Rayner (00:00)

Hey, hey, what’s up, my friend?

So in today’s episode, we’ve got Jack Schrager on the show.

I feel Jack doesn’t need an introduction, but I’ll do it anyway.

So Jack Schrager is the writer of the Market Wizards series, okay?

These are the books that he has written which have inspired a generation of traders, myself included.

So if you ought to connect with Jack Schrager, I’ll put his social media profile in the outline below.

Now during my conversation with Jack, we talked concerning the behind-the-scenes of Market Wizards, and the way he goes about interviewing these different traders from all world wide.

Then he also shared his approach to writing Market Wizards, how he decides what content stays within the book and what content doesn’t make the cut for the book.

He also talked concerning the significant changes that he’s seeing within the industry, he shares why he doesn’t imagine within the efficient market hypothesis which provides traders opportunities to benefit from the markets.

So we speak about all this and more in today’s episode.

Sounds good?

Then go listen straight away.

Rayner (01:13)

So to kick things off, I’d prefer to hear how would you describe your childhood.

Jack (01:19)

My childhood?

Not particularly eventful.

I grew up, actually, well, I immigrated.

I wasn’t born within the States.

I used to be born in Belgium. I immigrated on the age of 4.

Grew up in Brooklyn.

Went to varsity and Brooklyn College, which most individuals do not understand, no less than back then, was a superb college and never a very eventful childhood.

So I went to parochial schools through highschool, so it was particularly not eventful in that respect.

So nothing dramatic in my childhood.

Rayner (02:03)

Okay, so I hear the word eventful, so I’m unsure if this is suitable to us, but you recognize, might you ought to possibly share why that’s the case for you?

Jack (02:11)

Well, no, I mean, so I grew up in an urban environment, not particularly, interesting, attractive environment.

So, you recognize, later, as an adult, I gravitated lots to outdoors and every little thing, kind of, you recognize, I do not think I saw a tree until I used to be 13 years old.

So, you recognize, I believe I’m interested in what was not in my childhood, you recognize, kind of.

So not that I had a nasty childhood, it just was nothing particularly interesting about it.

Rayner (02:22)

Okay.

Jack (02:48)

Just about just school and just school and that was it really and friends and typical.

Rayner (02:53)

So what form of kid were you want at school?

Were you more of the quiet type, right?

, just floating around?

Jack (02:58)

I suppose, yeah.

I suppose I used to be probably more of quieter than outgoing.

Had my group of friends like several kid would.

I used to be at all times kind of significant about getting good grades and studying and that variety of thing.

Didn’t have much involvement in sports as a child.

Later as an adult, did various athletic things, but not as a child.

Rayner (03:29)

Is it because there wasn’t any interest in that as a child or is it due to your environment?

Jack (03:39)

I just wasn’t exposed to it.

I just wasn’t exposed to it.

I went to high school, I went to high school all day long. Like I said… It was pro-go-school.

To illustrate — Yeah, I might get, you recognize, it was like Jewish studies for the primary half of the day after which English studies for the remainder of the day.

By the point you bought home, it was six, you eat dinner, you recognize, a couple of hours of homework, and fall asleep. It was like…

“Tremendously uneventful”

.

I didn’t come from a wealthy background, so there’s nothing particular, no particular things we did.

I suppose, yeah, the one thing we did do, one among my best memories from childhood was the summers.

Within the summers, my family at all times rented a mungo at Rockaway Beach, and so I liked the beach, I liked the water.

I like body browsing, that variety of thing.

So the summers were good. I suppose that is the only thing that stands proud in my memory about childhood being fun.

, the remainder of it’s just about just, just route.

Rayner (04:44)

Yeah, I can see that, right?

The smile in your face as you were describing the bungalow through the summer holidays.

Jack (04:50)

Yeah, it’s mainly just the beach and you recognize, within the water and in order that part, you recognize.

So those were just like the times once we’d do something fun.

Throughout the school yr, probably not.

Rayner (05:04)

So from what I heard earlier you recognize, the varsity yr, like, it’s like your school day is pretty long.

It’s like, is it from morning to evening?

That is the standard school day?

Jack (05:11)

Cause it was, yeah.

So it was like from nine to 6 variety of thing.

Rayner (05:15)

It’s like a full-time job. It’s like, yeah.

Jack (05:16)

So, after which like I said — You eat, you do homework and also you fall asleep.

There wasn’t much, there wasn’t much, you recognize, much free time and no hobbies to talk of really.

Rayner (05:32)

Is it due to the varsity that you just occur to be in that is why the day is so long?

Jack (05:38)

Yeah, since it was like I say — It was like half the day was religious studies and half the day was conventional secular studies.

So it’s like a double school day essentially.

Rayner (05:53)

Okay, but back then I believe not all schools structured their curriculum in this fashion.

I believe some might be just wanting to…

Jack (05:59)

No, I mean if you ought to go to varsity, if you ought to pop a college, you’d have a traditional day.

Rayner (06:05

Alright, okay. So do you remember like possibly what are some things that happened in your younger days that form of like you recognize shaped who you might be today?

Jack (06:14)

Uh Gee, I do not think so. Not that I can… My childhood like really… I just…

I used to be serious about school.

I liked reading, you recognize, I remember.

Going to the library, especially as a young kid, was the thing I liked to do.

So I suppose I used to be a little bit of a nerdy back then.

Rayner (06:39)

Were you good, like, in your academics?

Jack (06:40)

I used to be good, but not great.

I hardly noticed.

The varsity I went to was a small, highschool was a really small highschool.

Oh, we had just… incredible number of scholars who scored like crazy, crazy high scores on the SATs.

So I wasn’t in that league.

So I used to be form of average for the varsity I went to.

But I did, you recognize, I did well enough.

I did well enough.

Rayner (07:14)

Okay.

Jack (07:15)

But I wasn’t, I wasn’t outstanding in any way. I used to be, I used to be okay.

But I wasn’t outstanding.

Yeah, the one thing I can not

I do have one disappointment I did have is I needed to work out.

I liked math and anyway, I desired to take calculus and I could not get it scheduled since it was conflicted with another work that I had.

So I just couldn’t take it.

I remember attempting to teach myself calculus in highschool and I didn’t get it by myself.

Then I went to varsity and I believed I used to be going as a math major.

But I quickly discovered by myself all yr and realized I just wasn’t adequate in math.

It was the precise decision because I mean now I do know that something like advanced calculus is kindergarten work by way of mathematics and for me that was like, you recognize, kind of reaching.

So it’s thing.

It’s something, it was like my favorite subject, but I believe to be a mathematician, you might have to have an innate talent for it.

I did not have an innate talent for mathematics.

I liked it.

I could, once I understood it, I used to be good at explaining it.

For instance, I wrote, the primary book I wrote was an analytical book called “A Complete Guide to the Future’s Market”

I felt it was vital to make use of regression evaluation as a part of it.

I noticed I could not speak about regression evaluation without having an introductory chapter in statistics.

Then once I did the initial regression chapter, I noticed — Well, that is only easy regression.

I got to go to multiple regression after which I noticed there have been all types of exceptions that needed to be discussed.

I ended up with like six chapters and I do not understand how many, well over 100 pages of not a lot mathematics, but at all times math in terms.

What I used to be good at was because to grasp it by having to grasp it myself, I believe I wrote that I believe my section on regression evaluation might be pretty good as an instruction for anyone because for the very reason that I wasn’t good at mathematics.

In other words, I had to grasp it myself and that made it, I used to be able, I believe, to speak.

Also, I could write.

That was, that is the one skill I discovered I did have that I could write and so I used to be in a position to convey that, but it surely wasn’t the mathematical skill.

I had an interest in mathematics, but not the skill.

But on a preliminary basis, made me possibly more capable, possibly more capable than anyone who’s a mathematician to write down something that might be grasped and understood by anyone more of a layman or a lower-level mathematics student.

So it did come, I did find yourself using it, regardless that I didn’t turn into, I didn’t find yourself majoring in math, I did find yourself using it.

Rayner (10:39)

So it looks as if your strength is form of…breaking down complex topics right into a layman where people can…

Jack (10:44)

Yeah, I believe that is… everybody’s good at certain things and I believe I’m good at taking something and putting it in a framework that it may well be understood.

That got here up within the Market Wizard books in certain cases needed to talk concerning the, you recognize, it’s a fancy thing.

The subprime bonds, that are put together from different, different tranches and that whole thing.

To make that comprehensible and readable is, is just not easy, you recognize, or it’s something that I used to be satisfied that after I wrote it didn’t must know anything, but you would read it and get it for those who wanted.

I didn’t know that I had been in markets, but I had no involvement on this whole area of subprime mortgages and all of that.

So I needed to form of educate myself on it as well.

But because by doing that, by educating myself, then I’m in a position to explain it to an audience.

Rayner (12:07)

It is a skill itself to interrupt down complex topics into something digestible.

So before we move on to the Market Wizard series, I’d prefer to share a story or something that brings a smile to your face at any time when you’re thinking that back to your younger days.

Jack (12:26)

In regards to the Market Wizard books?

Rayner (12:27)

Well, it may well be in your childhood days, possibly we just…

Starting out finding a profession, something that happened that brings a smile to you?

Jack (12:37)

Gee, yeah, a smile on my face. So…

Rayner (12:46)

So for instance, I can share an example.

So for me, I believe one example is that once I was in, we call it polytechnic about 17 years old, right?

So I used to be playing catching, right?

With my classmates, 17 years old, imagine that.

So that they were female classmates, they were running around, they usually ran to the feminine toilet because they were female.

They carried a few of my stuff with it, their laptop.

I used to be feeling a bit cheeky. I figured, you recognize, why not only go to the feminine toilet and grab my laptop back?

Not that serious in spite of everything, it was just my friends. So I did just that.

Got my laptop out, got here off the bathroom, and realized the disciplined mistress was just standing outside of the door.

So what happened next?

I needed to do some corrective work orders for like two months during my holiday.

So once I look back now, it form of brings a smile to my face, being naive, silly, but you recognize, it looked back, you recognize, that is fun times for me.

Jack (13:30)

Yeah, I do not know, number thing, I mean, I suppose one thing I remember coming out of graduate school.

I expected to get a job straight away and I used to be having, I used to be having, you recognize, I wasn’t getting any empty there.

Went to employment agencies they usually were useless after which I put an ad within the Times, position wanted, you recognize, I just needed to know.

MA in economics, minor in mathematics and I only got, I got several calls, a lot of which were just really hidden.

They were subterfuge for sales positions, but they would not inform you that.

I got suckered into going to one among them, and I could inform you that story, it’s an amusing story, but I had one legitimate call out of the entire thing.

So there’s my one legitimate interview and I went for it, and it was for a commodity analyst position.

I didn’t even know what commodities were and, I used to be asked about it, and the research director asked me, well, what do you recognize about commodities education you recognize, getting an economics degree?

You learn nothing about, you learn nothing about markets normally, but definitely nothing about commodities or futures.

So I said —not much, I mean, something like gold was my inane answer.

But there was something concerning the interview that the guy thought I may need some potential and he on the time was writing a column for Barron’s, he wrote a weekly column, Commodities, Colorado, English Column.

So he was using these interviews, he would have the interview candidates write an article, which he form of uses as form of background research material.

So he’s form of killing two birds with one stone, but additionally seeing who could fill the analyst’s position.

So like, he gave me the task of writing an article on copper.

I knew nothing about copper.

So in Brooklyn, where I lived on the time, there is a large library called the Grand Army Plaza which is form of just like the Fifth Avenue Library of Brooklyn.

That is way back, you recognize, we were many years before the web, so that you needed to go to libraries to seek out stuff.

I just lived within the library for every week, read every little thing I could on copper, you recognize, there was like, there was like something called a medical American metal market.

I believe, the McGraw-Hill had a weekly, and I might undergo years of these things, and any books and articles. I’m just… kind of training myself to turn into an authority in Hopper.

I wrote an article and principally, I ended up getting a job I used to be later told by one among the brokers who was a friend of mine that the research director had passed across the articles from the highest candidates and everybody said…

“Yeah, pick this guy”

In order that’s a form of smile on my face because I wrote my way right into a profession.

, I mean, it was my writing that landed my job.

Then a few years into the job, I began writing for, what was then called Commodities Magazine.

This then, it’s passed through various changes, futures, after which it’s modified again.

But back then it was called Commodities and I became a contributing editor.

In order that gave me some notoriety.

Some people knew me from that.

That made it possible in a few years to go from being an analyst to being a research director.

So then I ultimately ended up writing books.

Writing is, but that very first job was the undeniable fact that I just form of, writing that article that everyone kind of thought was the most effective article that got me my profession.

I suppose that is something I can look back and smile at.

Rayner (17:31)

Completely satisfied to listen to that.

So would you say that at that time, you didn’t realize that you just’re good at writing?

So after that… point that perhaps you look back, yeah, possibly you recognize pretty good.

Jack (17:40)

Yeah, I didn’t realize I used to be good at writing as a matter of fact.

Now there have been possibly hints during college years. I

 remember, as an example, I took a history course and we had to write down and I had to write down an essay on the First World War.

It seems I missed a day of faculty.

I needed to be absent.

The following day I got here in and folks said — That the teacher had picked my article as to read in school for example of a superb article.

I didn’t get to understand it because I wasn’t even there when she read it.

There have been a few things like that where I wrote something and there was response to it.

There may need been hints, but I never realized that this was something that I could particularly be good at.

I just discovered it.

Rayner (18:32)

Okay.

That is one.

So possibly now we will move on and talk slightly bit concerning the Market Wizard’s book, right?

So I’m curious to listen to, I believe firstly, how do you prepare for a Market Wizard interview?

 Like, you recognize, what is the process that you just follow?

Jack (18:51)

I do not do much preparation in any respect.

I’d say the preparation is lower than a percent.

The actual work, the actual interviews, you recognize, possibly 5%.

Then the editing of the interviews, 95% of the work.

In order that’s a fairly great way I see it.

So I do not know, what I did within the very first Market Wizards book, and I form of did it the identical thing in a way.

So I had an inventory of, back then I had on index cards, I had an inventory of questions.

And what I ended up doing, which was successful, like I form of never modified it, was that I didn’t use the cards.

So I had a conversation and let the conversation go where it went.

Now, at the tip of it, when the interview was over, I might say — Hey, I had some questions.

I need to be certain I hit every little thing and I’d flip through the index cards.

Most times, I’d covered every little thing anyway.

Occasionally, there could be an issue or two, a couple of questions that could be relevant to that individual interview that I hadn’t asked and I might ask at the tip.

So that might be it.

So there was not much preparation.

Once I did the set of index cards, which was just about common for many, possibly I added a couple of for certain people, but that was just about it.

I didn’t know real preparation.

I knew what they were, I had read if there was anything written on these people, which in lots of cases there wasn’t. In lots of cases, these people hadn’t been interviewed before.

In lots of cases, they hadn’t been interviewed since.

I mean, there are people I interviewed who never wanted to offer an interview and form of made, you recognize, made an exception for, you recognize, in my case.

That was the one interview they did.

I mean, I can think famous, perfect example that could be much like Bruce Kovner, who was, I do not think ever given an interview.

When he agreed to do it, the very first thing he said to me — We saw the interview.

I suppose you are possibly wondering why I agreed to do that.

I said — Yeah, sure.

So he said…

“Well, you recognize, there’s a variety of stuff appearing about me within the press, and a variety of it isn’t correct”

I figured I’d want one accurate, one accurate narration on the record.

He form of trusted me to offer an honest, you recognize, an honest portrayal.

So, um, you recognize, anyway, uh, it isn’t, so far as the preparation goes, really minimal, minimal.

Rayner (21:26)

So why do you’re thinking that?

As you said — Individuals who don’t do interviews, provide you with the possibility to allow you to interview them.

Jack (21:35)

There are different motivations.

I just gave an example of Kovner. Going back to the primary book, Marty Schwartz, he said…

“He thinks his parents were very proud to see him in a book”

In order that was his motivation.

Michael Marcus, who was a friend, and I knew I took Marcus as a friend.

In that first job I told you about, the position that opened up was Marcus was the analyst.

He was leaving to turn into a trader.

So when he was cleansing out his desk, I used to be coming in my first day and we met after which we kept in contact.

While he was in Recent York, we’d get together for lunch periodically.

So I knew him and he was still, he was very, he’s also anyone who never gave an interview.

Very shy person, very, very low-key, didn’t want much exposure.

He form of hesitated and didn’t wish to do it and we had a mutual friend that convinced him to do it.

So he did it, you recognize.

Once he did it, he was satisfied.

So I spent two days at his home.

On the time he lived in Malibu and interviewed him over two days or something.

The primary day was just a part of it because I got here late.

Then the following day was a complete day.

We talked all over the place.

We were in the home, walking on the beach, every little thing.

At the tip, we had dinner, naturally cooked by him, he had his chef there, you recognize, cook the meal.

So, after dinner, he is available in and pushes back his chair and he says — You know, this was good.

“This was a cathartic experience

Going through his whole life like that in our interview, kind of lifted a burden from him.

He form of felt good.

Although initially, he was very reluctant to the interview.

, some people, why they did the interview, I just, I never would know. I mean, I didn’t necessarily know.

Now you may say in some cases, in fact, in the event that they’re managing money, there could be also a useful motivation.

It gives them greater exposure possibly.

In the event that they’re seeking to raise more assets, then it makes it potentially helpful in that respect.

But in a variety of cases, people I interviewed weren’t managing money or in the event that they were managing money, they weren’t open to latest investment anyway.

So there was not necessarily at all times a natural motivation.

I believe also after the primary book, which became form of well-known and popular, people knew me due to the book.

One motivation was, as I got to the later books, like as I got to say Hedge Fund Market Wizards, there are several traders, as an example — May be, who were there, who began their careers because that they had picked up the unique Market Wizards book.

So my book was the catalyst for them becoming, stepping into the entire profession.

So you’d say that is naturally a natural motivation.

, so I remember one trader talking about his, I forget what the circumstances were.

He was like traveling somewhere and he had time and he went to a bookstore and he, he just found like a used copy of Mark Rizzo’s support and it was, you recognize, serendipitously led to his profession.

So, yeah, that is also, whenever you get the later books, that is also a motivation.

Rayner (25:23)

How did you then give you the title, Market Wizards?

Jack (25:26)

I had the concept for Market Wizards, and I suppose I had the title.

I do not remember where I got that, you recognize, I suppose I just thought, I do not know.

I do not remember where the unique thought got here from, although I believe I at all times believed it was title.

Then five years after I’d written the primary book, I got approached by a publisher who wanted me to do a series of fundamental books, you recognize, analytical books, I had no interest, because I did that for more for status.

I wanted to write down what in my mind was the most effective textbook on futures on the time and having done that, I had no real interest in doing it again.

It was a variety of work and that variety of book doesn’t sell.

After I say textbook, for those who write a textbook in a, like a calculus one textbook, that becomes well used, you then could make a variety of money since it’s a giant audience.

But for those who’re writing a textbook on something like future evaluation, there are only a few courses in that and the audience is far smaller.

So that you never try this to get a big audience.

You do it for other reasons.

Like I say…

My motivation was to write down that variety of book for the sake of writing the book, to not sell several copies.

I knew when that regression evaluation section I discussed

I knew by putting that in, I might decrease sales because I knew seeing that many formulas would scare people.

So I did things that I knew would hurt sales, but I desired to do, I used to be trying to write down a certain variety of book.

So I knew I didn’t want to try this.

I knew I desired to do something more popular and I had an idea of what was market wizards and that was influenced, I believe, because I knew some great traders.

I knew Marcus, I knew Schaffner, I knew another traders for them.

So I believed I had a starting group of traders that I could do and I could find others.

I just didn’t do it because I had a full-time job as a research director, which is greater than a full-time job and I didn’t see how I had the time.

But once I had that lunch and the publisher, I told him this concept, he said…

“Dude, you recognize, okay, you try this”

I agreed to do it.

I ended up, I knew it will be nights and weekends.

But back then I used to be, well, one skill I also had, I might be very, very focused.

For instance, once I wrote the Complete Guide to the Future’s Markets, we’re talking pre-PC, possibly PCs were on the arrival, but they weren’t a typical use tool.

We’re talking doing graphics by hand, we’re talking doing multiple aggressions hand calculator, you recognize, we’re, you recognize, and besides all of the writing, you recognize, just do the fundamental evaluation work could be what you would do now in minutes in Excel.

You might spend days doing this because you did not have those tools.

I might literally be up at night and I might work through the night and I might be focused solidly through the night and just get stuff done.

In those days, my younger days, I could do something like that where I might be working a full-time job after which on my nights and weekends being intensely focused and by some means getting it done.

After I look back at it now, I do not understand how I could do it.

It would not seem feasible for me to do it now.

Now just writing a book appears to be enough.

Forget a full-time job on top of it.

Not to say a commute and a family and every little thing else.

Rayner (29:33)

Yeah, you appear to me like someone who’s driven more by purpose than money.

Because whatever you are doing, you recognize, like books, they do not make much money, but you continue to decide to do it.

Like, you recognize, the futures one where it’s harder to sell, but you might have like lots more passion for it, or you ought to have something out out there.

Jack (29:49)

Yeah, I never, you recognize, once I wrote Market Wizards, I didn’t.

I didn’t comprehend it was going to prove as popular because it was.

Um, but I, you recognize, no money was never, I never think in those terms as that is my motivation.

I believe for those who’re motivated by money, your product is just not going to be good.

Um, you recognize, as I believe for those who’re writing a book to earn a living, I do not know. I suppose there are exceptions to it.

I mean, people try this they usually’re successful, but in my case, that was never, never the way in which I might take a look at it.

I believe the identical in trading. I believe people who find themselves good at trading.

They are not doing it for the cash.

They’re doing it because they just like the challenge.

They just like the game.

They enjoy it.

They are not doing it because…Hey, I need to get wealthy.

Now, there are exceptions.

There are exceptions after which they find the eagerness.

So, yeah, but for probably the most part, I believe, individuals who get into trading, because they think it’s a straightforward option to get wealthy, is frequently not going to achieve success if that is their motivation.

Rayner (30:52)

Alright. Yep.

So I believe I read somewhere you might have written like 10 or 11 books.

So among the many…

What number of books is it?

I need to form of like know the official number.

Jack (31:01)

I believe it’s 12.

Let me see. It’s 12.

There are five Market Wizard books after which there’s the notebook of Market Wizard which is a form of synopsis of the important lessons.

That is six after which there’s the entire guide.

The futures market is seven. There is a… after which there was a three-volume version of that.

In order that’s nine.

I mean, that is seven and it’s 10 after which there is a book called Market Sense and Nonsense.

That is 11.

Yeah, it’s getting began on technical evaluation, which is a brief version of one among the three-volume sets, which was technical evaluation.

So, in that case, it’s 12 separate volumes.

Rayner (31:44)

So 12 books, is there any particular book that you might have probably the most feelings for, that feels special to you?

Jack (31:54)

That I’m most satisfied with or…

Rayner (31:57)

That you simply’re most… that you just felt you might have probably the most feelings for that individual book that you have written?

Jack (32:02)

No, you recognize, I… to be honest, I felt satisfied with every book that I wrote. I believe if I wasn’t satisfied, I might have kept on working on it until I used to be satisfied.

Each differently. I believe the unique…

Complete Guide to the Future’s Market, which was revised years later and made slightly bit shorter.

But back once I did it, particularly with the limited resources, I used to be happy with that work.

I believe it’s piece of labor.

Marker Rizzo’s books, I believe, were good.

I achieved what I used to be attempting to do. I used to be attempting to do two things.

I used to be attempting to guide traders and understand traders When you take a look at the successful people, what are they doing and what can we learn from them?

In order that was one important motivation.

The opposite important motivation was, I wanted to write down something entertaining.

So with the ability to do each is I believe that’s the trick.

Up to now as I felt no less than personally satisfied that I had done that for, in Mark Rizzo’s books, I felt good about them.

So I do not know.

Then Market Sense and Nonsense which was not a giant seller, but I had personal satisfaction out of that because what I used to be doing was calling out these misconceptions that I believe are common.

I just was using a soapbox, you recognize, to try this.

Yeah, I believe for individuals who actually bought the book and browse it, I probably liked it, but it surely’s not, it’s nowhere near.

Same exposure as the opposite books but I form of was satisfied with it.

Rayner (33:54)

Okay and possibly going back to the Market Wizards I believe I read somewhere or heard on some podcasts where you may write pages, 100, 200 pages of notes, after which only 20 pages possibly make it to the book.

My query is you recognize the way you then determine what goes within the book and what doesn’t go within the book?

Jack (34:21)

Yeah okay, good query, that one goes within the book.

So principally slightly bit much like the reply I just gave you for the opposite query.

What goes within the book is, I hearken to the interview.

As I hearken to the interview, I take down anything that, I consider instructive, informative, insightful, helpful, um, and alternatively, on the opposite side, anything that is interesting is story and so forth.

So those are the things I’m pulling out.

Anything that does not fill either of those two purposes, I excise.

That is what I’ll undergo.

As I can undergo, I can put this in context.

The interviews I do vary in length. I mean, occasionally they’re short for reasons we couldn’t discuss, but over and over they’re many hours long they usually have been so long as a dozen hours since, you recognize, a complete recording.

In order that’s a variety of pages.

When you would transcribe all of the hours of conversation, that is long.

I do not understand how many tons of and tons of of pages that might be.

But the concept subsequently is that what you are attempting to do is you’ve all this massive material you are attempting to undergo and glean out the essence, you recognize, less is more.

So I’m not attempting to make the chapters so long as possible.

I’m attempting to make the chapters as short as possible without leaving out anything that’s instructive or amusing and interesting.

So in some cases that may find yourself still being a protracted chapter.

But in fact, it still means a variety of stuff has been left on the cutting room floor.

That is a part of the method.

One other a part of the method is, I do not know if you might have experience with this, you do interviews, but for those who ever see transcriptions of interviews, that’s the way you do a podcast and we’re talking and it could sound nice.

But for those who transcribe it word for word, like a court sonographer, here you will find there’s a variety of sentences that do not end, sentences which are run on, subjects that get mixed up, grammatical, things that whenever you read it on the page aren’t grammatical.

You could not pick it up whenever you’re talking, but for those who see it on the page, it doesn’t work.

If you transcribe the actual literal word for word, you don’t find yourself with a readable copy.

A part of that process then is you employ verbatim whatever works verbatim, you employ verbatim.

But typically, you might have to repair the sentences, you recognize, in order that they read well.

In some cases, you might have to finish the sentences because, you knew where the speaker was headed, but he didn’t quite finish it.

He picked up on one other tangent, right?

Then you might have things stepping into order, which is incoherent.

So that you speak about subject A after which subjects B and C, after which somewhere around subject H, you come back to subject A, and it’s just a large number.

One other thing I attempt to do is to get all of the things on one subject in a single section.

Then where you begin will not be where you’re thinking that the interview should start.

You could want to start out it some place else.

That is why I say 95% of the method is editing.

I’ll provide you with one other interesting example.

So I did an interview and hey…

There was an interview in Hedge Fund Market Wizards where one among the traders referenced a famous psychological experiment.

His point was that we misremember stuff.

That was the purpose he was attempting to make and it is a famous psychological experiment where people were shown slides and there is a stop sign or not a stop sign and there is an accident.

I forget the precise details and all that.

But then they were asked to recall what they saw and the purpose was that folks, once they were arrange for it, remembered something that they didn’t see.

It’s that variety of experiment.

He got here and he liked statistics and whatever he talked about.

So I went back and I went back.

I researched and located the study and there have been things that, like if I used to be talking about, I would not get things mistaken too.

So there have been mistaken things, but I knew what he was talking about.

I fixed that section.

It was factually correct, right?

It wasn’t exactly the way in which he described it, but I knew exactly what he was attempting to say.

By the way in which, when he read it, I do not think he knew that that wasn’t what he said.

That is true in just about all cases.

I believe people need a, I at all times send people the finished interview before I publish it.

To see if there’s anything that is, I got mistaken or anything that they’ve an issue with.

I do not think people realize that what I’m sending them is just not the actual conversation.

Yes, it’s all drawn from the conversation and I’m attempting to convey what they said as closely as possible.

However it’s not word for word, and I do not know in the event that they even realize that.

Because for those who do it accurately and also you capture the person’s voice, you are just getting a clean version of what was being said.

I’m very much cognizant of what it’s going to read, and what it’s going to appear to be on a printed page and so unlike a journalist who needs to be verbatim, I must be verbatim by way of being true to what the trader said or desired to say.

But I haven’t got to be verbatim to the actual word for word if it doesn’t work on the written page.

If that is sensible.

Rayner (40:42)

Only one query.

What’s verbatim?

I’m not accustomed to that term.

Jack (40:46)

Oh, what’s that?

Rayner (40:48)

What’s verbatim?

Jack (40:49)

Well, verbatim means word for word.

Rayner (40:52)

Word for word.

Okay.

So a number of the interviews can go for like 12 hours.

I believe you mentioned you’d transcribe them first.

Do you do the transcription yourself? Or is there anyone to assist you to with it?

Jack (41:03)

I didn’t know.

Yeah. In the primary…First Marvel Reasons book, I had a secretary to whom I sent the tapes and I believe she did the transcriptions.

I did it that way.

Now more, you recognize, reasons books, I modified the method.

I listened.

I’ll hearken to the recording and I’ll stop it at any point where I need to capture something.

Then I’ll redictate that portion right into a latest document.

I’ll undergo the entire interview piece by piece, and you frequently must undergo the interview greater than once this fashion, and you might have to undergo it slowly.

So in that rare case just like the 12 hours, it isn’t 12 hours, it’s for much longer.

Although to be fair, there are specific portions of that where you get right into a conversation that you just remember…

“Hey, this didn’t lead anywhere, so you may let that play”

In case you are mistaken and there is something impulsively that…that captures you, you would stop it.

But in some cases, you may let the tape run for some time and never take down anything.

Because for my part, none of it was value capturing.

Rayner (42:15)

That is a variety of work going through, man.

Jack (42:20) 

Yeah, yeah, yeah.

In order that’s where the work is.

Like I said— people think that I’m a variety of time, I’ve had this comment a variety of times, that folks say, you are an incredible interviewer.

I say… I’m not.

But I’m an incredible editor.

So my strength is taking those interviews and melding them into good readable copy.

That is what I’m good at.

As an interviewer, I do not think I’m great as an interviewer.

Probably okay, but I do not think I do some things right.

I believe one thing I do right is I listen, which may be very necessary because so many you may tell a nasty interviewer once they go into an inventory of questions, they usually hit an issue.

They wait for the reply to complete after which hit the following query.

But the purpose is the reply may itself result in roles which are way more interesting than your list of questions.

I at all times listen and if anyone says something, I then go off on that tangent.

In order that’s, I believe that is one thing.

That is an interview skill, well not skill, but I believe an interview tip that I believe is nice, which is something that I do.

But I do not think I’m an incredible interviewer.

There are folks that I hearken to, as an example — I’m right into a podcast, who I believe are great interviewers, but I would not consider myself.

Rayner (43:43)

Who do you think about an incredible interviewer?

Jack (43:45)

Oh, you recognize, like this show called Fresh Air, a podcast called Fresh Air, and the important host is Terry Gross, and he or she interviews all types of people, you recognize, writers, musicians, you recognize, and business people, every little thing you may think, every walk of life.

Famous people from all walks of life.

There’s one other interviewer on that very same program, well, Dave Davies.

They’re each superb interviewers.

They ask like really good questions.

They’re great at follow-up.

They, typically, ask the query that you ought to be asked.

, anyone says something, you’re thinking that — Hey well, what about that?

They’ll get to that.

They’ll ask that query. ,

Most interviews I hearken to and I’m listening to interview and I said — Well, what about that?

They do not ask the plain questions, it drives me nuts.

So, but that is an example of that individual program Fresh Air, Terry Gross, and Dave Davies, I believe are great.

If I delay If I delay paragons of what I consider great interviewers, I might say they’re good examples.

Rayner (44:55)

Right.

Speaking of the interview, I believe I heard on one other podcast, I believe it was with Aaron Fifield, he mentioned that one among the harder interviews you had was with, I believe, Tom Baldwin, right?

Because he’s just attempting to escape, right?

So my query is looking back straight away, how would you do things in a different way for those who’re in that scenario again?

Jack (45:14)

Well, I do not think there’s any interview that I ever did that I said…

“Hey, I must have done this, because I at all times had my limitations which weren’t set by me”

So in Baldwin’s case…

He didn’t wish to do the interview.

Okay.

But he had it, but there’s one other trader that I got to persuade him to do it.

So, I agreed to do it.

My luck was it was St. Patrick’s stay in Chicago.

So while I’m, and so he didn’t wish to interview, to start with.

We interviewed after trading hours, we’re in his office and, the messing questions, and each couple of minutes anyone got here up.

Is available in and says…

“We’re going all the way down to regardless of the bar was”

He said —  I will be right there.

I knew that I could not leave a split-second space between his ending talking and my hitting him with the following query.

Since it was like, I believe I used the analogy.

I may need used the analogy for that interview.

However it’s such as you’re trying, like a photographer attempting to get an image of a bird before it flies away.

That is the way in which I felt that whole interview.

There was one point where I hesitated for a second, and he said… Gotta go...

In order that was just like the shortest of the very other days, but it surely wasn’t by selection.

I knew the circumstances on the time. It still worked.

I still have enough material to make it work.

It was not the worst interview.

The worst interview was about which book was it in.

I believe that was all, it was in The Recent Market Wizards.

It was a fellow by the name of Gary Bielefeld.

That is form of an interesting backstory.

So those days I used to be a research director and one among the things we needed to do in those days was you’d must put slightly wire out at the tip of the day on certain markets, you recognize, the bond market was up for this reason or down due to that.

You’d say —Well, there’s buying by Morgan Stanley and something like, you recognize, and so forth.

Anyway, there was one firm that kept popping up, and all these big names with BLH.

After I form of checked out who the hell is BLH, I discovered that BLH was one guy in Peoria, literally.

That is the guy who’s form of trading 1000’s of bonds, you recognize, that is just, that was an interesting story.

So I got in contact with him.

I went out to Peoria, literally Peoria, to interview him.

I do not know for those who know the old Westons, like you recognize Gary Cooper.

Do you recognize him as an actor?

Okay, so Gary Cooper was one among these Western hero stars.

But he was very, very terse, you recognize, yup, nope, that variety of thing, that variety of personality played and really, very form of rigid wood man of only a few words, but motion.

Bielefeld, every query I asked him was like this short, you recognize, that is reminding me of Gary Cooper.

I just said — Yup, no, I could not get anything out of him.

Form of then at one point within the interview, he mentions how trading is sort of a poker.

I said — Okay, yeah, well,
how’s my poker?

He gives me like a semi-interesting paragraph, or two or three concerning the analogies between trading and poker.

I said… Gee, that is nice.

He said — But you may’t use that.

So why, what’s mistaken?

He says… Why do people think it’s like gambling?

I said — No, nothing.

You said it isn’t, you do not make it sound like gambling.

You make adequate points, real points the danger side of it, and the chances.

It isn’t a, anyway, so he can let me use it, but that was just like the one short section that I believed was marginally interesting.

However the long interview just really wasn’t superb.

I mean, I made what I could out of it and the story may be very interesting, but that’s the only chapter in any Mark and Wiz’s book where my narrative is longer than the interview, since the interview itself was so not successful, you recognize, is sensible.

Rayner (49:51)

Speaking of narrative, what’s your approach to writing the narrative?

Jack (49:55)

So I take advantage of the format of an introductory section, which talks concerning the trader and possibly related topics, depending on the situation.

Then I actually have the interview after which I actually have a conclusion section.

So for that introductory section, I’m attempting to create some interest on this trader.

Now, a variety of the background of the trader comes up within the interview.

So you may’t necessarily put, you are not putting all of the stuff within the narrative because you might have it within the interview.

But what’s within the interview, if it’s interesting, I attempt to put that within the, at first, and I’ll also speak about my observations.

I’ll speak about it.

What I needed to do to get the interview, it’s just, you recognize, it was difficult.

In Mark, like in some cases, I’ll talk concerning the surroundings.

For instance, Marcus lived at this mansion in Mineralbo, and I remember driving up and it was similar to an enormous gate.

So just in that describing that, I said…It’s kind of, you form of enter the gate, which looks…which looks prefer it got held up under a panzer division.

, so you are trying to, I attempt to convey what my thoughts and feelings were and be descriptive as much as I can or extra-relevant.

So the start narrative might be anything.

It will depend on the trait.

It will depend on the circumstances.

Rayner (51:32)

So do you write the narrative first before the edited interview or that comes later?

Jack (51:39)

That comes at the tip. So… I do the interview first after which I do, after which I do not know if I do the conclusion first or the narrative first, however the conclusion section comes obviously after the interview.

Then the narrative is only a separate piece.

Rayner (52:02) 

You interviewed many many traders.

I’m just curious, how do you remember all the several narratives, the several environments, and the context of all these different interviews?

Jack (52:10)

Well, I do know, I mean, I’m writing these after, so I do must take notes and stuff, you recognize, while it’s brisker than my memory.

So after I do an interview, I’ll sit down in my hotel room and write down some notes about things that occurred to me.

Rayner (52:34)

Yeah because if not you only quickly ignore it.

Jack (53:36)

Yeah, yeah, yeah.

So you might have to, yeah you might have to and, and yeah in order that’s, that is necessary like we’re like kind of like I give it some thought lots it comes up on a regular basis in other ways.

So like I remember interviewing Bill Lipschitz who on the time was ex-Solomon brothers.

He traded huge currency positions at Solomon going off to be his trader or manage his own money, not his own money but…

Turn into a money manager on his own.

I interviewed him, and we spent a few hours, and it just really wasn’t coming anywhere.

Then we ordered Chinese food, and I had the tape recorder off, after which he began coming up with interesting stories.

That variety of situation is something that I might convey, or like I take a break to go to the restroom, and there at height, at standing height is a quote screen.

He has quote screens throughout, however the undeniable fact that he has a quote screen at standing height in the toilet, I believed was particularly universe, you recognize.

I put stuff like that, you recognize, and in fact, I’ll make notations of all those things after which that can go obviously into the initial narrative.

Rayner (53:50)

It is the things that stick out like a saw tongue to you, you recognize, like herald all this.

Jack (53:53)

That is amusing, you recognize?

Rayner (54:03)

Plainly whenever you write this Market Wizard book, there are a variety of costs involved, such as you’re booking up your hotels, the flights, and stuff like that, and you might have no idea how well the book will sell.

Is it like all this cost is born on you?

Jack (54:13)

Yeah, I mean, I absorbed the associated fee.

At this point, you recognize, and I’m pretty efficient, so once I do one among these Market Wizard books, I attempt to group the traders.

So within the last book I had, I’m gonna…

Quite a couple of London traders.

I believe no less than 4 that I can consider right off the bat were London traders.

So I did all of them.

I had greater than 4.

But in every book, there are interviews I find yourself not using because I feel they’re just not adequate to incorporate within the book.

So I may need had like a dozen traders.

Not a dozen, a half dozen traders.

So, I had all of them.

I had the triple range.

So I had like one each day, in some cases two in a day, if I believed that it was the variety of thing like every two in a day.

So it’s, and I make it pretty efficient in that respect.

Rayner (55:07)

It’s because earlier you mentioned something along the lines of, you recognize, you interviewed the traders, but their interview didn’t make it to the book.

I prefer to hear, you recognize, what’s the explanation for that?

Jack (55:16) 

Numerous reasons, but when it bores me, after my best, some cases, in some cases, in lots of cases when the interview is just not within the book.

I do not even attempt to edit it.

I am going through it, I hearken to it, and if I find myself rarely really wanting to stop and take stuff out, you recognize, if it isn’t interesting to me, I can not expect it to be interesting to anybody else.

So I believe you could have the opportunity to chop stuff and never use stuff that is not good.

I believe it will be a giant mistake to incorporate subpar material.

The explanation could also be a variety of times it’s since the variety of trading a trader is doing could be inherently not very interesting.

It might be some kind of arbitrage or whatever.

It might be something that just doesn’t…

Perhaps the guy made money and did it right, but there’s just no drama to it.

There are not any lessons to it.

It’s just…

There’s nothing to tug out of it, so far as I’m concerned.

So there, if I drop an interview, it’s because there’s not just enough anything that I can say could be helpful.

There’s little or no, if anything, that I consider interesting or entertaining or anything like that that might make read.

So those are the explanations.

I just don’t need to place any.

I don’t need to place anything right into a chapter that I would not wish to read.

Rayner (56:57)

So before you interview them, I suppose you would need to allow them to know that there is not any guarantee you will be featured within the book, you recognize, blah blah blah.

Jack (57:03)

Yeah, I do not think anybody, I do not think I ever mentioned that per se.

I do not think anybody ever asked me, well, this goes within the book, I do not think, you recognize, so I make no guarantees ever about that.

The one I guarantee is…

I guarantee that they’re going to have the opportunity to see the chapter before I publish it.

The explanation for that’s, I did that from the very first book on, is because I’m attempting to get the trust of individuals and I need them to be honest and open as much as possible.

If anyone’s giving an interview with something that is gonna be in a book, they’re gonna be particularly cautious and kind of self-editing themselves a variety of times.

I try to attenuate that as much as possible.

So by telling them, look, go along with you or whatever, if there’s anything that results in there that either you are feeling is just not correct or for whatever reason you don’t need to incorporate it or is problematic, then we can’t use it.

We’ll either determine a compromise that we’re each comfortable with or I won’t use it.

It doesn’t occur too over and over that in some cases, most cases don’t lead to any changes.

In some cases, some changes but it surely is a giant deal.

But I believe it makes people more comfortable.

Rayner (58:26)

Okay.

By the way in which, Jack, we’re currently across the one-hour mark so I just want to ascertain in with you to see how you feel.

Yeah, absolutely.

You possibly can go slightly further.

Sure.

Do you ought to get some more water for yourself?

Jack (58:37)

Yeah, let me get some more water.

Sure, go ahead.

Rayner (58:41)

Yeah, by the way in which, I like whenever you shared earlier, right, that you recognize…

Interviewing right you haven’t got an inventory of questions you only follow it or bullet by bullet because that is what I used to do then once I heard that from you I told myself…

Yeah, that is point I should just form of like you recognize throw away the questions undergo the conversation see where that results in, after which at the tip yeah I form of like check what I missed right so yeah that was a superb point.

Good tip yeah love that yeah so

So going back to the market wizards right I believe I will steal this query from you I believe you shared this like what’s

What are a number of the more painful memories you had while writing the Market Wizard series?

Jack (59:16)

I can not consider any painful memories.

I used to be doing what I desired to do and it was largely successful.

There have been no, nothing painful.

There was occasionally…

Interview I could not use, you recognize, where I didn’t wish to use it, however the trader had other reasons for not wanting to grant permission, but that happened rarely.

But aside from that, I can not consider anything painful.

Rayner (59:57)

Are there any, like, possibly… things that happened, right, during this whole journey of yours that bring a smile to your face?

Jack (1:00:03)

No, I do not know, it’s just that it has been so… a lot through my entire adult life, I mean… spans…

Like 1988 through probably the most recent book?

2020, so there are some updates much more recently last yr.

So it has been a part of my adult life.

It isn’t like an isolated thing.

It has been a part of it has been a part of my profession, essentially.

Rayner (1:00:40)

Okay, and since you recognize, I believe it’s like 30-plus years now and you’ve got interviewed so many because the 80s and 90s.

So do you recognize what number of?

Of those markets, businesses are still trading today, right?

Jack (1:00:53)

No, I do not.

I do not. In fact, you recognize, in lots of cases, they are not trading because my original interviews were done, as I said, in 88.

In order that’s quite an inventory.

Not all of them are alive anymore, for that matter.

Definitely, a lot of them are retiring and stuff.

But once I do the interview,

I do not follow up.

There was an exception where this last book on non-market wizards, I did return, the book got here out right before my last, and my last interviews were wrapped up kind of months before COVID.

After the book was finished, we had COVID, you recognize, the bear market, and we had the massive bull market recovery, after which we had one other bear market.

Form of an interesting times and led to the query, well, these people have done so great.

What about this subsequent period with a bear market, a really sudden reversal, after which one other bear market eventually?

Just so, how did they fare and what were their experiences?

They were also interesting periods.

I need to understand how they navigate all that happened.

In some cases, that led to some pretty interesting stories.

In that individual case, I did return a couple of years later and did an update, which coincided with the discharge of the paperback version.

The paperback version has the updated interviews as well whereas the unique hotback didn’t.

But that’s the only time I went back and followed up.

Although I believe the stock market wizards, there was a bear market that began a few years later.

When the payback was coming out, I did update at that time.

So I suppose I did intend to as well.

Those are the one times, but they were done a few years after the unique book.

But I have not gone back and filed it up with traders.

I interviewed 10, 20, 30 years ago.

Rayner (1:03:13)

I believe for me, the stock market results were form of like a special book because like…

stock market wizards, right?

I’m pondering that would open up further opportunities like options trading market wizards, you recognize, day trading market wizards along those lines.

Jack (1:03:39)

Yeah, but to be fair, I had stock traders in all the opposite books too.

So one among the dilemmas you might have, to appear to be, is once you’ve something like market wizards, it’s gotta be a heavy title, right?

Because that is, it’s form of a brand name.

Okay, so the primary time, yeah, market wizards, the second time around you may do latest market wizards.

But then, you recognize, you form of, so every time it is a bit of a challenge.

So that individual point that said… Well, I’ll do one among all stock traders.

So I did stock, so I could use the title stock wizards.

But there have been stock traders in the opposite two books as well.

Then with hedge funds, again, I needed an angle.

So I said — okay, this time I’ll do only hedge funds and the opposite books.

You had hedge funds, but you furthermore may had individual traders.

Yeah. Then I said…

Well, I did hedge funds.

Let me do exact opposite solo traders, you recognize, that no one knows of and that was unknown market wizards.

If I ever did one other book, I do not know what the hell I’d call it because I’m running out of preface words for market wizards.

Rayner (1:04:38)

The most recent market wizards.

Jack (1:04:41)

Yeah.

I’m form of amused with pondering I ever did one other one, possibly I should just call it the last market wizards.

Because I would not do one other one after that.

I do not know if I’ll even do one other one.

Rayner (1:04:53)

I believe I heard somewhere you mentioned there was possibly a woman’s one, right?

Where you saw female traders, something along those lines.

Jack (1:05:00)

I at all times try to seek out women traders.

But very difficult because, look, I’m at all times searching for individuals who’ve done it for a very long time and to seek out women who’ve traded for a very long time.

High success, it’s difficult, you recognize and so it isn’t that I don’t need to incorporate women, and I would really like to, but you haven’t got to only the demographic kind of such, and it’s going to probably change.

But for those who’re searching for individuals with 10, 15-year track records, you recognize, particularly once I did the sooner, you recognize…

In the opposite MarkerWizard books up until the more moderen one, you only did not have those sorts of records. I mean, there was an occasional exception I could find.

Like in stock MarkerWizard’s Dana Galante, she was a brief seller.

So once I could find a girl trader, I might use that, you recognize, but I just had, I had trouble, every one among the traders I kept on uncovering happened to be male, it wasn’t by selection.

I did do…

I did interview an over-woman.

Well, one among them Tuesday that I’m not using within the last book, is trader.

Had some interesting stories in a way, but her methodology was just so esoteric that I just think the thing it could relate to.

It could relate to you recognize,  that almost all people most individuals just couldn’t relate to it was just a really esoteric methodology.

There was one other woman trader I attempted to get who just didn’t agree, I didn’t wish to do it.

But I actually have trouble finding even just a couple of, let alone fill a complete book with women traders.

It could be, if I had that, it will be a good topic for a book.

Rayner (1:07:13)

So after the interview, you recognize, you then tell the person, possibly the women, hey —  you recognize, your interview didn’t cut.

So what is the form of response you often get whenever you tell them, tell them…

Jack (1:07:20)

I do not… Oh yeah, I suppose I possibly do. I probably at all times…

Well, I’m at all times honest.

I probably, I like, I believe in probably the most recent book, I said —Hey, you recognize, seems I’m not going to find yourself using it.

I just, there wasn’t enough material in here that I felt could be, you recognize, of interest to readers.

But thanks for, you recognize, participating in that variety of thing.

Rayner (1:07:46)

All right.

So, okay, now we’ll move on to the following section, possibly speak about trading and, you recognize, concerning the financial markets.

So I like your answer.

I believe I heard on a podcast, you gave a superb answer to why you don’t think the markets are efficient, and I might love to listen to that from you.

Jack (1:08:01)

Why I do not use what?

Rayner (1:08:02)

Why you don’t think the markets are efficient?

Jack (1:08:07)

Oh, markets are efficient.

Yeah. So, plug here.

I discussed the book I wrote, Market Sense and Nonsense.

After I told you allowed me to get on a soapbox and complain about things like individuals are mistaken.

There’s a complete chapter in there called the Deficient Market Hypothesis, through which I am going through like a dozen plus the reason why the idea is mistaken.

they vary, there are a variety of reasons, but let me just undergo a few of them.

Subsequently, you recognize, and if latest information is available in, everybody gets it.

Subsequently, you may’t beat the market due to the things that they see discount.

So one thing that’s mistaken with that’s that regardless that everybody has the identical information, not everybody is equally expert in using that information.

An example I take advantage of once I give talks is, you recognize, you might have a chess tournament.

Everybody knows the chess rules.

Everybody has all of the, has read the identical chess books.

Everybody knows all the identical.

Classical chess openings and everybody has the identical information.

But there’s going to be a Magnus Carlsen or a Gary Caspar of it, is not it?

Who will just crush everybody else?

It isn’t because they know something everybody doesn’t know.

It isn’t that they’ve some hidden information. It’s just that they’re more expert in employing the knowledge that is there.

The markets are the identical.

There are millions of ingredients of potential information within the markets and there are infinite ways they may be combined and used and the way you may react to that information.

Some individuals are going to be more expert than others.

That is the inherently mistaken pondering.

One thing I do once I give talks is I sometimes use a slide where I’ll show a traffic jam and kind of the efficient market hypothesis of the markets is the markets are like a traffic

You are in a single lane and you are trying to modify over to the opposite lane and also you carry on switching backwards and forwards attempting to get ahead.

Half an hour later, you look to your side and it’s the identical automobile in your side and you only cannot get ahead because everybody’s on the identical, you recognize, they got the identical impediment.

Then I put up a slide and I show a bike going between the cars.

So everybody’s using it.

Everybody’s using the identical road, but some people have a more efficient way of doing it.

Rayner (0:10:58)

That is good.

Yes, that is …

Jack (1:11:02)

Analogy.

Right. Okay.

One other thing that is well, then is the empirical argument.

There are only too many examples of markets that were ridiculous, totally absurdly ridiculous.

The classic one classic is the web bubble.

So the web bubble, we’ve got the web stock index going up sixfold 600% in a yr and a half.

Then it goes down 88%.

Enough goes down in that percentage, which brings it back to where it began. Right?

So you might have a 600% rise in 18 months after which an equal decline back down in the following 17 months.

If markets were efficient, hey, there will need to have been some really dramatic, bullish news happening during those first 18 months and a few incredibly bearish news.

Happening for the following six, to 17 months.

I mean, I challenge anybody to seek out fundamentals that designate that.

You had firms that had business plans that never made money, that would never earn a living.

I mean, the businesses where, you recognize — I joke as I joke about like one among the businesses like Pets.com, which just became famous for example of one among these failed firms, because back then the shipping cost was so expensive.

They were selling a variety of things like pet food, which is heavy.

They were losing money on most of their sales since it was costing them more for the product than the shipping, then they were making, from the sale.

So I form of joke there…

They think they went broke in nine months, but they couldn’t last more if their sales weren’t so good.

So, um, you recognize, since the more they sell, the quicker they burn money and my point is, do you might have firms which have these?

Models that just didn’t work in any respect, never work they usually initially, you recognize, they made a variety of money.

Or not, that is not content, but a variety of, there have been a variety of worthless stocks that went from 10-200.

So there’s not the basics of change.

What happened was it kind of became this mania where everybody’s making all this money into their socks.

My neighbor, hey, my neighbor just bought these web socks and he just made 100% of them.

He can keep people, more people are available and more people are available.

The individuals who didn’t are available, nice, they can not stand it, seeing everybody else creating wealth they usually get it.

However it’s like musical chairs where sooner or later the music stops and anyone’s left holding the bag and it’s just the stock goes from 10 – 200 then goes to zero.

It was never value 200. It probably was at all times a zero.

However it’s not that the basics change.

It was the human emotions that were driving it to excess on the up and excess on the down.

It isn’t that the markets weren’t efficient.

In the event that they were efficient, you’d never have that basic problem of the efficient market hypothesis is, I take advantage of the instance that it is the efficient market hypothesis is sort of a recipe for chicken soup without the chicken.

Because what does it omit?

It leaves out human emotions.

Now, human emotions are very difficult to quantify in any way.

But the very fact is markets don’t just act on fundamentals.

In addition they respond sometimes more to human emotion than to fundamentals.

In case your model assumes leaves no room for human emotions or human irrationality, as behavioral economics will argue, then your model is lacking a key ingredient.

In order that’s one other mistaken thing. the efficient market hypothesis.

The empirical examples go on and on.

I mean, the crash in 87, 29% in futures, the money market never caught up, the info never caught up.

But I believe in the longer term, it was a 29% decline in in the future.

Interestingly enough, in a day where there was no really big news.

But when the markets were efficient and were normally distributed,

The probability of that might be, it would not occur in a number that’s mind-bogglingly long by way of zeros.

We’re not talking about trillions or quadrillions.

We’re talking about some minute fraction.

So events like that might never occur within the history of the universe, let alone the history of recent mankind.

So you recognize, there are too many things that occur empirically, which couldn’t occur if Mark’s primary is just the traders I interviewed.

Ed Thorpe, his first fund 19 years, and he has three losing months, three losing months in 19 years.

All of those losses are lower than 1%.

Now, I did a probability distribution, just an easy binomial distribution.

I made the simplifying assumption that were equal to the losses, which is conservative because his gains were larger than his losses, those three losses.

So the probability I got here out with was for Thorpe to have made that without skill, you recognize if it is a Mark’s sufficient, no one can beat it, right?

So Thorpe shouldn’t have the opportunity to beat it.

However the probability of his getting that variety of record of 19 years of positive months, was akin to picking one atom from the mass of the Earth.

Not the surface, from your complete mass of the Earth, after which randomly doing one other atom selection and getting the identical atom.

That probability is higher than Ed Thorpe’s record.

So people could say — Yeah, well, if you might have enough traders, anyone’s gonna earn a living.

Well, yeah, anyone’s gonna earn a living.

But to get anyone’s track record is probabilistically not possible.

, it’s just like the argument of, well, if you might have enough monkeys typing, hitting random keys on a typewriter, some monkeys are gonna type Hamlet.

Yeah, but what number of monkeys do you could try this?

There are probably more monkeys that may fill the visible universe.

So it’s the identical variety of argument.

It sounds right, but it surely’s mistaken whenever you get all the way down to the numbers, they’re just way more extreme.

You’ve gotten that empirical argument that comes up in lots of, many various ways.

So those are a number of the aspects.

There are other things, but that ought to provide you with a flavor.

Rayner (1:18:18)

Yep. So, I mean, after you have interviewed like many traders, you have seen the different sorts of strategies that they’ve employed.

I’m curious to listen to, are there any strategies that worked prior to now but don’t work anymore today?

Jack (1:18:36)

Yeah, there are numerous strategies.

, markets change, and things that work stop working.

I discussed Thorpe.

I mean, he originally…began in the marketplace side of it, trading options, and that was because he had mathematically derived the equivalence of the Black-Scholes model.

But years before the famous Black-Scholes model paper was published, you then get to the purpose where there are also programs of option pricing, and every little thing else.

In order that engine goes.

Excuse me, that edge goes away.

He goes from being the one one who knows tips on how to price options to everybody having the pc power to calculate up.

So he goes to a distinct strategy.

Now he goes to statistical arbitrage.

Eventually, that stops working well and he goes to convertible arbitrage.

Eventually, so he kept on changing his methodology because the markets, as things that weren’t efficient became efficient.

Something like trend following.

In the primary market wizard books, several traders did spectacularly well with trend following.

I mean, you recognize, you might have extraordinary stories of traders successful trend following, essentially trend following, you recognize.

Trend following by itself not works anything like that.

I mean, yes, there’s at all times, there’s still trends, there’ve at all times been trends, there is a reason why there could be trends.

There’s a logical fundamental underlying principle.

But what has modified is because trend following has turn into popular, and you might have so many computer programs being sold

Software sold to do trend following variety of things and so many various CTAs using the identical variety of approaches very highly correlated approaches, that very participation of so many more traders doing the identical thing.

Results in lots more false breakouts.

So whilst you still have trends, you will get lots more, not only false breakouts but very, I believe there is a greater predilection to violent reactions inside the trends that make those trends very difficult to follow.

Not in all cases, occasionally you will get a smooth trend.

I mean, we have a smooth trend happening now within the stock market.

So that they do occur, but they’re more the exception than the rule.

Rayner (1:21:11)

Yep, and I believe from what I’ve also gathered is that you just imagine that exceptional super traders are form of like, whether you might have it or not.

So I suppose your genetics do play a component.

What’s your tackle that?

I believe that is what I heard right from the opposite episodes you shared.

Jack (1:21:29)

Okay, so repeat the query.

I mean, I’m not getting the essence of the query.

Rayner (1:21:37)

Okay, so do this again.

Like running a marathon, not everybody can run a marathon on the Olympic level.

So trading to be an excellent trader, not everybody is usually a super trader, but they’ll no less than still be a profitable trader.

Jack (1:21:50)

Yeah, I agree.

So, I mean, that is true.

I mean, people ask, can anybody be Mark Wizard?

The reply isn’t any.

Can anybody run in your… I’ve used the identical example once I’ve given talks, everybody who’s devoted enough can train to run a marathon.

Even even individuals with serious handicaps have managed to do it, right?

Yeah, with this amount of commitment training, every little thing else may be done.

But irrespective of how dedicated you might be irrespective of how hard you’re employed for the overwhelming majority of the population It’s going to be not possible for them ever to run world-class Marathon times because their bodies just aren’t built to try this.

You not only must have the work and the dedication and every little thing else, but you do must have a really specific body type to have the opportunity to run a marathon at world-class record speeds.

Right?

In order that’s not so.

We talked about mathematics.

I mean, kind of, I could love mathematics, but I didn’t particularly have the skill to be a mathematician, let alone mathematician.

Right?

So and it’s true for most individuals.

In the event that they like math, you might have to have a special variety of mind to be a mathematician.

Through music, I do not care how many individuals practice what number of years on the violin, you are just not going to be the primary soloist for the Recent York Philharmonic.

Usually, you do need some, you wish that plus some innate talent.

So why should training be any different?

Certain people have some innate skills.

Not a selected skill because people’s methodologies are in every single place.

If it’s different for everyone, you recognize, for everyone, it might be an intuitive variety of skill of the markets.

It might be a quantitative skill.

It might be anything.

I mean, certain people just have talents in certain niches, in certain areas and a few people have that talent in a trading strategy they develop.

So I do not think everybody might be an exceptional trader. I believe most individuals can find yourself being that profitable, but not in the event that they do every little thing right, but not exceptional.

I believe that the exception by definition implies that everybody cannot even be average, let alone, you recognize, above average.

Everybody cannot be above average.

By definition, right?

Everybody can speak different languages.

Let alone everybody may be an exception.

Rayner (1:24:45)

Yeah, so I can understand where you are coming from whenever you say that certain people have certain physical attributes that favor them to perform well in certain sports.

Jack (1:24:52)

So I have been around a protracted time.

So I’ve seen a variety of big changes.

For one thing, we have gone from trading pits to completely electronic trading.

Thanks for the highest.

So changes, you recognize, one big change has been going from Pit trading to electronic trading.

Dramatic change there.

Commissions, you have gone from high commissions to, well, zero commissions, but you then have slippage, but you mostly have.

So dramatically reduced cost.

You’ve got gone from no computers, apart from the occasional, you recognize, large computer back within the, you recognize, which wasn’t accessible to anybody but academics and folks in corporations and had very limited power even then.

But you go from a world of really no computers to most people to at least one where you might have powerful PCs and hand them out to everybody and where you might have supercomputers within the hands of some skilled traders.

In order that’s one other, the computerization, I believe, is a serious, major change, which by and we’re coming with the computerization, you might have all this proliferation of knowledge of all sorts.

There’s, and by data, I mean, not only just fundamental data, but as I say —Price data.

You didn’t even have each day price data computerized accessible in my early years on this industry.

Whereas, you recognize, for a few years now you might have any time interval you wish all the way down to minutes and even fractions of minutes, right?

So you might have all that data available, plus all the basic data and it’s available to numerous people.

Then you might have the supply of gold’s computing power has been accompanied by an amazing influx of quants into the markets.

So that you go from a situation where you had virtually no quant funds originally to now a world where multiple quant funds have tons of of individuals, tons of of PhDs I should say…

On PhDs working for them.

In order that’s a really different world.

So the markets in that respect have modified lots.

The one thing that hasn’t modified, obviously is human emotion.

That is the one thing that stays pretty constant.

Rayner (1:27:47)

Even the quants which are operating on their systems, there are still emotions involved right, especially once they go right into a drawdown and all, you recognize, how you recognize, once they pull the plug and stuff like that.

Jack (1:27:57)

You’ve got had some famous examples, I forget which yr it was, but it surely was well over 10 years ago, but there was an instance where market and real funds were doing well.

There was a situation where all of the market and real funds were the identical, same, belonged to the identical stocks, and were short the identical stock, and something triggered

You had these fonts which were form of nice, having nice smooth performance, impulsively print these nervous losses.

You went at it in a short time and also you needed to have the selections made.

Do you stick with the system?

Do you take a look at the info?

So even then, you recognize, human decision emotions had to come back into it.

Rayner (1:28:47)

So what do you’re thinking that?

Or moderately, how do you’re thinking that discretionary traders would then find their place on this world where technology is advancing quickly, the rise of Kwan, so where do discretionary traders have a spot on this world?

Jack (1:29:03)

Yes, I might have thought that it’s turn into way more difficult, and logically it needs to be.

Yet once I did this last book on non-market wizards, I discovered these discretionary.

They were all, all except one were discretionary.

The least impressive track record was by the systematic trader.

His track record was nice, but not one of the same being the opposite discretionary trader.

So everybody else was a discretionary trader and a few of them are truly just mind-boggling performance records.

So by some means, despite competing against these MAMA firms with tons of of quants, they were in a position to have way higher performance numbers, although, in fact, they’re trading much smaller amounts of cash.

They couldn’t do it lots.

You could not have those sorts of results with large sums of cash.

Nevertheless, they’re still getting those returns in liquid markets and by some means it’s possible.

It’s still possible.

Everybody figures on the market, not everybody but those which are successful determine their particular edge, their particular edge is the most effective option to put them they usually’re in a position to pull it off so it’s still possible.

I believe empirically it’s possible.

Rayner (1:30:39)

Yeah I prefer to hear from you furthermore may like you recognize I believe trading principles are often pretty timeless like you recognize cut your losses and all ride the trend blah blah blah

Are there any principles that were largely true back then but it surely’s possibly not low not true today?

Jack (1:30:58)

Oh, you mean trading principles that were true once but aren’t true today?

Rayner (1:31:05)

Yes yes Yeah

Jack (1:31:06)

well actually I mean take a practical example.

I took the unique Mark Rissabuck after which it was like 30 years later.

Uh, well, it was 30 years later, but why am I even about possibly 25 years later?

But many years later did an update, uh, where I added a chapter and I, you recognize, in other words, the chapter I added was looking back, you recognize, what, what do I believe men variety of thing, you recognize, 25 years later or whatever number the years are.

Between that 2012 edition and the unique.

There was nothing that I put in that first book that I didn’t think was still true.

So form of basic trading principles do stand the test of time.

Markets may change, but because people don’t change, basic market principles proceed to carry.

That is why a book like Reminiscence of a Stock Operator, which I read 65 years after it was written, back in my youth, it was written back across the Nineteen Twenties, rang true to me then…

It still rings true to people now and my original book, you recognize, it’s the unique Mark R. Wizz’s book, greater than 30 years later, I believe still rings true to people today.

So, because I believe trading principles have a while of mortality to them.

Rayner (1:32:44)

All right.

You’ve gotten interviewed a variety of successful traders, and I believe you furthermore may shared one among the commonalities.

Perhaps as a substitute of taking place that route, I’d prefer to hear, in your opinion, what are some sorts of folks that should not be a trader, that shouldn’t go down this trading route?

Jack (1:33:04)

Sure.

 Very dogmatic people, who insist they imagine they’re right on a regular basis who aren’t open to changing their mind.

That could be a very bad personality for trading.

I mean, one common denominator that just about all exceptional traders share is that this flexibility, this ability to activate the dime.

, and in order that’s, that is an example anyone shouldn’t go into trading.

People, I believe who’re well, individuals who must win shouldn’t go into trading.

If you could win since you’re financially eager to get money, that is a recipe for disaster.

People who find themselves mainly motivated to earn a living, typically, that is not sign.

If that is your motivation, that is probably not sign.

When you’re highly impatient, by the way in which, which is a trait that I actually have.

Which is one among the explanations I do not consider myself trader.

But that is a nasty trait for trading.

To be trader, you could have a high degree of patience.

Those are some traits which are hostile to trading.

Rayner (1:34:26)

So possibly we will move on to the closing section now, right, Jack?

I believe it’s almost two hours now and it’s pretty late for you.

Jack (1:34:33)

Yeah, I’d prefer to wrap it up at this point.

Rayner (1:34:34)

Yeah. So I believe just a few questions.

Perhaps just… couple of questions.

So is there anything that you just prefer to add that you recognize you did not have a probability to cover?

Jack (1:34:43)

No, I believe we covered lots.

Rayner (1:34:48)

Okay so yeah last one will probably be where you recognize traders find and connect with you?

I’m on Twitter you recognize so check go at Jack Schwager.

I mean I suppose that is that is probably one spot to get me on the front seat or you may communicate through that, I suppose.

I actually have a web site which I do not update which actuator that comes up is there and you recognize you may get information on the contact me through there as well.

Rayner (1:35:27)

Okay great so thanks a lot in your time once more Jack.

I appreciate it it’s late for you right, you shared a lot and yeah thanks in your time I appreciate you.

Jack (1:35:34)

Okay, have one.

Thanks.

Rayner 1:35:37

You too, take care bye bye.