indeed it was probably the toughest, was also another giant bond trader who also started from nothing, which was Gary Bielfeld, you know, BLH. And I remember, and I think he was in the second, I think he was in New Market. But I remember as an analyst,

you know, as sort of, as a research director, you always had to put out these like little summaries of what happened in the market. And you'd always, you know,

people on the floor, you know, each brokerage had, the guy was all, BLH was a buyer, Solomon was a buyer, or whatever. And BLH was always being mentioned

like Morgan, Stanley, and Solomon, these big firms. And he said, who the hell is BLH? And then I find out, BLH was always being mentioned, like Morgan, Stanley, and Solomon, these big firms. And he said, who the hell is BLH? And then I find out BLH is this one guy in Peoria. Literally one guy in Peoria. And he's like trading 10,000 bonds at a shot.

So I said, that's got to be a story. And so then I found out that he started out trading like literally one corn contract, two corn contract, and built it up to like where he's trading 10,000 months. So he agreed to do the interview and I went out to Peoria to interview him. But he, the image I used to him, and I think it's very appropriate, he was like Gary Cooper. You know, at least hopefully people know Gary from the old films. But, yep, nope. you know at least hopefully people know Gary from the old films but yep nope like he was in a deposition

no just these really terse answers and I could see like it was an incredible story I'm getting nothing out of this interview and then finally he says something like we're was going to give a poker analogy.

And I said, okay. So he said, turn off your tape recorder. And I turned off the tape recorder. And he gives me a good analogy about poker. I don't remember what the analogy is, but it was perfectly innocent. I said, why'd you have me turn off the tape recorder? Well, he said, well, I didn't want people

to kind of confuse trading with gambling and stuff. I kind of remembered that answer more or less. And I still used it with his permission. But that was the one chapter where my narrative was longer than the actual interview. Because there was so little in the interview that was usable. And I was just, some people are very, very articulate and give you great stories. And some people, you know, and Gary was on the other end of the spectrum. So that was another tough one.

What do you feel like those days are gone? Like some of those four trade, right? There's no more floor. Computers trading ones and zeros. Like some of those guys, especially in Chicago, right? You didn't need, they didn't care where you came from, what degree you had. If you're aggressive, you're a big guy. We'll get you

in here. We'll teach you the ropes. I feel like those days are gone and you're not going to run into those kind of traders anymore. No, but you can still find individual traders who are doing spectacularly well without having the pedigree. They're out there. They know, they're still out

there. I got one other quick, funny floor story of the, that I just heard recently of a guy on the floor that all these guys knew, and they all thought he was a terrible trader. And he would, he would tell everyone that he had a job loading baggage at O'Hare, because he wasn't making enough money trading. And then another guy who was on the floor i just talked to recently saw this huge mansion of a house and doing quite well and all this stuff and they're like what and he finally opened up of like yeah i just i did i wanted you guys to pity me and not try and take advantage of me and so he was running the long con the whole time of like doing his trading and making good on it. So anyway, were there any big names that you wanted to get in the book that you couldn't? Sure. And the biggest name and my

biggest regret is George Soros, who is probably, if he's not the best trader in the last hundred years, he's certainly, I don't know who's second, you know, who's first, you know, but so doing the types of books that I do, Soros was an obvious, an obvious name. Also, he has a great life story, you know, you know, escaping, escaping from Europe during, you know, World War Two as a Jew and, you know. And then he went on, he went, when the Berlin Wall came down, he spent all those years in the Soviet Union,

Eastern Europe, trying to get those countries on a capitalist track. So he had a lot of interesting stuff in his life besides the trade. And the trading was just legendary. But I never actually spoke to Soros. I never actually got through to him.

One of my interviews was Stanley Druckenmiller, who did actually run the quantum fund for many years while Soros was in Eastern Europe and the Soviet Union. George would call in and stuff, but he was Stanley that was running those funds. And I did get him to ask Soros for me, but for whatever reason, Soros just never, I never got him to agree, you know, although like I never was able to directly ask him. And another one was, which I had less regrets about, because I figured it was going to be an enormously difficult interview, was Jim Simmons of, Simon's of

Renaissance, which is probably the best performing fund of all time. Although he strikes me as the same terse answer kind of guy. I have no idea if that's true or not, but if you got him he might say it. What kind of guy? Terse answers, right? Short answers. Probably, yeah. And I did have experience, he would also be, I'm sure he would have been extraordinarily close, close fisted about any information because given the types of strategies they do, he's not going to tell anything. with David Shaw, who was another brilliant mathematician. Well, he was a computer scientist, but still a brilliant quant guy. And also very secretive.

So that was an interview I did get. But I kind of imagined that it would have been the same with Jim. It would have been a really tough interview to do because of his being on guard. And he did think of me, I asked him twice, once he turned me down. And then on the next book, he thought about it for two weeks and turned me down. And there is a book, The Man Who Sells the Markets. My computer is on a homemade work from home twobook stand right now. One of the books is that book that I haven't read yet because I've gotten a lot of feedback. Let me give a free plug. I don't personally know the author, but it is a phenomenal achievement

because I know the difficulty, how secretive that firm is, and his ability to get so many traders to open up and so many people and to put it all together in a highly readable narrative is quite an achievement. I've gotten the feedback from a lot of people that it doesn't give enough. And I'm like, but it's better than zero. It's a classic. I think that book will be around for decades you know. All right I'll go read it and then do you think well I had one more comment on Soros do you think he's a great trader or had a great trade? No I, he's famous for breaking the back of England, but he's repeatedly done, you know, he's repeatedly done, you know, achieved a magnificent performance.

So that was his trade he's famous for. But he was always trading. So, I mean, in his career, God knows he's had tens of thousands, hundreds of thousands of trades. So he's not a one-shot wonder by any means. He is, like I said, I never got to interview him. But from what I know about him, and also like Druckenmiller, who's a phenomenal trader in his own, you know, the respect he has for Soros itself speaks volumes. And the lines kind of blurred, right, between a quote-unquote trader and what becomes their trading firm. Yeah. Yeah, I mean, of course, he had many, you know, his firm had many funds, but however he accounted, whether it's through his firm or his own account

or anything, he's got to be there's if not the best very close to it and what speaking of that who who among those original wizards or even any of the books has become like the most full-out wealthy probably either paul tudor jones or drunken miller well maybe from the early books yeah i don't know from the early books? Yeah, I don't know. From the early books, it might be Kovner, it might be Bolter Jones. Yeah. Yeah, I'm sure, you know, I mean, they ran hedge funds for a long time that managed tens of billions. So I'm sure, you know, I have no idea what their personal wealth is, but I'm sure they did quite well. That's a sense of blog posts I could write up.

Go grab all the names, put a little chart together of their supposed net worths. And tell us, I kind of found a lot of those big names were kind of futures traders and had a bit of a trend model to them. Do you agree with that or no? No, I think the, almost to a person, the really big achievers didn't trade off a model. They were really discretionary traders. Okay. I think that's, I think that's essentially true in, in, in almost all cases. I mean, there are exceptions in later books, like, you know, I mean, there are always people who did well, you know, trading models.

But the really exceptional traders were almost always discretionary. And then do you think there's, for the whatever, 50 that you've interviewed, right? Are there 5 million that are out there? Like they're the luckiest or the best? No. So, of course i didn't there are lots of great traders i never got around to interviewing for one reason or another um so it's not like i interviewed all great traders and figured it's an average of 15 15 traders a book

and five books so um of the ones that appeared in the actual books maybe there's like 75 or whatever uh but of course there's a lot more great traders than I interviewed. Right my point being that they've right there's millions of people who've blown out on the other side of the coin right? Oh yeah yeah sure sure sure so it's a small fact I mean it's certainly not representative yeah. Yeah the NFA would have me right if I was trying to highlight it say hey, you can't you can't cherry-pick these super successful guys Yeah, well in a book you can I guess Where'd you get the idea for the unknown wizards which is kind of funny because a lot of wizards were unknown at the time. Yeah. Yeah. So you're totally right. Okay. So I, you know,

from the very first Mark was his book, people like Michael, Michael Marcus were unknown, would be unknown. Nobody in the world would know they existed if it wasn't for the book, because they're, they did phenomenally well, but they were very low profile. Didn't give any other interviews or whatever so so there were certainly unknown people in the other books this one the idea was well the previous marker was the book was hedge fund markers yeah so that was only hedge fund so it seemed a good one thing was a good counterpoint to that was go the other direction no hedge fund guys just solo traders trading their own money who have just

done phenomenally well and nobody knows they exist uh so as purely that's it you know that's the whole book uh that's part of it and the other part of it was that maybe the actually idea came came through Fundseater, which is a startup that I co-founded. And the idea of Fundseater was to create a platform of performance analytics that was free to traders. The interest in that was to create a database of, create a database of traders who, you know, unknown, you know, undiscovered sort of speed up. And of course you get, you know, a lot of traders are not particularly good, but the, the concept was that within all the people you draw to the site,

there'd be like, I don't know, 1%, 2% of traders that are really good. You don't need a large, even 1% is fine. And so that was that concept. And so the idea from the very beginning when we did the first website and stuff was that there would be a book. And I think the working title was originally Undiscovered Market Wizards.

And I ended up using Unknown Market Wizards. But that was, so that was the intention all along. And indeed, a number of the traders in the new book did come off the FundSeater platform. One issue with that, right, of the persistence. So if they might be good at that snapshot in time, but can they be good moving forward? Yeah. Well, that's always an issue. But I'm basically looking for people who have 10 or more years of track record. And so with one exception, I made one exception in this book. I had like an eight or nine year track record, but it was so good. And I was so convinced he was going to continue to do well, that I had no reservation. But the other people are all about more than 10 years,

some cases near 20, and some cases, in one case, over 30 years. So there are longer track records, and that kind of speaks to that problem. Yeah, and then Peter Brandt, who you led off the book with, who's a good follow on Twitter, it was interesting there because you just said hedge fund market wizards, those are traders running other people's money. Unknown market wizards are people just trading

for themselves. But Peter kind of bridged that gap. So Peter was the exception. So he fit the model of being a solo trader. But he wasn't unknown, at least not in the trading community. He's still, I think, in the investment world.

He doesn't manage money and all. He's not a hedge fund manager, so in that world, he may not even be known. But he certainly had a large Twitter following, particularly over the last few years. But I made an exception because he still was a solo trader, and I always, not always, but for some time, knew that if I did another Marker Wizards book, I wanted to have Peter in there. Peter and I are friends.

I know him. I know all he thinks. I know his ideas about the markets. And I felt he had a lot of value to contribute. And I wanted to, you know, I wanted to kind of immortalize his concepts. I wanted to capture his ideas in a book so his thoughts would live on. And so that was one of my motivations. And Peter also lived in Colorado.

And he was a couple of hours south of where I was. And he was going to be moving. So that was the catalyst, actually. I said I knew I wanted to interview him. He was moving, so I figured, well, I might as well interview Peter because I want him in the next book. And so, but ironically, by the time I got around to interviewing him, he had already moved anyway.

But that was the catalyst that got the project going. And you got to go down to Tucson. Yeah, yeah, yeah. But what's interesting to me there, and the dichotomy between the two, he had great success, but he was not successful when he had to manage other people's money. Exactly. It really brings to light, like, it's a totally different ballgame,

especially mentally when you're worried about the other people's money. Yeah, and it's so ironic because he has this really great track record and then he starts he agrees people are asking them friends and family friends are asking him to manage money he agrees to do it and he starts managing money and he has the worst period in his whole track record he has his own his largest drawdown not immense I think it was something like 13 14 15 percent and for investors are probably closer to 10 because his money was a little more aggressively traded anyway so in attending he decides and he can't keep first time in his life he starts deviating from his natural approach trying different things and he and he just digs the hole deeper.

And he kind of loses, almost loses his confidence in a way, and then just decides to, you know, is agonizing over it and gives back all the money. The month after he'd given away all, given up, given back all the money to investors, starts a winning streak that goes like 18 months in a row. You know, so it's like so ironic. it's like where he starts and where he ends you could see it's like his equity is going up and then it's this drawdown and then go straight up and that drawdown that whole period

is wise matching up people's money it's like the uh har Harry Chapin song. You a Harry Chapin fan? Not many of us left out there, but that- Yeah, I like Harry Chapin, yeah. Mr. Tanner, I don't know the name of the song, but it's the guy who sings in the dry cleaning shop and they all tell him to go sing at Carnegie Hall, go to New York. And he goes and bombs and then he says he never sings again,

except very late at night by himself. We'll put that in the show notes that song for all you young people who have no idea who harry chapin is um cool so then and you also got to expand the reach a little on these unknown right of a guy who's doing like twitter social metrics so really explain some of the cool cool things you found with these new new that's that that's chris camillo and that you know the most surprising thing to me probably of any interview like what was the surprise like his whole his whole thing was a complete surprise because i'd gone through i started in 71 so god that's nearly a 50-year career i'd gone through, well, I started in 71, so that's nearly a 50-year career.

I'd gone through all this time and, you know, the universe I knew about was fundamental and technical. What else is there? You know, whatever you're doing, it's got to have some element of fundamental or some element of technical or some combination of two. I never thought of anything outside. That was the whole universe, right? Or so I thought. Along comes Chris Camillo, who doesn't use fundamentals, he doesn't use technical at all. You know, so what does he do? He uses, you know, he said it, social media. And, and so he created, literally created his own methodology, a completely different methodology and enormously successful, you know, doing it now probably close to 15 years.

Which is, but there's a lot of, there were a few of those well-publicized hedge funds that were going to scrape Twitter and, you know, for the momentum and the flow and that you haven't heard from them since. No, but Chris really did. And in fact, he built a company because he was doing it manually and he wanted to do more efficiently. So he took a couple of million of his own money, raised a few more million and started a company called Ticker Tags to create the software to make it efficient that he could put in phrases and it would kick out, you know, you get all the data

of, you know, how many times that phrase appeared and how many times it appeared in the past. So he built the software, you know, to make his trading more efficient. And then he sold the company just, but he built it only so he could have the software to make it, to be able to do this approach even more efficiently. So he really figured out how to do it. And just, and it, funny that I ask him about, like if he looks at charts, see the price, doesn't care where the price is,

doesn't care where he's buying it or selling it, doesn't make a difference. Yeah. His timing, he doesn't, you know, I don't know if he, his timing is based upon his signals he's getting from social media. You know, spikes, spikes in either terms that are showing that there's a great interest in something or that

there's a hatred for something you know which was like it came up with SeaWorld you know when when that Blackfish documentary came out and so you know if you've seen this... All the bad press seems like... But it was the thing is he could see in social media. Normally these things spike, you know, when they go down, it was just stay there, you know? And so he could, he kept on going short C world earnings report, you know? So it's like, so it could be on either side. And, but it doesn't make a difference in what the price looks like. It's when the social media is he is in one direction he's that the news is known what he knows is kind of more known than he gets out you know so which is right that's the big world these days of alternative data and satellite photos right there's hedge funds that have been or like credit which comes up in the interview credit card data so hedge funds you know getting smart smarter and saying, well, you know, instead of waiting for an earnings report,

let's get all this credit card data. We can anticipate the earnings report and that's all fine and good, but he's kind of earlier. He's earlier than the credit card data because he's there when the, before the people buy the product, when the chatter is actually beginning, when people are getting excited about the product. So it's not even showing up yet in the credit card data and so he's he's one

step ahead of the hedge funds I talked to an oil trader once who would use some of that satellite data and then they had a new satellite that could basically see through the infrared and see how all the storage tanks were and then BP went and bought some company that made infrared proof paint in the storage tanks were. And then BP went and bought some company that made infrared proof paint in the storage. Well, I didn't know that's a good story. I didn't ever heard that. It's like, how do you win? Like, we're going to spend all this money to be able to see in your tanks. Nope, we're going to go on the other side. So what else from the unknown was there's any other stories? A lot of it, you know, going into the book, I kind of assumed that, you know,

I did my first book with people who really made their fortunes, or I interviewed them in the late 80s, so they were part of that whole 70s decade into the 80s. We had these enormous, enormous trends, you know, where gold went from $100 to $1, you know, gold went from 100 to 1,000 and sugar went from two, three cents to 66.

You had these incredible moves. It was the inflationary period of the 70s. And so, and it were these trends, the trends were a lot smoother.

Yeah, that was my comment before of like, the trend following was, but I, trends were much smoother back then. So,

I kind of assumed, yeah, not to take away from what they did, they were still phenomenal traders. So I kind of assumed, yeah, not to take away from what they did, they were still phenomenal traders, but I kind of assumed that no way I'm going to get track records like that. Nowadays, after you've got this tremendous quantification of trading, you've got tens of thousands of PhDs working for different firms. You've got super computers.

You know, with all this stuff going on, for different firms, you've got super computers, you know, with all this stuff going on, individual traders are just not gonna get those extraordinary types of returns relative to risk. And to my surprise, some of the people in this book, I would say the return risk numbers are as good as any of them I've ever seen. One case probably, well, I wouldn't know. Thorpe is always there as somebody who's kind of almost impossible to beat or return to risk. But, but there are people in this book who,

who just had just extraordinary performance. For example, one, one trader started out with, well, he had a $7,500 stock account. $5,000 was the stock his father left him and it sort of down to position. He had $2,500. When I interviewed him, he had cumulatively made about $50 million, coming off of that account. And I've been in touch with him since then, and he's tripled it. Wow.

From like mid... From $2,500. From mid-2019, it's kind of... From him, well, he tripled it from mid-2019. Yeah, from when... In the last year, year and a half, he's taken that $1,500 to like $150, roughly. And we'll throw out our past performances, not necessarily indicative of future results.

No, so this is not, you know, I mean, he's less than one in a million. I think it would have been funny if you just put in one chapter and found some guy who spent like $1,000 on Bitcoin back in 2006 and had no trading skills whatsoever. But he just bought it and now it's worth a couple million bucks. Yeah, it would be, God knows it would probably be worth more than a couple. The thing, and people always are asking me,

well, can you put it on any crypto traders and maybe do crypto business? And, you know, my attitude is, well, I'm not interested. You know, it's basically one trade. Yeah. Basically one trade. So one trade so yeah i mean somebody like you said could have bought could have bought bitcoin early days and just did nothing but sit on it and they would have they would have a better return and than anybody in the book even you know right so although but it's just like is that luck or is

a skill i was reading the other day, there's been three separate 80% drawdowns in Bitcoin. So if you bought and hold that, it's been... And then the other recent one, I'll get off crypto in a second, but there's the guy, did you read this, who has a digital wallet and he only gets 10 tries to get the password.

He threw out the paper with the password. So there's 7,200 coins on there that it's worth 200 million bucks. Wow, no, I didn't read that one. And he's tried to get his password eight times and failed. So he has two more chances to unlock the digital thing to get his 200 million bucks. Wow, that's awful.

And it spikes so high. He's like, right now, like i gotta get out now do you think it's healthy this is getting a little too philosophical but do you think it's healthy as a society to like idolize all these big hedge fund names no i mean i don't think it's healthy or unhealthy it's just there's no worse than it's no worse than any other, you know, business, unless it's a business that's really providing something that's,

you know, a social good in some way. Yeah, I guess we idolize Steve Jobs and athletes and everyone. Yeah, I mean,

so yeah, you know, athletes, I mean, so, right, so athletes, athletes is probably a better,

because jobs did bring, did create, you know, products that really changed a lot of things and did improve the lives of a lot of people and was a kind of singular genius when it came to design. So, I mean, I guess that's maybe not the best. So that's influencing a lot of people and bringing a lot of good. Athletes is a much better example. So you have extraordinary athletes, not to take anyone. They're tremendously skilled in that particular sport.

Well, fine, nothing wrong with that. And you get people enjoying watching them, but they've made fortunes because they're particularly skilled. Same with some of these traders. They've made fortunes because they're particularly skilled. Same with some of these traders. They've made fortunes because they're particularly skilled. It's just, I think the sports analogy is probably a good one. And in fact, in some ways, the mindset of these traders is a little bit reminiscent of what some professional athletes do. In this new book, one of the great traders in this book

talks about how the mental preparation and kind of sort of mentally playing through all the different possibilities and how I'll react and getting into a focused state. All of these things, you could be talking sports. When you read that, it doesn't have to be training. It could be sports. And that's probably a good analogy.

Yeah, like the golfers, right? Process over outcome. And as long as my swing was pure and if whatever the ball bounced the wrong way wasn't my fault, my process was sound. Yeah. And then that's interesting, too. I don't believe you could train to be an NBA athlete, right? I don't think my son could train hard enough. We could spend all the money in the world. He's probably not going to be in the NBA. So take that over to the trading side. Do you think people can, well, I'll throw out there immediately, you're not going to buy these online courses and make yourself into one of these traders, right? But do you think people could train themselves even if they learned under these traders? Or is it an innate thing like an NBA or NFL player?

Well, I think it's a difference between becoming good enough to play in a local league and do well versus being a professional. Now, you have to have not only the will and the talent, you have to have the body. You have to be born with a certain type of body. Although, I mean, there have been some exceptions of professional basketball, you know.

Yeah. Some great players who were not tall. But by and large, if you're 5'5", like I said, there are exceptions. You can try all you want. You're not going to make it. Same simple with running. You can train as hard as you want.

You can run a marathon. Anybody can run a marathon if they train hard enough. Not that it's easy, but if you have sufficient incentive and drive and discipline, you could do it. But I don't care how hard you train, only a tiny percentage of population has a physical body that can run a world marathon time. You have to have a certain type of skeletal, you know. Yeah, they can run the average faster than most people could run during their whole lives to run a single mile, right?

Yeah, I mean, so, but you have to be run to be, to take a male running time, to run a 210 or under, you've got to, it's not just a matter of of drive and trading and everything you've got to have a certain type of body yeah so you know some people a lot of people don't most people don't so yeah so so training is the same you know you i think that uh you know if you're really dedicated and you really love it and you put in the work and you develop a methodology and you learn risk discipline and all of that, you could become a profitable trader. I mean, maybe even most people can do that if they do enough, if they're dedicated enough. But, you know, you're not going to get people who turn $2,500 to $150 million.

That's like a real outlier. you're not going to get people who turn 2,500 into 150 million. That's like a real outlier. It's only certain people have, for whatever it is, some almost indescribable particular skill that makes that possible. And there's a healthy dose of luck in there too, I'm assuming, right? I would say not really. I mean, there's luck that comes into it, but there's also bad luck. So in this book, I've got stories of good luck and bad luck. I think over the long run, the luck kind of washes out.

And also, even when there is luck, the trader may be lucky in a way, and I'll give you an example, but he still takes advantage of it. So, for example, like the trader, stick with the guy I talked about who turned a few thousand into over 100 million. So he's always, one thing he's doing's doing he's always early on he's trying to catch these things these these these trends before they before they begin and he's trying to look for what's the next thing so when cbd beverages was sort of starting and became starting to become legal so he's on to that he's he's all the different beverages. He's going to his regionals, the biggest regional store, selling these beverages, and he talks

to the manager and whatever. This is Camillo, or this is a different guy? No, this is Jeffrey Newman. So he's at this big beverage store, and the guy tells him,

wow, you wouldn't believe this product changed my life. I had this pain in my shoulder for like 15 years. I started drinking it. And so he ends up investing in it, and he's invested in other companies, and of course the thing's going up or whatever. And he goes back periodically to check what's going on. And one day he walks into the store,

and the manager calls him over and he says we pulled it off the you know we there's they found some stuff some debris in some of the bottles we pulled it off the shelves so boom he's off he goes he sells he sells willis holdings in that stock and every related stock now is that lucky sure it's lucky but he made his own luck yeah he was going back to that store you know so you tell me is that lucky sure it's lucky but he was and he made his own luck yeah he was going back to that store you know so you tell me is that luck or is it or is it some persistence yeah there's a difference at scale too right like i come back to the athletes a golfer like any of us could make a three-foot putt but how many of us could make one for 10 million dollars right like you have to

be able to perform at scale with some of these hugely famous and successful names of they don't blink twice trading 500 lots versus one lot. Yeah, and a number of traders in this book, in fact, their approach is to take very large positions relative to their equity, you know, at specific points in time. And, you know, when they're very confident about the trade. And, you know, so they have to be, they're taking, it seems like they're taking a lot of risks, but they're so skilled that they're both getting in and getting out. That while position size, it seems mind boggling,

they've got the discipline that they'll be out in under a minute if it's not working right so you know you've got to have a certain type of i don't know fortitude to do that type of stuff right yeah um so lastly then i'll finish up with our favorites but what are some of the big takeaways from this book, but all of the books on basically what makes a successful trader? Yeah. So in every book, I mean, the number one takeaway people should come away with is that risk management is more important than whatever approach you're using. So if you don't have risk management down really well, then the odds are against you, no matter how good your method is.

And most people really focus almost 100% on the methodology or an entry method, especially, because that's like more fun, you know, and that's how they can show you're a genius. You can't show the world you're a genius by your risk management. Well, actually, you can over the long run. That's what makes the performance. But that's always the number one message. I mean, I thought I was going to be writing books about trading.

And I think if you read the books, they're probably more about psychology than they are about trading. So psychology is, you know, in many, many ways. It comes up in every interview and in many different ways. So the psychology is extraordinarily important. And it doesn't even become a right behavioral finance is a thing now that

probably wasn't a thing. And when you wrote the first. No, it wasn't. It wasn't. And I think traders, good traders are. They got it. Behavioral, you know, acting like a behavioral economist. They understand that people are not rational. And you're making the money. You make the money not by doing what your human nature is leading you to do. You make it by kind of going counter to that in a way and you have to you know learn because people have these misconceptions and and emotional responses that are counterproductive and being aware of those and this is very much like a

behavioral economist would think being aware of those how how humans is very much like a behavioral economist would think, being aware of those, how humans do not make the right decisions is important. So that's a very good analogy that a behavioral economist mindset is very amenable to the right direction in trading. And they almost have it two ways too, right? They see it in others and know how to take advantage of it or structure their, and they can control their own. Yeah, so one of the traders, the contrarian, Jason Shapiro. In fact, one of the things he does is he, you know, as he's going through his career and met different traders, he knows those traders who do the wrong thing.

They just intuitively and instinctively do the wrong thing. And that becomes almost like a contrarian indicator to him. And he's careful about it. He's saying, look, he's not saying he's smarter than they are, but he went through a whole decade where he did the wrong thing and he blew up his account twice. And when he sees traders who remind him of himself during the time where he wasn't,

where he was not doing the right thing, where he didn't have it down, where he was emotionally doing the wrong response, that to him is a contrary indicator. The remind me of a quick story of a trader we knew very good, self-traded on the screen, modern days. But he identified every now and then he would chase and have a big blow up day. So he had the platform program into the computer. Basically after three losing trades, it wouldn't let

him physically place any more trades for the day. That's a great story. Yeah. And that's a good, that's a very good exercise of risk management. But the programmer told me he'd get calls during those days. That's over, right? Take that off. Take that off.

Oh. And he told me not to. I can't do it in a single day. It takes me overnight. He'd yell at him. And then the next day he'd be like, oh, thank goodness that was there. We finished all of them off with some quick hit favorites of yours. So start favorite ski mountain out there in Colorado. Well, I'm a cross-country skier.

Okay. But the place I ski at, I have a membership there and I live not far, is Snow Mountain Ranch, which is run by the Y, actually, which has a really great trail network. And for those few people out there who are cross-country skiers, one of the unusual things about this place is they've got a trail that runs up the market uh mountain summit so you could go um you could ski all the way up there and then then have like a six seven mile downhill ski so it's pretty neat for a for a for a groomed for a groomed trail to have i mean it's pretty neat for a groomed trail to have. I mean it's the only one I know of.

We were out in Crested Butte a few years ago and they had the championships where they basically skin up the mountain and then ski down it. Those guys were incredible and it was like how many laps? Yeah so this is like you know and those guys are probably using Mohair skis to go up so it's not quite the same thing and then they're going down with downhill type skis or equivalent whereas here you're using cross-country ski equipment but it's not steep like that it's just you know you go up maybe a couple of thousand feet only. Only i'm saying that's that's that's fine and that's that's a good amount on cross country skis but it's not like downhill

skis and i've i've always found the uh cross country ski events in the olympics are thrilling than the downhill or anything on the they are they are they i still remember there was this i think maybe 15 20 years ago and it's always in norway it was a it was sweden norway the two top thing on that? They are. I still remember there was this I think of maybe 15-20 years ago and it's always in Norway. It was Sweden and Norway, the two top skiers and I remember they like together for the last half mile. The enormous speed they're going at and you know considering it's just their you know and one of them like by the tip of a ski I love watching

cross country out of no other sport they just die at the finish line it's the most grueling of course it's as grueling as you put in but when you're talking about Olympic skiers they are like really

the energy they put into this, it is probably the most grueling sport in the Winter Olympics, this cross-country skiing. Hopefully we get the Olympics back this year. What's it going to be? Summer and then a year off, then the winter, I think. Yeah, I think we'll be okay in the winter part.

Let's hope so. Favorite Boulder restaurant? Oh, Boulder. Do i like any restaurant enough to give it um there's the oak is is yeah i guess i would say the oak is is a really good restaurant there are there are a number of different restaurants that are good um yeah people coming out to boulder for a visit There's the, I don't remember, there's a restaurant up halfway up the mountain. Now I can't remember the name of it, Broverlooking Boulder. Oh yeah, I've been there, yeah. Yeah, so that's really neat because

you're overlooking, you're kind of in the mountain, and you're overlooking the valley, and it's all glass around the food's good surface is good uh it's killing i can't remember the name but you know for people who are visiting boulder that's that's a uh that's a that's that's one you should go to just for the view and the food legacy is pretty good as well that little uh waffle place at the base of winter park ski mountain is pretty good too. Yeah in Winter Park area the one I would recommend is the Tabernash Inn which is a few miles out of Winter Park and Tabernash is like a town that if you blink blink once

driving through it you're gone but there's a Tabernash Inn is a very good is probably the best local restaurant in the area. All right. I'll check that out. Favorite book of yours? My favorite book is probably if I had to pick one, I would say it's Endurance, written in 1956, I believe. And it's about Shackleton's adventure. Have it somewhere.ansing is the author and it is literally my single

I've read it twice I've listened to it on audio tape the audio version is excellent a couple of times it's such an incredible book because it's a true story and yet it is more phenomenal than than fiction.

Yep. Well, is that Lansing's book? Because there's... Yeah, Alfred Lansing. That's the book, yeah. That's probably my single favorite book. I just love that book. I also would want to give a plug to

Bill Bryson, who's one of my favorite authors, who has a great sense of humor. And so there's a book, you know, Walk in the Woods, which is this phenomenally entertaining story about him and a friend. He's out of shape and his college buddy, who's more out of shape decide to do the Appalachian Trail and it is just it is it is good in every dimension and humor and in suspense and at the end and um it's pretty you know it's that's another book I would recommend really high and he has his book uh that he wrote uh something about everything uh but he really writes like the history of science in a very entertaining way. Yeah, I've read, I don't think I've read the, I've read one of those. Yeah, I know he's,

he spoke on Australia's sunburned country. Bill Bryce now would just like throw out there's a great author. Oh, and I have to get Michael Lewis, I'm sorry. Michael Lewis is just a terrific author and you can't go wrong reading anything but Michael Lewis. I was going to ask you earlier when we were talking about the books, if you ever had that desire to kind of Michael Lewis it and basically take these different interviews and kind of novelize it, right?

Yeah, I sort of found my format that works. And yeah, I would like to be able to do, you know, I would like to do that. I don't know. Were you sitting there reading the big short, like, ah, I would like to be able to do, you know, I would like to do that. I don't know. Were you sitting there reading the big short, like, ah, I should have done this. Yeah, no. So like I said, I fell into my format and I just think, you know, Lewis, you know, Lewis, I just think he's a phenomenal author.

I'd like to be able to, to do that type of book. I've never attempted it. Um, but I guess, I mean, the formula that it works, I kind of stuck with it. Yeah. I've always wanted to quit everything I do and start just writing fiction of like, but basically they did it with The Billion Show.

But right, if you did like, what's the, all the lawyer books, it's escaping me now, but what's the name with the Pelican Brief and all those? Oh yeah, Grisham. Grisham, right. If you did a Grisham style thing, but in the hedge fund industry,

instead of in the law world, in the hedge fund world would be interesting. But so when I asked you a favorite book of yours, I meant of yours you've written, but I also was going to ask you other books. You know, my favorite book. I don't know. I don't really, I mean, I have reread maybe my books once, but I read have other books. You know my favorite book I don't know you know I don't really I mean

I have reread maybe my books one but I read them after I've written them and you know I don't know if I've gone back sometimes I've gone back and read parts of it but yeah I don't it's a hard question. Like picking your favorite kid. Yeah. The one I like least is easier to say than the one I like most. Okay, we'll take it. Because I think Market Wizards, New Market Wizards, the first two books, and Hedge Fund Market Wizards, Unknown Market Wizards, I think they're all good

i really you know so which one is the best you know maybe market wizards because it was the first yeah um in some ways though like hedge fund market wizards had some of the most um i guess some a lot of insightful trading concepts in there which which professional traders could, I think, appreciate. And the new one, I think, can relate to, might relate best to a lot of people, because it is about just ordinary people who've done it, you know. So of those books, I'm not sure which one I would say is, you know, and those are just the Markowitz's books. It's difficult. When you're dealing with your own books, it's very tough. All right, I won't press you too much on that.

And then lastly, we ask all our guests, favorite Star Wars character? Oh, I'm not a Star Wars fan. Well, you must know some of them, any of them. I saw the first Star Wars. Yeah, that's okay. I like science fiction, but I'm just not a Star Wars fan. All right, well, I'll give you Luke Skywalker

or Darth Vader, your two choices. I'll go with the good instead of the bad. So we'll go with Luke instead of Darth. All right, Jack, this has been fun. Any other thoughts for the listeners? Anything you want to share? What's the next one going to be? We had a lot of topics.

Yeah, yeah. Nothing that, you know, basically, well, I'll just say for those listeners out there who are just early on to training, I can give some advice that I think would be useful. When you start trading or if you're early in trading, don't put all your money, all your risk money into the account. Only use party risk capital because if you do it all at once, all it takes is one. And in the beginning, most people do fail. So you don't want to make your one shot your only shot

or your first shot your only shot. So I would always advise people to, especially with the first meaningful trading account, to stay away from using anything remotely resembling their total risk capital. And the other thing I would say, which is not out of my books, it's my own personal advice and experiences. I personally, I'm not a trader by profession. I trade.

I have my account. It's more of a hobby for me. Now, actually, I finished a book and I've got, even though I'm involved in Front Seeder, I've kind of done all the stuff necessary for the platform. And so if it goes in spurts, I've got, even though I'm involved with Front Seeder, I've kind of done all the stuff necessary for the platform, and so if it goes in spurts, I've got more time. So the first time I'm really trading, even then, I mean, I'm trading full-time. I literally spend maybe an hour trading,

and then I'm skiing. It's not like I'm sitting in front of my screen. So I'm not a trader in that way, but my own experience is I always, when I begin trading, and I started and stopped many times because I was too busy with other things or once I'm not doing well or giving back money, I stop. But whenever I start, I always say, I always start with an amount, and I say, okay, I'm willing to risk this amount,

and if I lose this amount, I'm out, risk this amount and if I lose this amount I'm out you know and I'll come back again and that's it so whatever it is so if you start with a hundred thousand if you could say well if I lose 20% today my account goes under eighty thousand I liquidate everything something's not working back to the drawing boards and if you have a type of mentality it'll keep you from blowing it all in one shot and digging deeper and trying to make it back and falling into all those human emotions that will steer you wrong. So I think that's a good piece of advice

is define how much you're willing to lose on the account before you liquidate everything and walk away and are able to come back another day. That rings true just in the hedge fund and managed futures world too of investors coming in. Predefine what you're willing to lose so when it's down 15%, you're not emotionally making a decision to cut it off or whatnot. Yeah, and do it before. In all these things, you make the decision before you take the action

because that's when you have the objectivity, like you say. Once you're in there, you've lost objectivity. Yeah, you're in the heat of the battle. If I get out now, it'll just rebound right after I get out. You start getting all these rationalizations. But if you can make these decisions at the start, then you're making an objective decision. I love it. And I would throw in there, too, of like you can make these decisions at the start, then you're making an objective decision. I love it.

And I would throw in there, too, of like, don't, you can't paper trade. You know, you were saying put a sum of your money, kind of play with it, test out, see if you're good at this. Like, me in the bond pit with Baldwin trading, I would keep my little paper trade, right? I'd be like, oh, I'd have bought 20 here. I'd be down 80 ticks. I'd buy 160 in reverse yeah like it's easy with money yeah I was great on my and this was actual paper on a card yeah that's why they started calling it paper trade but if

you took that then I went off the floor and started trading on my own it was not nearly as successful so no agree with that well Jack this has been fun yeah best of luck to you and I'll reach out to you next time I'm in Colorado. Oh yeah. Get me out on the cross country trail. Do you do any cross country? I have done it, but it's not, I prefer the downhill, but I'd be up for it. Yeah, sure. I'd be happy to do it.

All right. Thanks Jack. That was fun. Take care. You've been listening to The Derivative. Links from this episode will be in the episode description of this channel. Follow us on Twitter at RCM Alts and visit our website to read our blog or subscribe to our newsletter at rcm alts.com if you liked our show introduce a friend and show them how to subscribe and be sure to leave comments we'd love to hear from you