Hedge Fund Market Wizards

"Hedge Fund Market Wizards: How Winning Traders Win" от Jack D. Schwager е книга с интевюта на големи мениджъри на фондове, като например - Joel Greenblatt, Ray Dalio,...

Лично за мен, тя ми донесе много нови знания относно пазара и търгуването му, но тук няма да правя ревю. Извадил съм различни цитати, които по някакъв начин са ми направили впечатление, като искам изрично да отбележа, че броя им няма нищо общо с качествата на интервюирания. Просто някои мениджъри нямат дар словото на други, или пък изказа им е по-описателен, техничен... Всеки един от тях има своя стратегия, изключителни резултати, и достойно е заел мястото си в тази книга. Също така, извадките тук нямат претенциите за обстоен и фундаментален анализ на книгата. Това са цитати, които лично на мен са се сторили важни. Малка част от тях съм сбил в по-кратък вариант, а други съм взел от обобщаващите думи на самият автор на книгата с които завършва всяко интервю.  

Сега, приятно четене.


Colm O'Shea:

1. "You are selling the market on the way down, not on the way up. Because in a bubble, who is to say how far a market can go"

2. "Historically, what is important to the market is not whether growth is good or bad, but whether it is getting better or worse."

3. "You need to implement a trade in a way that limits your losses when you are wrong, and you also need to be able to recognize when a trade is wrong. "

4. "The most common money management error I see is people setting stop losses that are really pain thresholds. When the market reaches their stop, they don’t really want to get out because they still think they are right. They will get out because their stop is hit, and they are disciplined. But very soon afterwards, they will want to get back in because they don’t think they were wrong...First, you decide where you are wrong. That determines where the stop level should be. Then you work out how much you are willing to lose on the idea. Last, you divide the amount you’re willing to lose by the per-contract loss to the stop point, and that determines your position size. The most common error I see is that people do it backwards. They start with position size. Then they know their pain threshold, and that determines where they place their stop."


Ray Dalio:

1. "Мistakes provide learning experiences that are the catalyst for improvement."

2. " In trading you have to be defensive and aggressive at the same time. If you are not aggressive, you are not going to make money, and if you are not defensive, you are not going to keep money."

3. "The biggest mistake investors make is to believe that what happened in the recent past is likely to persist. They assume that something that was a good investment in the recent past is still a good investment. Typically, high past returns simply imply that an asset has become more expensive and is a poorer, not better, investment. The tendency of investors to buy after a price increase for no reasons other than the price increase itself causes prices to overshoot. When investors are making money because they’re greedy and fearless, which is typically after a large price rise, doing the opposite is a good idea."

4. "Trading mistakes cannot be avoided, but repeating the same mistakes can be, and doing so is often the difference between success and failure."


Larry Benedict:

1. "Don’t average losing trades."

2. "You are not a trader; you are a risk manager.” Never stay in a losing trade because you think it will come back. Minimize the loss."


Scott Ramsey:

1. "The evolution of a trader is when you start letting your money work for you and increasing your size."

2. "I learned the value of the classic “buy the rumor, sell the facts” kind of trading because it put you on the opposite side of retail buying."

3. "The reality is that I’m not being paid to be right; I am being paid to make money."

4. "Think of taking a volleyball and pushing it underwater—that is your crisis event. Then you let go—the event dissipates—and the ball goes popping out of the water. That is exactly what we just experienced in the markets. Today, we had a terrible unemployment report, and yet the equity markets closed higher. The equity market’s repeated resilience in the face of negative news items tells me that it wants to go higher. Chaos creates opportunity. We learn so much about the markets when we have crisis events.

We learn from how the markets respond? Just a simple exercise of measuring which markets were the strongest during a crisis can tell you which markets are likely to be the leaders when the pressure is off—the markets that will be the ball popping out of the water."

5. 'If you have trades that are not working, and your mental energy is going toward damage control, you can’t think clearly about opportunities in the market."

6. "If there is one principle that you cannot violate, it is: Know what you can lose."

7. "Hope is the worst four-letter word for a trader."

8. "Taking a loss is part of the process. You will have some percentage of losses; you just need to make sure that your losses are smaller than your wins."

9. "The market doesn’t care if you lost money on a trade. It doesn’t matter. Think about your next trade."

10. "Many investors viewed QE2 as “money printing”—a widespread perception that encouraged a shift of dollars into alternative assets including other currencies, gold, and equities.6 I actually didn’t share this view; I thought QE2 was nothing more than the Fed swapping a noninterest-bearing asset (cash) for an interest-bearing asset (a note or a bond) with the private sector."

11. "The typical stimulus-response pattern is:

Equities Up = Commodities Up = Dollar Down

Furthermore, if commodities are up, then commodity currencies are up."

12. "If your trade entry point gets hit, you are selling the weakest markets first. Never sell the strongest markets until they fail...Always buy the strongest market in a sector for long positions and sell the weakest market in a sector for short positions."


Jaffray Woodriff:

1. "People are so excited about building and using software that allows them to handle so much more data than ever before that they are missing the point of doing the process properly. Not only does the software fail to guide the user in doing data mining correctly, it actually leads users in the wrong direction because it allows them to generate bogus evidence to support their pet theories."

2. "Allowing the OTC markets to be unregulated and opaque makes as much sense as leaving 50 eight-year-olds unsupervised for a month."


Edward Thorp:

1. "Earnings surprises seemed to have an impact for a considerable period of time—weeks and even months—suggesting the market was slow to assimilate this type of information. "

2. "The claim of market efficiency, which implies that no market edge is possible, is a hollow statement because you can’t prove a negative. But you can disprove market efficiency if there are people who have a demonstrable edge. There is a market inefficiency if there is a participant who can generate excess risk-adjusted returns that can be logically explained in a way that is difficult to rebut. Convertible arbitrage is a good example. You can lay out exactly how it works, why it works, and approximately how much return you expect to get."

3. "The negative impact of overestimating the correct trade size is twice as large as the negative impact of underestimating the correct trade size by the same amount."


Jamie Mai:

1. "Finding answers is much easier when you know in advance what the questions are."

2. "Markets tend to overdiscount the uncertainty related to identified risks. Conversely, markets tend to underdiscount risks that have not yet been expressly identified. Whenever the market is pointing at something and saying this is a risk to be concerned about, in my experience, most of the time, the risk ends up being not as bad as the market anticipated."

3. "Good traders get out of a position when they realize they have made a mistake. Great traders are capable of taking the opposite position when they realize their original concept was dead wrong."

4. "What is a classic locked-in arbitrage trade. The oil prices are trading at enormous discounts to more forward futures. It was possible to take delivery of oil, hedge it by selling a much higher-priced forward futures contract, store the oil on a tanker, and then redeliver it against the forward contract at expiration. The price difference between the two contracts far exceed the costs of operating the tanker for the interim period."

5. "The expected value is the sum of the probability of each outcome multiplied by its value. If we simplify by assuming there are only two outcomes—winning trade and losing trade—and estimate the average amount for each of these outcomes, then the expected value could be defined as the probability of a win times the average win size minus the probability of a loss times the average loss size. For example, if you estimate the probability of a win at 20 percent, and a winning outcome is expected to be $10,000 and a losing outcome $1,000, then the expected gain for the trade is +$1,200 (derived as follows: 0.2 * $10,000 − 0.8 * $1,000 = $1,200)."


Michael Platt:

1. "We make an estimation of the future based on all the knowledge we have of the past at the current moment...If the market is going up today, your forecast is going to be that it will continue going up because it is how you feel at the moment that is the most important thing. Today becomes how you felt in the past because you misremember. So everything is about today. If it is going up today, it will go up tomorrow. In this sense, financial markets become self-referential."

2. "Losing money is what kills you. It is not the actual loss. It’s the fact that it messes up your psychology. You lose the bullets in your gun. What happens is you put on a stupid trade, lose $20 million in 10 minutes, and take the trade off. You feel like an idiot, and you’re not in the mood to put on anything else. Then the elephant walks past you while your gun’s not loaded...It’s the 80/20 rule of life. In trading, 80 percent of your profits come from 20 percent of your ideas."

3. "I look at each trade in my book every day and ask myself the question, “Would I enter this trade today at this price?” If the answer is “no,” then the trade is gone."

4. "There are three things you need to make money in a market. You need a decent fundamental story, a good trend that looks like it will carry on, and the market handling news the way you think it should. Bull markets ignore any bad news, and any good news is a reason for a further rally."


Steve Clark:

1. "Do more of what works and less of what doesn’t. "

2. " It is size that kills you. If you are too big in an illiquid stock, there is no way out."

3. "There is no career in trading. You are only as good as your last trade, and that is it."

4. "The market is not about facts; it’s all about people’s opinions and positions. Consequently, anything can be at any price, any time. Once you understand that, you realize that you need to have protective stops."


Martin Taylor (който бих сложил в дъното на класацията ми за симпатия):

1. "When markets are trending up strongly, and there is bad news, the bad news counts for nothing. "

2. "There are so many things in macro that are inherently unpredictable. If you get 50 macro experts in a room, you will get 55 opinions."

3. "When the market is so bad that you think it is obvious that you should be net short, that’s typically the time when it is all in the price and you should be buying."

4. "I am wrong all the time. If I can be right 60 percent of the time, and when I am right I have some big winners, and when I am wrong, I staunch the losses quickly, I can make a lot of money."

5. "We have never had and would never use any form of quantitative risk control because all quantitative risk control models use historical volatility. It is like driving by looking in the rearview mirror. If you use volatility as a guideline, and volatility suddenly increases, you will—Doh!— find that your risk was much greater than you thought, but by then you will already have been wiped out. That is exactly what happened to a lot of managers in 2008."

6. "RSI doesn’t work as an overbought indicator because stocks can remain overbought for a very long time."

7. "If you don’t understand why you are in a trade, you won’t understand when it is the right time to sell, which means you will only sell when the price action scares you. Most of the time when price action scares you, it is a buying opportunity, not a sell indicator."

8. "Investors often miss the best stocks because they can’t bring themselves to buy a stock that has already gone up a lot. What matters is not how much a stock has gone up, but rather how well a stock is priced relative to its future prospects."


Tom Claugus (който ми стана любимец от всички интервюирани):

1. "A lot of times before the market cracks, the lower-quality stocks zoom."

2. "People do things that are not in their best interest. "

3. "The most important is to having your emotional side lined up with your mental side for life-changing decisions."

4. "Our net exposure will increase as the market goes down and decrease as the market goes up."

5. "I have people tell me all the time that I should short stocks after they break. All I can tell you is that if you didn’t short the stock when it was 80, psychologically, it is very difficult to sell it when it’s 50."

6. "Losing money on the long side is different from losing it on the short side... Being short in a rising market is very difficult from an investor relations standpoint."

7. "For many people, risk control means that they have a plan for what they will do if something goes very wrong. I try to avoid getting into that situation in the first place... So as long as a monthly loss is less than 7 percent, we are still in a normal range. If a loss exceeds 7 percent, it indicates that something is wrong. If I can figure out what is wrong, then I might not change anything. If I can’t figure out what is wrong, then I have to reduce the exposure."

8. "Just because you made money doesn’t mean you were right, and just because you lost money doesn’t mean you were wrong...If you take a bet that has an 80 percent probability of winning, and you lose, it doesn’t mean it was a wrong choice."

9. "There’s no place to hide in a liquidity sell-off; people sell everything because they have to, not because they want to. The reverse rarely happens on the upside. People don’t run out and buy everything."

10. "The interesting thing is that shorts are actually easier to find than longs. It is easier to spot a broken company than a good company. It is easier to identify bad management than good management."

11. "Politicians only respond to a crisis when they have someone to blame —either the market, or the bankers, or anybody but themselves—and then they will act."

12. "The conventional wisdom is that airlines are a terrible investment and that you never want to own them. In fact, Warren Buffett says that he has a full-time employee whose only job is to keep him from ever buying another airline again.

My son has a similar line. He asks, “How do you become a millionaire?” Answer: “Start with a billion and buy an airline.”

13. "One thing I try to do is find oil companies whose price reflects only current production without accounting for ongoing exploration programs that have the potential to significantly increase future production...The broader idea is getting optionality from a business opportunity that is not producing current revenues, but has the potential to produce future revenues—a concept that would apply to other industries as well. For example, in recent years, Apple was frequently priced at the value of their existing products without pricing in the potential for future revenues on new products, despite their consistent record of innovation...The general principle is that we look for future revenue generation that can be reasonably anticipated but that is not reflected by the current market price."


Joe Vidich (може би най-интересната история за създаване на фонд+страхотни примери за шорт, като самият Vidich е художник-аматьор, а ТУК може да видите негови творби):

1. "If a company reports generally bullish news in its conference call, and the next day the market is up, but the stock is down, this price action is as a bearish indicator."

2. "Иt is always better to do your own work and get your own information because then you will have more confidence. If you listen to someone else to get into a trade and things go bad, then you have to listen to that person again to get you out."

3. "Pricey stocks are always 30 percent pricier than they should be because people are willing to own them at 30 percent above what they should own them at. A good growth stock is always overvalued, and a lousy company is always undervalued."

4. "(short-term trading) What happens in a bull market? Prices open up lower and then go up for the rest of the day. In a bear market, they open up higher and go down for the rest of the day. When you get to the end of a bull market, prices start opening up higher. Prices behave that way because in the first half hour it is only the fools that are trading [pause] or people who are very smart."

5. "If there is bearish news before the opening and the market does not trade down much during the first hour, it indicates that the smart money is not selling and that the dip is a buying opportunity."

5. "The hardest thing is to sell on the way down."

6. "A stock being down after a good earnings report would be an example of negative sentiment."

7. "It is really important to manage your emotional attachment to losses and gains. You want to limit your size in any position so that fear does not become the prevailing instinct guiding your judgment."

8. "To be successful in the markets, you have to be willing to change your opinion. Most people are not willing to change their opinion. You have to be humble about your ideas."

9. "Most people are more afraid of making money than losing money...There is no real reason to sell a stock just because it’s up 20 percent...But they are only afraid of losing gains. If the stock is down 20 percent, they are not going to sell it. What they are really afraid of is not being right."

10. "I try not to sell on the way up; I try to sell on the way down."

11. "If all of a sudden stocks stopped going down on bad news that would be a positive sign."

12. "Charts are extremely important. One of the best patterns is when a stock goes sideways for a long time in a narrow range and then has a sudden, sharp upmove on large volume. That type of price action is a wake-up call that something is probably going on, and you need to look at it. Also, sometimes whatever is going on with that stock will also have implications for other stocks in the same sector. It can be an important clue."


Kevin Daly:

1. "A good business is one that provides a necessary service or product and has a balance sheet and cash flow that can sustain it through difficult periods."

2. "Good ideas don’t come that often. But the wider you cast your net through reading, screening, and speaking with others, the greater the likelihood that you will succeed in finding good ideas."

3. "The best value opportunities arise in the most extreme bear markets."

4. "The trick is to stay away from companies that can’t grow their cash flow and increase intrinsic value. If I think the business is a “melting ice cube” like newspapers, yellow pages, and video rentals, to name a few bad businesses, then I won’t invest in it, no matter how cheap it is. Conversely, if I invest in a business that can be purchased at a discount to its intrinsic value, and that value is growing, then all I have to do is wait and be patient. As Buffett says, “Time is the enemy of the poor business and the friend of the great business.”

5. " I’d rather miss an opportunity than lose money."

6. "Having a lot of emotion about investing doesn’t do you any good."

7. "I’m always trying to buy a dollar’s worth of assets for 50 cents, which helps limit the downside."

8. "You need to always keep in mind that stocks are units of ownership in a business. If you buy a stock at a good valuation, and the price goes down, unless something has changed with the business or business outlook, you should stay the course, or possibly even buy more.Conversely, don’t get carried away if the stock goes up. You should use the same valuation discipline to decide where you’re going to sell. If the stock reaches what you think is fair value, take your profits and go on to the next one."


Jimmy Balodimas:

1. "I never buy or sell anything at the market because I’m wrong and have to get out."

2. "Smart guys always sell when the market is going up."

3. "Buy companies when they are out of favor and sell companies when everybody loves them."

4. "Trading is a great mirror into yourself."

5. "All I think about is making money; not being right."


Joel Greenblatt:

1. "Value is the way stocks are eventually priced."

2. "If I wrote a book about a strategy that worked every month, or even every year, everyone would start using it, and it would stop working."

3. "People don’t fully appreciate the importance of not losing money. Negative compounding is very difficult to overcome. If you lose 50 percent of your money, you have to make 100 percent to recover the loss."

4. "In a market capitalization weighted index, the higher the price of a stock, the larger the percentage of the index it will represent. Therefore, by definition, a market capitalization weighted index will automatically own too much of the overpriced stocks and too few of the bargain-priced ones."

5. "Don’t fall in love with any position."

6. "Over the short term, prices fluctuate due to emotion, but over the long term, they come back to value.Value investing is figuring out what a business is worth and paying a lot less."

7. "If you invest all your capital now based on the current opportunity set, you may not have that money available for a better opportunity in the future, or you might have to sell what you buy now at a lower price to free up the money."

8. "It is very difficult to have a lot of great ideas. If investors keep piling in money, then those managers have to do something with the money, and they may be forced to do some things differently than when they had less money."

9. "If you are looking for leverage in philanthropy—that is, you want to get the most bang for your buck—education is one of the best ways to achieve that goal."

10. "Sometimes Mr. Market is in such a good mood that he names a price that is much higher than the true worth of the business. On such days, it probably would make sense for you to sell Mr. Market your share of the business. On other days, he is in such a poor mood that he names a very low price for the business. On those days, you may want to take advantage of Mr. Market’s crazy offer to sell you shares at such a low price and to buy Mr. Market’s share of the business."

11. "Options are primarily priced off of mathematical models that do not take account of specific fundamentals. If you can identify a situation where the fundamentals suggest that a large move up, or down, or in either direction is more likely than normal, options may provide a very attractive risk/reward trade."

12. "Value investing works over the long term, but there are times when it works poorly. However, this periodic underperformance is actually the reason why value investing is able to maintain its edge. If it worked all the time, it would attract enough followers so the edge would disappear."


В края, няколко цитата от автора на книгата - Jack D. Schwager:

1. "Whether a trading decision was right or wrong is not a matter of whether you won or lost, but rather whether you would make the same decision all over again if faced with the same facts (assuming you have a profitable process)."

2. "Claude Debussy said, “Music is the space between the notes.” Analogously, the space between investments—the times one is out of the market— can be critical to successful investing."

3. "Sail into a cash harbor when the market seas turn stormy."

4. "I am frequently asked whether becoming a Market Wizard is a matter of innate talent or hard work. My standard answer is to use a running analogy. As intimidating as the task may seem to those physically unconditioned, most people can run a marathon given sufficient training and dedication. But only the small minority born with the right physical characteristics will ever be able to run a 2:15 (men) or 2:30 (women) time, regardless of how hard they work. The analogy for trading is that similar to running a marathon, proficiency is achievable with hard work, but performing at an elite level requires some degree of innate talent."

5. "If a position is too large, the trader will be prone to exit good trades on inconsequential corrections because fear will dominate the decision process."

6. "Volatility and Risk Are Not Synonymous. Low volatility does not imply low risk and high volatility does not imply high risk."

7. "Aspiring traders need to understand that the quest is not a matter of finding that one approach that unlocks the secrets of market success, but rather finding an approach that fits their personality."

8. "You cannot succeed in the markets by copying someone else’s approach because the odds are remote that their method will fit your personality. The answer lies not in copying someone else’s method, but in finding your own."


Завършвам с този последен цитат, с който искам да кажа че книгата е изключителелно полезна откъм идеи, от които да почерпите и да приложите. Идеи, които могат да допринесат да намерите вашият стил на инвестиране. Защото, ако се опитате да търгувате по начин, който не отговаря на вашата чувствителност, душевност-рано или късно ще се провалите!

За финал, препоръчвам на всеки решил да се занимава с финанси и търговия на стоковия пазар-ето тази книга.

Тя разглежда историята на лихвите, които са в основата на всичко в икономиката.

Интерактив Брокерс все още е най-добрия брокер за търговия у нас, а и по света. Ако все още нямате регистрация там -  ЦЪК

Нищо от гореспоменатото не е финансов съвет, то е плод само на моята фантазия за нещата от живота. Ако инвестирате, или просто спекулирате, не забравяйте какво е казал великия Джеси Ливърмор.

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Ventsislav Stanchev Atelier

Photographer, Director, Creative Director of Advertising Atelier. I like to run, to do things such as lamps and traveling with my family. And remember : The only Love you can find on the tops of mountains is the Love you bring up there.