Hedge Fund Market Wizards
By Jack D Schwager
Published by John Wiley & Sons
Ask anyone working in finance for advice on what investment books you should read, and the chances are he or she will mention one or more of Jack Schwager’s three books – Market Wizards, The New Market Wizards and Stock Market Wizards.
Indeed, money manager and blogger Barry Ritholz calls the first two “must-read, seminal books for investors and traders”. However, the last of the trilogy was published 13 years ago, at the height of the tech bubble. Clearly, the financial environment has changed a lot for the worse since then.
The good news is that the fourth book in Schwager’s series, Hedge Fund Market Wizards, brings the series into the age of austerity. As before, each chapter consists of an edited interview with an individual investment “wizard”. He splits his 15 interviewees (14 hedge fund managers and one bank trader) into three categories.
There are “Macro Men”, who take large directional bets on currencies and commodities; “Multi-strategy Players”, who try to come up with multiple ways to beat the market; and “Equity Traders”, who deal solely with shares. The traders in the final section get less individual attention than the others, perhaps because Schwager’s own background is in futures and currencies. However, many of the subjects still reveal useful information about their tactics and outlook. Indeed, the interview with value investor Joel Greenblatt (author of The Little Book that Beats the Market) is one of the strongest.
While the book’s focus is clearly on trading and investing, there is more than enough human interest on offer for the general reader. For example, Edward Thorp, who invented many of the strategies used in quantitative investing, tells of how he also made an enemy of the entire casino industry when he proved that blackjack could be consistently “beaten” by the average player – a revelation that (according to Thorp) led to at least one alleged attempt to kill him.
Like Schwager’s other works, Hedge Fund Market Wizards looks set to become an investment classic. While other writers have also tried to profile top money managers, Schwager is more thorough and probing than his rivals. Having run money himself, his questions are focused and he is not afraid to query responses. This lends the conversations an edge they would lack if someone more timid, or with less direct experience of the subject, had carried them out. Required reading for anyone with an interest in trading.
• Hedge Fund Market Wizards by Jack D Schwager. Published by John Wiley & Sons, £26.99.
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