The 3 Steps To Become A Market Wizard Jack Schwager

TITLE: The 3 Steps to Become a Market Wizard | Exclusive Interview with Jack Schwager CHANNEL: TraderLion DATE: ---TRANSCRIPT--- like Lance. No, he’s doing great. He’s the firm’s best trader for a number of years running and decided this rule of only day trading is kind of holding him back. He could do a lot better if he could hold some of these positions and he he’s the type of trader who knows that he shouldn’t be getting out at, you know, near the end of the day. He could if he holds it, it’s going to go further. So, he left uh basically so he could trade and stock be free of that. And then and then they went on in the next four or five years turns it into 78 even when we interviewed him. the trader principles which are respect the price action of the market. Stick with your winners and cut your losses were inherent in pretty much all of the guys in this book as well. If you broke it down, they were trading in the style where if they were right, they made a lot of money and if they were wrong, they lost less.

That was kind of positive asymmetry. The ones who experienced that became market wizards only because there was something in them internally that said they were just convinced regardless of evidence. You know, the evidence was saying, “Hey, keep on blowing up.” one trader in particular I come to Kenny Sharpness uh his ability to kind of focus on multiple things at the same time there’s some innate skill he had every trader in their own way has some innate skill Christian Kulamagi and Phil geter talked about how they studied I think Phil said tens of thousands of charts and by looking at charts they really became familiar with the types of moves that markets can make a lot of people are attracted to markets because they think it’s an easy way to make a lot of money if you read this book carefully you should be struck by the fact that all of these traders, all of these traders just did enormous amounts of work and dedication. The opposite of easy way to make a lot of money.

All right, welcome back to the Trailer podcast. I’m your host, Richard Mglin. Uh joining us today are two excellent guests. We’ve got Jack Swagger and George Coral. Uh who are co-authors of the newest Market Wizards release, The Next Generation. Uh, I like the Star Trek reference there, guys. Um, really exciting stuff. Today, we’re going to dive into um all the similarities and differences of this next gen generation of Market Wizards and, uh, hopefully sharing some great stories as well. So, George and Jack, thank you so much for your time. A pleasure to have you.

Thanks for having us.

Excellent. Uh, to start with, um, first I just want to say I’m eagerly waiting awaiting my copy. This is actually the release date that we’re recording this today. Uh, I don’t have my physical copy yet, but I got the audiobook version that I’ve been listening to. I definitely recommend checking it out. Um, but to start with, George, I’d love to hear kind of your perspective on co-writing this book. Um, and how interviewing this batch of traders has kind of um, confirmed a lot of the principles that you found, you know, going back and researching Lobe, Livermore, Darvis, all these great traders from the past. So any interesting parallels that you notice when in you know interviewing these these this next batch of uh of traders?

Yeah, I mean I think the trader principles which are respect the price action of the market, stick with your winners and cut your losses were inherent in pretty much all of the guys in this book as well. You know occasionally you’ll get somebody who doesn’t subscribe to those principles but uh they all pretty much did it in this book. So, and I did my best to point out wherever I saw, you know, instances of things that here’s a real-time example of what I’ve written about in the prior work that I did about principles. So, it was great um in that regard. It’s it’s sort of just a confirmation in my mind of the existing knowledge that uh that lives out there as it relates to trading, whether it’s from the work I’ve done or from the prior wizards books as well. So, yeah, I guess I’d say that. And the first part of your question was, I guess, could you clarify a little bit what you mean about the the writing process?

Oh, not not the writing process. I just kind of want to hear if there were any kind of parallels that you saw, you know, showing up in this next generation of wizards compared to all these historical grades. I know you’ve done a lot of work on Livermore Lobe. Um, anything that surprised you or or like it was like a mirror image of those historical traders?

Well, no, there were definitely differences and we could get into that if you’d like to, but I would say um the key principles, the three that I mentioned are really the most consistent things um across traders and across time. But there’s always an exception to every rule, but I would say, you know, if there’s a rule to trading, it is adhere to the principles.

Yep. And Jack, from your perspective, uh what were some of the interesting uh differences or similarities of Dispatch of Market Wizards compared to those of the past? You know, I found it interesting that the styles were a little different. There are a lot of people who focused at least early on their careers on the short side of small caps and then kind of later evolved a little bit. Uh but from your perspective, I’d love to hear kind of what were some of the standout differences and and also again the core principles that they share with the previous market wizards.

Sure. So you’ve you’ve hit upon one of the key differences in your comment and um it’s not just the idea of small cap trading but small cap short tra uh trading which a number of these traders did in the beginning at least until they became you know grew out of it and had to go to other strategies. Uh but so that there’s a philosophical difference there. uh all all the interviews I’ve done in the past uh almost with rare exception uh regardless of the fact they’ve all all used different approaches some fundamental some technical some mix or traded different markets all that but if you broke it down they were trading in the style where if they were right they made a lot of money and if they were wrong they lost less right

that was kind of positive asymmetry

uh so you you know selling small caps going short small cap stocks can be the poster child for negative asymmetry. So it’s u it’s that that’s a key difference and it wasn’t the only strategy they showed up that was different. Uh one of the traders when he evolved evolved into going short out of the money options which again is another postage offer negative asymmetric trades. Uh so that that was a key difference. Uh I should say that both of those strategies shouldn’t be tried at home. Don’t try don’t try this at home. Uh uh these traders pulled it off but they had a they had ways of doing it that make it work. Uh even the out even selling out of money options and surviving through a sudden quick bare market uh move. Most people will almost all people will not be able to do that. The trader we interviewed in this book was uh but again I it’s very specific to his innate nature and skills. There were some other interesting differences like um certainly the first book ever where not just one but multiple people mentioned they played video games and that was that was a help in their uh you know in their trading because they were doing very fast trading early on. A few of these traders started out day tra day trading. Uh so those are some of the differences.

Yeah, I was actually gonna I picked up on that. that I was going to ask you guys what your perspective on that was. Like from a mental perspective, obviously there’s huge stakes on the line with trading, but video games and that competitive atmosphere, learning by failure, there’s a lot of parallels that you can take take over into the trading sphere. Uh George, did you have any thoughts on on how many of these traders kind of grew up playing video games or kind of mentioned that in the interviews?

Yeah, I mean, I guess it makes a lot of sense, right? Because trading nowadays is more you’re in front of a screen, you’re clicking buttons, you’re staring at screens, things are moving. You know, there’s patterns essentially. I haven’t played video games in any real way since I’m going to date myself here, but since like Nintendo and Sega and Mike Tyson’s Punch Out and games like that, which is long ago, but there were definitely patterns, you know, like you had to I don’t know if you ever played Mike Tyson’s Punch Out. It’s a very popular game, but you could like duck to the right with one guy and then you’d have to throw an uppercut and across. And so, yeah, I guess there’s a lot of similarities in a sense of like you learn the patterns of the games. You’re in front of the screen, you’re using a a joystick, and then in the case of trading, you know, you’re using a mouse and you’re clicking. So, it’s a little bit different, but it’s the same thing. There’s patterns in the markets and you trade these certain patterns and strategies. And so, it makes a lot of sense, I think, when you really think about it. And if you do have good reaction time, Mike Tyson might hit you in the face or the market might hit you in the face too for sure.

Um, excellent. And I also want to ask you guys about the learning curves of these traders cuz what’s interesting about this next generation is they’re on the younger side. I think you guys mentioned that in the intro as well. Um, and I wanted to hear if you guys had any observations about how these traders learned and how they kind of what resource that resources they went to to kind of speed up their process. A lot of it was trial by fire, which you guys mentioned with shorting small caps. There’s a lot of risk there and many of them blew up multiple times, but um, any observations on how they worked to improve their trading skills to kind of reach this level? Um and Jack may maybe start with you to see if you have any thoughts there.

Yeah. Well, let’s tie it in from with the previous topic of video games. Uh there was one key word that came to my mind. And by the way, I want to date myself on uh as beyond George. Uh I can go back to pong in terms of video games. So uh anyway, uh the key word is focus. So one thing about video games is you’re intently focus and I don’t play video games but have occasionally in the past but you do need a lot of focus and and so this intense focus is a aspect of the characters and talents of many of these traders. uh one trader in particular I come to Kenny Sharkness uh he he basically he’s trading many many different strategies uh different time frames all at the same time and how we and he just said that he basically says that this this ability to kind of focus on multiple things at the same time there some innate skill he had and uh and I think every trader every trader in their own way has some innate skill

you you know, uh, one of the traders I asked um, you know, he’s describing his difficulty in school and all of that. I said, “The a lot of descriptions that do you have ADHD?” And and he said, “Well, I don’t know, maybe, but but the thing about ADHD is many people think it’s just inability to focus. Uh, again, staying on the topic of focus here, but actually hyper focus. ADHD. Uh, and I have a son who who has a has attention deficit. Uh, they can’t they don’t focus on any something that’s not of interest, but get them interested in something and they got intense focus. Yeah.

So, so I think that’s a key key concept.

Yeah. Excellent. George, did you have anything to add on kind of observations for how these traders learned and developed?

Sure. Yeah. You know, I think in terms of learning, obviously Jack and I study traders pretty intently. Um, and these guys study traders, but one of the things that I was sort of taken with is they studied charts a lot as well. So, specifically Christian Kulamagi and Phil Geter talked about how they studied, I think Phil said tens of thousands of charts. And by looking at charts, they really became familiar with the types of moves zip markets can make. And I think that helped them to figure out like what they wanted to try to capture, you know, what was a persistent pattern. Um, and then combine that with their temperament and their goals. So, as far as learning, that’s uh that’s one thing. You know, in terms of another thing I guess we saw that that didn’t show up, I think in prior books was they uh learned things from watching people on YouTube. And I think that’s just a function of the times. There’s a lot more people on YouTube sharing information. But most of the guys who did parabolic shorts talked about or a handful of them at least talked about having seen somebody on YouTube who was sharing ideas and information about that strategy. you mentioned like how do they improve and I think the biggest thing there is really just journaling. So writing down their trades and Jack, you know, can speak to this probably a little better than I can, but the quick version is they write down their trades and they use that information to improve by seeing like what did they do right, what did they do wrong, how can they alter process. So I’d say those are the the high points that that I took away.

Yeah. And was it Lance who would record the training day session and then watch it back on the weekends? That really stood out to me as it’s like watching game type, right, Jack?

Exactly. I mean so he he not only he not only what the idea coming in on not only is this this a guy who was sitting in front of a screen all day long right and then taking notes and record uh after session just getting more research but coming on the weekends as you say and replaying tapes as it’s trading and in two modes slow speed and fast speed. Now, the fast speed was like the batter uh you know uh taking the lead bat before going up to the plate just so the real bat feels lighter, right? Uh so that was just to get faster and the slow speed was to just really capture and see what was what the market was doing and how he was reacting and what he could do better. So yeah, so there’s a there’s an immense dedication there in terms of work ethic.

It’s also also pretty interesting kind of replaying your training. Yeah, I I think it’s really smart. I think the more we can study the charts and and master those patterns, we can see them in real time, too. Um, and one one thing I wanted to ask actually, um, is a lot of them, uh, which is is common with a lot of the previous books as well. Uh, but a lot of them had to deal with several blowups and there was this kind of innate ability to overcome, you know, failing and and setback. Christian Kagi blew up multiple times. I think uh it was um uh Lucas who uh had to sell his bike and his PlayStation to get his capital back. Um that that abil that drive to keep working and keep surviving that also seems in itself a talent uh necessary to get to that level. Would you would you say that’s correct Jack?

Yeah, I mean it’s uh the the ones who experienced that uh became market wizards only because there was something in them internally that said that they were just convinced they could do it uh regardless of regardless of evidence you know the evidence was saying hey keep on blowing up a kulami interesting said that a nice comment uh basically says well the first time it took him like uh I don’t know a month to blow up and then the next time it took him like four months to blow up. The third time it took him a year to blow up. He said, “Yeah, I’m getting better at this.” You know, but that ability to not say, “Hey, I blew up three times,” but to say, “Hey, I’m improving and I know I can do it.” That type of uh just confidence confidence is real work is a is a trait that many of the wizards share. Not all of them obviously blow up in the beginning, but a surprisingly significant percentage of them did. And the only reason they became wizards because they had this internal uh belief.

[Sponsor segment for DFW / DeepVue trading platform omitted.]

And one thing I want to ask you guys is looking at the the records of these traders at at the beginning, it seems the their equity curves must have been very volatile. And of course, it’s market dependent. you can make mistakes later on, but over time does that boom and busting kind of cycle diminish typically with these traders or do you still see that apparent uh later on in in uh in their careers? Um like as they gain experience, do they start to make less mistakes, know themselves a little bit better, be able to recognize the market environment a little bit better to hopefully uh diminish those those big swings when they come?

Really depends on the trader. Some of these traders just had an internal uh risk aversion from the very very beginning and never had volatile returns. So you know and that that includes well quite a few traders in the book actually. So there’s a class of traders where they just had tremendous they were born with they were born with a nature riskmanagement response. So that’s a big advantage in this business. uh some traders had to learn from experience of course there there but well one of the traders uh the the anonymous trader which you can get chapter three uh he uh of course his result ultimately ended up being very smooth with an exception uh being generally very smooth uh but then uh but then he let then he kind of broke his own rules and stayed in for trade and I I I mean, we talk about it in that interview. Yeah.

And and this for context, I tell people this is a this is a trader who blew up multiple times early on your volatility. Uh and tremendous. He’s he’s the his early track record up and now you know wide sleeves makes 500% blows it all that type of thing. So he’s he’s the classic example of violent volatility moves now. uh and he’s a trader who I should say for context goes from 40,000 to a half billion. So people know that he he really uh succeeds spectacularly. Uh so he gets eventually very smooth as a he gets very good as a trader and it is using risk management but then he he lapses on a trade and it’s a trade it doesn’t follow it’s not a it’s not a trade as hard of a strategy. It’s was almost kind of well, you know, I uh it was Carvana, I believe, uh uh that he uh he sold he he was short and he stayed with it, you know, first went against him, then he made money and then it popped up again and he sold it again and uh and but but not for the same reasons that he had originally just because he figured, well, you know, I’ll get it a second time and then didn’t didn’t stay with it. I think he added this position ends up being a massive loss and it actually calculated that that particular trade I don’t know I don’t remember off hand maybe George does where he lost 50 or 100 million whatever he lost so it was a lot of money but kaka but it turns out that who he got out he got out after an earnings report and it was a big big loss but it turns out had he held that position in the next year or so he could have wiped out his multiple hundred million dollar account on that one trade so generally speaking yeah he became over except when he broke his long rule rules.

Yeah. George, anything to add on on that side?

Well, I mean, I think compared to the lose everything down 100% years, they uh early days they improve, but um and it does vary as Jack said, but I I think the guys that make the biggest amounts of money still have reasonably harrowing draw downs. You know, at least 25 30%, some cases 50% or more. So, kind of the takeaway that I had is I don’t think you’re going to make a gargantuan amount of money um without some volatility and some heavy draw downs. I just I don’t think it’s uh possible really.

Yeah. Sorry. Go ahead. To your question, like I definitely got more smooth, but that’s kind of compared to losing everything, right? So,

Exactly.

So, yeah.

Yeah. And we’re all human. We’re all going to make mistakes at some point. And I that’s what I really liked about the Christian Kamagi chapter is he talked about how after he reached that peak of over 100 million um he had that significant draw down and like how that changed his perspective and it was interesting that several traders mentioned kind of changing their prior priorities a little bit. you know, they were hyperfocused on trading to to reach this Market Wizard level and then they’re kind of diversifying a little bit away and still can get amazing results because they have that talent, but they’re they’re they’re smoothing out their psychological equity curve a little bit. Jack, I I saw you I saw you nod there. Anything to add on on that point part of things?

Yeah, I mean you you’re absolutely in fact this goes back to one of the earlier questions you had is is how are the traders different and in this in this book quite a few of the traders got to a point where they said hey they stopped them you know wait a minute is this what I really want to do you know uh and uh and in some case they’re struggling with like L mentioned Lance Lance by his own admission you know he wants to do a lot of different things and he almost wants to move away from trading totally. He’s made enough money, you know, to to kind of live off for the rest of his life and and do whatever he wants to do and use it for whatever purposes he wants. But he’s he, you know, on the other hand, something comes up and he sees the opportunity, you ask him just to devote those to get intense on those four or five days and walk away from $10 million, right? It’s like uh it’s a difficult so he’s struggling with it and the the uh trade we talked about uh one to a half a billion uh he’s trying he’s moved away from it but still spends about 10% of his time. What he what he did is he found somebody who knows who thinks exactly like he does knows his methodologies and alerts him whenever there’s a key trade that he should take a look at. So he’s not looking at the markets and when it’s the system kind of calls it he focus on the markets and interestingly spending 10% of the time he used to and he’s you know in the last few years and during that period doubled from 250 to 500 billion.

Yeah. So you could as have as good results maybe maybe you’re kind of not you’re focusing on the A+ trades the absolute A+ trades and trying to eliminate everything else. Yeah. Yeah.

Which is maybe the answers to the paradox. How could you spend 10% of your time and do better?

Yeah. Well, because if you if you do the 10% is structured so you’re only looking for the A+ trades as you’ve termed it and as a few traders in the inter in the book termed it then you’re kind of doing a selection process that is quite beneficial because that’s another thing that comes up is that there are traders that make almost every all the traders make most of their money on certain select type of trades and yet they keep on trading other stuff which doesn’t make money and all that but because they’re there and they got to do something, right? So, uh I was Phil who said get that guy uh I think I’m here all I’m here every month every day maybe one of one trade one two trades a month is where I make my money but I got to do something right so so and the other stuff just keeps them busy but they the key difference is in those cases where they are watching the market all day they’re the trades that are the A+ trades they’re sizing much smaller.

Yeah. Exactly. Um, what one thing I really liked about uh this new book that you guys added was the chart the charts aspect showing charts of the trades. Uh, I’d love to hear kind of the background behind that decision. First of all, I think it was a great decision. Uh, but yeah, how did that come to be and and um what are you guys thoughts on on adding in kind of charts of the trades that you guys are discussing? Some good examples because like the Christian Kalanagi chapter, you guys have um maybe five charts in there showing the different moves which I think is fantastic.

Yeah, I well I I’ll I’ll I’ll go first and let George comment afterwards. Um yeah, I didn’t do any of the other books. I kind of sometimes thought cheating might be useful, but I figured I’ll just stick with the same format and didn’t do it. And in this book in particular, there were so many traders that were getting into very specifics about the trades. Uh I just thought, well, it would be clearer if we could show the chart of what they’re talking about. Uh so like Lance talking about uh how he trades uh I forget the term he used but these panic the exhaust panic m Yeah. Yeah. Right. Right. And you know so he describes it but it’s it’s one thing to read the description. It’s another thing to see the chart with four steep up bars each with huge increasing volume and then a gap at the top and then that’s stop you know. So that that image is important I thought and I so I thought in this case what will be clearer to include charts and it’s kind of a new feature. So we ended up doing it for a number of the chapters. George you want to any thoughts on that?

Yeah I guess a couple. You know, in some of the prior books, people would talk about their macro ideas and, you know, they wanted to express a bet. Like Jim Rogers comes to mind, and I’m not sure if I’m pulling from other things he’s written or the original market wizards, but he would talk about how he wanted to invest in agriculture some years ago or how he wanted to be in China. And you can sort of look at a chart and first you can conceptualize the idea as to why if it’s fundamental and you can say, okay, it went from here to way up here. Compare that to a guy who’s day trading and if most people see a bar chart, you know, even if there’s big volatility, you’re just going to see this really long bar. So, it’s hard, I think, to visualize the guys that are day trading what they’re doing because if you look at typical day charts, it just doesn’t show up. So, zooming in on those charts and then really clarifying is helpful. The other thing is, you know, most of them had uh a handful of setups. Like Lance had a handful of setups and Christian Kulamagi had a handful of setups. And I think that it’s good to be able to show those with images because again, like articulating in words the setup. A picture’s worth a thousand words, I guess, is the bottom line in this case. And if you’re talking about technical patterns, it’s not the same thing as talking about fundamentals or or long-term thematics. So, for all those reasons, I think it was a great addition. And uh it’s good to hear that you liked it. So, thank you for confirming the decision.

Yeah, I think it’s great. And did you guys pick those charts or did the did the traders kind of pick which which trades to include uh in the book?

Well, I I think predominantly we we picked what we’d like to to provide us with. You know, that was essentially the way it worked.

Yeah. Excellent. or in some cases where they talked about a specific strategy and they had some various they talked about several examples you know we said well pick one example that illustrates this type of trade they might have sent us um we would say okay episodic pivots like show us one or two I can’t remember exactly but and then we would look at the one or two and say okay this is a clearer depiction so it was kind of an iterative process where we’re going back and forth essentially and just saying, “All right, we want to what’s a good example of this? There’s two or three, you know, maybe the one hits the nail on the head.” And essentially, that was how it came to be. So,

yeah. Excellent. Um, we already touched on this a little bit, but I think it’s worth diving deeper into uh the evolution kind of of a few of these traders because because a lot of them started in the day trading time frame and then at least the earlier chapters. Uh I’m I’m still reading the whole the whole book, but and then there’s this evolution, lengthening the time frame, switching from going short predominantly to going long. Um any observations on your guys side about kind of the evolution process and and what allowed these traders to be to be so dynamic and allowed them to shift kind of, you know, different perspectives um and and still have great success with it. Um Jack, any thoughts on that?

Yeah, sure. Uh first of all this ability to change that’s that’s another key trait that I pointed out in a number of Maruza books. Uh the adoption ability the flexibility that’s part of a winning that’s part of the formula. uh in terms of these traders they part of it is just when they as well they’ll the ones who started out with day trading or started out selling small cap stocks uh they obviously did they made their initial millions like that and it’s all fine and good but they realize they come to a point they said wait a minute you know this is good but I could do better like Lance you know sort of said hey you know I’m I’m no he’s doing great he’s the firm’s best trader uh you know and he was for many for a number of years running and decided this rule of only day trading was kind of holding him back. He could he could do a lot better if he could hold the position you know some of these positions and he he’s a type of trader who knows that he shouldn’t be getting out at you know near the end of the day he could if he holds it it’s going to go further. So he left uh basically so he could trade his stock be free of that and then and then he went on in the next four or five years uh turns a few you know turns turns it into 70 80 million when we interviewed him. So uh he was absolutely right about that and and other traders come to the same realization. probably the high school frolic who was a high school kid that you mentioned and sold his sold his bike because he you know just goes to cover his losses and and uh anyway but he he goes on and he also starts off shortterm uh small cap stocks and uh but ultimately besides really the big money is on longer term stocks and uh sometimes is if the one traders goes from from smaller cap to midcap and develop strategy for it and realizes that strategy is only going to work in in bull markets and then has to branch out and come up a strategy that’s will work in more various situations.

George, you want to comment?

Yeah. Yeah. I I think not everybody can adapt just just to make it clear and I think it comes down to kind of goals and temperament. So, two of the guys in the book uh we we called them cash registers behind the scene because they almost never lose money. They’re like just it’s like a W2 paycheck. Um, and they were very comfortable where they lived. One of them in particular just had no real tolerance for risk and losses. And so I think he would like to adop adopt a strategy that allows him to make more money, but it just doesn’t suit who he is, you know. And then I guess the flip side of the coin is almost everybody that was a parabolic shorter moved away from it. And and I think it was for a few reasons. One of them is there’s a lot of stress associated with that stratey associ associated with that strategy. There’s a lot of risk. You know, you you get these stocks that jump up a bunch and they’re going to collapse, but maybe they go up a couple thousand% and then it’s game over. So, you know, those two reasons I think make people want to migrate away from that strategy. Um the lifestyle, you’re living in front of that screen and you’re watching every tick because if it starts to halt or gets halted, you know, you got to be there. And so I think in the case of Phil Geter, he wanted to spend less time in front of the screen. And then there’s scalability. Um, and you know that strategy can only do so much capital. So I think it’s this blend depending on the trader of you know what do I want to accomplish? What can I tolerate? Um, what are my goals? And all of that combines and then they find a way to get away from it. But I guess in aggregate, yeah, I I do think a pattern is people who start with that parabolic shorting get away from it because it’s just I think it’s too much for any person to sustain over the very long haul.

Do you think there’s any edge erosion going on with that too because a lot of these traders, you know, they they’re on social media a lot. They’ve sharing their strategies, all that. So, I’d be curious to hear your guys perspective on that if um if that’s also kind of limiting the opportunities or the effectiveness of the setup uh in general.

I mean, I could comment on that. We asked a couple of them about that and the answers are in the book, but um you know, they said that there have been instances before where these strategies were mentioned at conferences or in different books, maybe not as as popular as the Wizard series, but they said it would create sort of temporary aberrations, but things tended to go back to normal. And the fundamental reality of shorting small caps is essentially there’s going to be small cap companies. They’re gonna, you know, there’s going to be financial shenanigans. They’re going to do things to get their stock to run up. They’re going to need working capital that’s going to cause the stocks to come back down. So, I think by and large the guys believe that maybe this strategy being discussed more because of this book or or related media could have a short-term impact, but the long-term, I guess we’ll call them fundamental realities are are pretty much going to be there unless or until somebody comes in and and puts a stop to it. So, so I think they think it’ll persist and and be a strategy that’s viable long term. Now, that said, it it does evolve, you know, and I think 20 years ago, like a guy like Phil Geter, not to keep coming back to him, but he would just short him and stay short because it didn’t cost 300% annualized to borrow. And that’s changed. And then the intraday patterns have changed. So, it’ll definitely evolve. It’s not going to be a strategy where you can just short in the morning, come back and cover at dark and or at the close and and you’re done. But um I think they believe the fundamental realities behind the strategy are inherently gonna remain.

Excellent. And the best traders will evolve with it as it as it changes. Um one question I did have is um going going back actually to Lucas, I think my favorite line that I’ve heard so far is uh his drive to get out of high school was why he wanted to trade so bad or something like that. It made me laugh. Um but I was curious, do you guys have a favorite um question that you ask? a favorite qu um a favorite answer to a question or just a favorite chapter as a whole? Not to not to say one chapter is better than another, but one that you particularly um you know stood out to you. And uh Jack, maybe we’ll start with you.

Sure. As far as a favorite chapter, I mean there are a number of them that are very high up for me, but I guess if I I pick one, it’s it’s the anonymous trader uh who went from 40,000 half billion there because this trainer was a musician musician started he was musically talented and he he he was ma his goal in life when he was very young was to master music. He found music and he was just enamored with it and he was in a prestigious music school and uh but then discovered trading and trading was was another he had a had a passion for that too and because he’s someone who has to master whatever he’s doing can’t master two things at the same time. So he decided to drop out of music school and focus on mastering training. And then he goes through this this interesting we talked about some of these like some of these hair raising trades and interestingly even after we finished the the the whole chapter and it’s the longest chapter in the book it’s maybe the longest chapter in the market wizard series but even after we finished it he um he said hey guys I have to tell you I have to be kind of upfront I don’t want people and he’s anonymous so people wouldn’t know anyway it’s not like his record is is probably actually most these all these is a solo trader, so their track records aren’t known by the public, but he said, “I want to be upfront.” He said, “I just had my worst loss ever.” And he goes through that and and it is a harrowing tale. Uh so that of if I had to pick one chapter, it’s that because it’s just filled with interesting stuff.

And he wrote the letter to his parents. Is that right? To kind of

Yeah, he wrote the Yale.

I thought that was

explaining why. And we included Exer’s letter. The whole letter was too long. But I thought in that letter the way he talked about trading the passion that’s yeah

the passion that’s he describes in in this uh this goal of becoming a master of trading and and how it fulfills him.

I thought just verbalized beautifully the mentality and the attitude that super winners uh have.

Yeah. Excellent. George, do you have a a chapter or an answer that stands out to you?

Yeah, there’s so many. I mean, there’s just great little parts of of all the chapters. I could rattle off just a few thoughts. It’s hard to pick a favorite because

it’s your favorite child. I understand. It’s okay.

Yeah. Yeah. But, you know, I really liked um like Kenny Sharpness. His approach just looked like total madness. And I think we did a really great job of drilling down and and understanding how he did what he how he does what he does and how he makes money. So I like that aspect of that. Um Phil Geter had a great line about how to adapt while remaining consistent, which is one of these things that in trading it’s like, well, you have to adapt, but you have to be consistent. And it’s kind of like, well, is there a contradiction there? So I like that. Um, you know, Lance’s story of his early days in the hustle is just like the guy’s spending 10 hours a day on Sundays watching highlight reels. It’s just kind of like what, you know? So, so, um, and then Christian Kulamagi was such a legend. And then Rick Bandazian, uh, he’s a guy, we’re we’re the same age and he wanted to be an investment banker out of college. And he’s like, I didn’t really know what it was. And I totally relate to that because when I was his age coming up, we all wanted to be investment bankers. And then we realized, oh, this is a horrible 120 hour a week sales job. Like, no thank you. So, I think um rather than one chapter, there’s just bits and pieces and some of its stories and some of its just great lessons about trading and and how to trade and how to improve process. You know, Lucas had this great thing where he said, “Look, you want to study the great traders, but you have to be careful not to get stuck in the past because essentially like my words here, but you can’t fight this war like the last war because this war is going to be different.” And I have done my fair share of of emulating or trying to recreate the strategies of traders of years past with, you know, not the best of results. And so I totally related to that. I instead of one, I think there’s just so many great tidbits and lessons um throughout the whole book, but those are the ones I guess that come to mind initially. I think I left one or two out. So, if they’re listening, sorry, guys, but that I don’t want to take too long with it.

No, those are great. And I think um I think going back to studying great traders, I think Lucas, he’s got folders with clips and and stuff for each of those traders. And I think you’re right. you you want to kind of try to distill the principles like you’ve done uh in your work, George, and then apply how that might change and adapt to to current markets, not get lost too much in the history aspect of it. Um, what one thing I did want to touch on is maybe two groups of traders in this book. There’s a few that are a little bit more self-taught, independent, and then there’s those who like Lance at Trillium learned from traders directly there. Um and um uh Kenny Kenny at SMB learning there. Any thoughts on that environment and how that might help or hinder your development as a trader um working with a group versus having to figure it out on on yourself and developing that self-reliance?

Well, I came up in multiple chapters. Uh and it comes up in both ways. on the one hand and in fact for sometimes both ways feel the same trade and I forget which is a trader to settle but uh said well it’s very helpful being in an environment where there’s other people and there sharing of ideas and it’s all very positive but in but when you get to a certain point you’re almost better being off on your own so you don’t have all the extra noise right and distraction and it’s the same trader you know opposite opposite points but oddly enough they’re they’re both true in certain context

Yeah, George, any thoughts on that as well?

I think it depends a lot on the trader because I mean I initially thought exactly what Jack just said, but then I thought of Kenny Sharkness who says it’s great to, you know, he stays in SMB Capital’s ecosystem even though he doesn’t necessarily have to because he can bounce ideas off of people. He’s got more eyes. He’s got people that can challenge him and say, you know, he’s mentoring them, but like why didn’t you get bigger here? And he’s like, oh, good point. I should have. And so I think it just depends, you know, then you’ve got guys like Lucas and he says you should probably start there because they’re going to give you like guidelines and and training wheels essentially so you don’t blow yourself up. But long term, you want to be on your own comparatively. Then I guess you have a guy like Phil who says, “If I hadn’t done the primary research on my own, if I had had the resources that were available today, I wouldn’t be the trader I am today.” So just thinking out loud here, um there’s so many different paths. I think it really just depends on the person. I don’t think there’s one absolute truth or right right way to go there. It’s more about the individual. But I guess I all that said, I would say, you know, it probably is beneficial to start in one of those environments just because you’re going to have people that are like cut your losses and things like the principles. You can read about them and that’s helpful, but to have somebody sitting next to you show you, I think could be advantageous if you’re 20 years old and and fresh out of the gate.

Yeah, I agree. in I I forget which chapter maybe it was the anonymous trader um who was the trader who um started off on his own and but then with a buddy they decided to both get serious at it and was anonymous trader and he and his friend was making a lot more on the same trades um there’s some lessons there. Yeah.

Yeah. Yeah. And yeah, that was an interesting step. One of the interesting things in that chapter so they’re both trading. They’re both doing all the exact same research. They’re both trading the same ideas. And you know, half a year half a year into the year, uh, he’s up like 50 and is the other guy’s up 500.

Yeah.

And and ultimately, uh, we got off on a tangent, but then I came back to him. I said, “Well, by the way, why why uh did he do so much better?” And he said, ‘Well, he I was still even though he had gotten better on the risk management and and all that, he said he was still there were trades where he wasn’t doing Yeah. he he he was letting the trade go much further than the plan called for. And so those trades were eating away at his profits.

That was the key.

Yeah. And yeah, I I think that was that’s a great takeaway. And what one question I had is I didn’t realize this, but in the intro you guys let slip that there’s going to be another market wizard book in 2027 focused on hedge funds, which I think is fantastic. Um, but I just want to hear guys your your guys’ perspective. What made you separate those two kind of type of trader, the more individual side, uh, not necessarily retail side, but more individual side versus the folks who are make, you know, working with billions of dollars managing funds.

Yeah, we saw very early on that we were just going to have too much material. You know, we had too many good interviews and uh that if we even if we translated them all into text, we’d end up with more than we could use one book. So, we we discussed it and came up with the idea, well, let’s one we needed a differentiating theme. So, we said, well, let’s take all the solo traders in one book and all the hedge fund guys in another book. So, that’s basically how it came.

Is there a different skill set that you think is required for managing billions versus these traders who have taken, you know, a few thousand to 50 million, 100 million, you know, up to 500 million or could these traders get there eventually or and and develop that skill set?

Uh, are you talking about can they scale their strategies or is there a difference between being an independent trader and a hedge fund manager?

more more that side of thing like is there a different skill set required to manage that those huge sums of money versus grow a little into also you know quite a bit but there’s a difference between 100 million and managing 10 billion for sure.

Oh, absolutely. Massive differences. You know, on one end, like you’re living and dying by the sword. You you eat what you kill and that’s it. But it’s just you. You on the other end of the equation, you’ve got clients, client service, sales, you’ve got marketing, you’ve got to deal with operations, you’ve got compliance, you have due diligence questionnaires, you’ve got to make sure that your returns fit a niche. You can’t have style drift. I mean, I could go on and on. I’m not I think there are obviously way more successful hedge fund managers than there are traders who have achieved results like the guys in this book, but running a hedge fund or any money management business for that matter is no small undertaking. And this is actually one of the things that I talked to Jack about early on when we first met. I I asked him about a trader and I said, “Do you think that guy would have been good at running a hedge fund?” And Jack, if you want to name him, you can, but if not, I won’t. and he said, “Oh, no, no.” He just wasn’t a salesy guy and he wasn’t a people person. So, I I think you probably need a more diverse skill set to effectively manage money because you’re wearing either you’re wearing all those hats or you’re facilitating the hiring and the buildout of the business that can accomplish all of those goals.

Excellent. Jack, any anything to add like kind of the differences between those type of traders versus uh the ones in this book?

No, but it’s it there’s a personality difference in how people react to managing other people’s money. Some people have an easier time managing other people’s money than their own than their own trading and other people quite reverse. uh you know uh just a classic example uh not somebody who went to be on an Echra matcher but from the last but Peter Brandt uh constantly had his friends and family you know kind of say oh you know Matt could you manage some of our money and he kept on turning him down and then one one day decided okay I’ll do it and that began an 18month losing straight which is only time in his career I think he had that uh and find and during that time he starts he he had a very specific approach which he used all and this is a guy who who’s only he hadn’t traded for 50 years solid because as discussed in the interview that I did it for 13 years he stopped at cold turkey and then came back but he still has like 30 40 years of trading and uh he basically uh started dabbling and trying other things some indicator never used indicator starts trying indicators almost comical in a way and then this and has his only has his worst draw down one of his worst draw down which in his case I think was 15 16%. Not a huge amount, but anyway. So, and just kids killing him. So, just gives all the money back. The first month he gave money. He’s no longer managing money. He goes on on like a 19month waiting. So, some people So, it’s a psychological thing. Some people can’t handle don’t want to handle it. They just don’t uh not comfortable.

Excellent. Well, I look forward to that book as well. Um George Jack, thank you so much for your time. um any last lessons or takeaways from the book um that you think people should look out for or or experience as they as they read it and get their copies and and maybe George, we’ll start with you.

I mean, I think the principles, the three principles I mentioned earlier, which are respect the price action of the market, ride your winners, cut your losses, if you incorporate those into what you do, and you don’t use way too much leverage, you stand a reasonable chance of survival um to learn. So, I think that look at how the guys incorporate those, look at what happens when they don’t, look at what happens when Russo doesn’t cut the loss. he knows that he should and consider that. You know, beyond that, we did um our best to highlight all market wizards have very independent unique personalities, but there are some consistent personality traits and I think it was actually in the the my take on Russo’s chapter where I talk about those specifically because he did a good job of highlighting the I think it was seven or eight factors. I can’t remember exactly how many, but um I I think paying attention to that stuff is helpful as well because there is a while they do have different personalities, there are consistent personality traits, and I think it’s important for people to kind of consider that versus who they are in their potential pursuit of market wizardry. So, I guess I’d say those are the two big things for me.

And you might relate more to one chapter versus another and and just relate to their personality more. I think I think that’s important. Um, excellent. Uh, Jack, any anything from your side about things to remember?

I guess final word I would say is a lot of people are attracted to Marcus because they think it’s an easy way to make a lot of money. And uh, if you read this book carefully, you should be struck by the fact that all of these traders, all of these traders just did enormous amounts of work and dedication.

Yeah.

The opposite of easy way to make a lot of money.

Excellent. Well, uh, Jack George, thanks again so much for for coming on here. I look forward to finishing off my copy. Um, and to everybody watching, I hope you guys enjoyed as well. Uh, if you’re interested in the book, uh, the link is down below for you to check out. And, uh, we’ll see you guys in the next one. Cheers.