Stock magicians. Interviews with top traders. Jack D. Schwager

Before you learn to fly, you must learn to fall. Paul Simon
What is a ceiling to one is a floor to another. Paul Simon

If I wanted to become a vagabond, I would consult the luckiest vagabond I could find. Wishing to become a failure, I would resort to the advice of people who have never known success. Having planned to succeed in everything, I will look for those who succeed next to me, and I will do as they do. Joseph Marshall Wade (quoted in Wall Street's Treasury of Wisdom, Harry D. Schulz and Samson Koslow)

Foreword
Here are some of the amazing stories told in this book:
• a trader who failed repeatedly early in his career turned $thirty,000 into $80 million;
• A fund manager who has achieved what many say is impossible has earned triple-digit percentage returns for five years in a row;
• a trader from provincial America, starting almost from scratch, became the world's largest bond trader;
• A former securities analyst trading primarily in stock index futures, has been making an average monthly return of 25 percent (over 1,400 percent per annum) over the past seven years;
• An MIT graduate electrical engineer, using almost entirely computerized trading methods, generated an astonishing 250,000 percent in sixteen years.

And this is only a small fraction of the information from the interviews given in the book. Each of my interlocutors has achieved incredible success and is phenomenal in their own way.

How are they different from the rest? In order to win in the market, it is necessary, according to many, to find some secret formula for success. In fact, it turns out that if my interlocutors have something in common, it is rather an attitude than a method. Some use only fundamental analysis, others use only technical analysis, others use both together. Someone conducts transactions in the range of hours or even minutes, while someone is used to positions calculated for months or even years. Despite such a variety of trading techniques, the interviews below highlight important commonalities at the level of trading principles and attitudes.

The stock market game is one of the last great strongholds of favored nation remaining in our economy. This is one of the few ways in which a person, starting with a modest amount, can actually become a multimillionaire. Of course, only a few (including my interlocutors) can achieve such a triumph, but at least everyone can try.
Although not all of my readers will become super traders as one (it simply does not happen in life), but I hope that thanks to these interviews, which provide rich food for thought, the most thoughtful and receptive of readers will increase the effectiveness of their work in the market. And a select few may still become super traders.
Jack D. Schwager Голденс Бридж, Нью-Йорк май, 1989 г.

Expression of gratitude
First and foremost, I would like to thank Stephen Kronowitz for his careful reading of the material in each of the chapters, and for his many helpful suggestions and editorial corrections. I am grateful to Steve both for the volume (in hours) and for the quality of his work. Whatever the virtues of this book, they have been greatly enhanced by his contributions.

I am grateful to my wife, Jo Ann, not only for her patience during her nine months as a “book widow,” but also for the impartiality of a sensitive tuning fork, whose role she played with all her candor. For example, like this: “Worse than this you have not written yet!” (Needless to say, such passages were promptly removed from the text.) Jo Ann had no common sense, and usually I followed her advice without question.

Of course, I would like to say thank you to all the traders who agreed to be interviewed: without them, there would be no book. In general, these people do not strive for fame and do not need advertising. They trade either only with their own money, or have already concentrated under their management as much other people's money as they needed. In many cases, they agreed to the interview out of altruistic motives. Here is how, for example, one of them said about it: “At the very beginning of my career, information about successful traders from their biographies and interviews was especially helpful to me. Now I would like to help newcomers in the same way.”

I express my sincere gratitude to Elaine Crocker for her friendly arrangements, to which some of the chapters of the book owe their appearance. Courtney Smith, Norm Zadeh, Susan Abbott, Bruce Babcock, Martin Presler, Chuck Carlson, Leigh Stephens, Brian Gelber, Michael Marcus and William Rafter.

Finally, I was greatly helped by three traders who kindly gave extensive interviews that were not included in the book: these are Irv Kessler, Doug Redmond and Martin Presler (the first two interviews were not included in the book, because the questions I asked then, over time, seemed too technical and technical for me, and the third - because of the tight deadlines for publication, which did not leave time for the necessary clarifications and editing).

Prologue
“The novel ... was called “The Big Board” ... It told how two earthlings - a man and a woman - were kidnapped by unearthly creatures. This pair was exhibited in a zoo on a planet called Zircon-212.
On one wall of the abode of these fictional characters hung a large board showing supposedly stock prices and stock quotes, and on the other wall was a news teletype and a telephone, which was also supposedly connected to a brokerage house on Earth. Beings from Zircon-212 informed their captives that there, on Earth, a million dollars had been deposited into their account, and now it was up to the captives to manage this deposit so that when they returned to Earth, they would become fabulously rich.

Of course, the telephone, the big scoreboard, and the teletype were imitations. They were needed in order to stir up earthlings for the amusement of zoo visitors - to make them jump for joy, gloat, annoyance, tear their hair, tremble with fear, or, conversely, bliss like a baby in mother's arms.

The earthlings were very successful in being surrounded by this props, which was also specially rigged.

Religion was also brought here. They were reminded by teletype to pray as the President of the United States declared a National Week of Prayer. The previous week for earthlings in the market has developed in a bad way. They lost a lot of money in olive oil futures.

Prayers were launched.

And it helped. Olive oil has risen in price.

Kurt Vonnegut Jr. "Slaughterhouse Five, or the Children's Crusade"

If the proponents of the random walk theory are right, then earthly traders suffer from the same illusions as the inhabitants of the zoo from Kilgore Trout's novel. (The character in Kurt Vonnegut's novels is the ubiquitous science fiction writer Kilgore Trout.) If the captives from Zircon 212 believed their decisions were based on real stock markets, quotes - which was not the case - then real-life traders believe that their insight and skill can beat the market. If the markets are indeed efficient and random in any time frame, then the successes and failures of these traders, attributed to their own professional strengths or weaknesses, are really a matter of chance.

Now, having interviewed traders for the book, I hardly agree with this picture of the world.

What makes me doubt it is the fact that some traders manage to consistently win the majority of trades for many years. Of course, with a sufficient number of traders, one of them, simply according to the laws of probability, will break ahead, and even for a long time. Let mathematicians estimate the probability of winnings of such magnitude and duration as my interlocutors had. By the way, the traders themselves have no shadow of a doubt that in the end, skill, not luck, makes a person a winner or a loser. And I also share this belief.

My own story

Immediately after graduate school, I got a job as a commodity market research analyst. And I was pleasantly surprised when I saw that my economic-statistical analysis correctly predicted a number of large commodity price movements. Soon after that, I started thinking about trading. The only catch was that analysts were not usually allowed to trade in my department. I shared my frustrations about this with Michael Markus (first interview). I became friends with him, asking him about the position of analyst, from which he was leaving at the time. “You know, when I worked here, I had the same problems,” Michael admitted. “Do as I do: open an account with another company.” And he introduced me to a broker from his new firm who was ready to open an account.

At the time, I was making less than a department secretary and didn't have what's called "risk capital." After persuading my brother to open a $2,000 account, I became his advisor. Because the score had to be kept secret, I couldn't issue orders from my desk. Whenever a position needed to be opened or closed, one had to take the elevator down to the lobby and call a pay phone. (The way Marcus found a way out of a similar situation is described in an interview with him.) Worst of all, this was not even delays in orders, which often cost me unpleasant experiences, and my frequent absences, which could arouse suspicion. So I had to be careful, and sometimes even postpone the order until the next morning.

I don't remember the details of my first few transactions. I only remember that after paying the commission, I