WEBVTT - Interview With Jack Schwager: Masters in Business (Audio) 0:00:00.080 --> 0:00:03.400 Brought to you by B A. S F. We create chemistry. 0:00:07.280 --> 0:00:11.559 This is Masters in Business with Barry Ridholts on Bloomberg Radio. 0:00:11.760 --> 0:00:16.920 Welcome to the one addition of the Masters in Business 0:00:16.960 --> 0:00:20.680 podcast here on Bloomberg Radio. I am so thrilled and 0:00:20.720 --> 0:00:25.599 excited to have hit this milestone if you would have 0:00:25.760 --> 0:00:29.520 told me when we began what really started as a 0:00:29.600 --> 0:00:35.639 skunk works project on the down low. Quick digression as 0:00:35.680 --> 0:00:39.360 to how this podcast came about. Tim O'Brien, who runs 0:00:39.360 --> 0:00:42.040 Bloomberg View and Bloomberg Gadfly, He's the one who set 0:00:42.040 --> 0:00:47.959 it up. Uh was recruiting me to, uh come right 0:00:48.000 --> 0:00:51.280 from Bloomberg and I said, listen, you guys have a website. 0:00:51.440 --> 0:00:55.000 I have a website. Why do I wanna publish for 0:00:55.000 --> 0:00:57.760 for you guys instead of on my own site? And 0:00:57.840 --> 0:01:01.280 he said, well, look at this fantastic playground that we 0:01:01.360 --> 0:01:04.800 have here at Bloomberg. Look at the technology, the facilities. 0:01:05.120 --> 0:01:07.080 I have to tell you that was really a very 0:01:07.160 --> 0:01:11.960 persuasive argument. The Bloomberg Building, if you've never been, is 0:01:12.600 --> 0:01:17.080 it's mind blowing. It is a purpose built technology and 0:01:17.200 --> 0:01:21.600 media high rise in the middle of midtown. It's really 0:01:21.600 --> 0:01:23.959 an amazing, amazing place. And if there's any way you 0:01:24.000 --> 0:01:28.640 could find uh, the opportunity to come here professionally, you should. 0:01:28.959 --> 0:01:32.679 It's pretty awesome. And when Tim was showing me around 0:01:33.160 --> 0:01:38.000 the facilities, I noticed all these super cool um radio 0:01:38.720 --> 0:01:41.560 booths and studios. Now I've been to the Bloomberg Building 0:01:42.040 --> 0:01:44.479 numerous times before. I've been on the radio here, I've 0:01:44.520 --> 0:01:48.520 been on the Bloomberg TV set, I've been here for conferences, 0:01:48.960 --> 0:01:52.520 so I'm somewhat familiar with the space. But when you're 0:01:52.640 --> 0:01:56.080 looking at it not as just a guest who's blowing 0:01:56.080 --> 0:01:58.200 in and out in order to do a television show, 0:01:58.800 --> 0:02:01.400 but as a facility. The if that someone says, hey, 0:02:01.400 --> 0:02:04.680 you have access to all all of these really cool toys, 0:02:05.360 --> 0:02:07.920 you see it from a slightly different perspective. And so 0:02:08.560 --> 0:02:12.480 when we started chit chatting about what we could actually 0:02:12.680 --> 0:02:16.919 do with these facilities, I started to get all sorts 0:02:16.960 --> 0:02:22.080 of interesting, interesting ideas, the first of which was I 0:02:22.120 --> 0:02:25.880 would love to do a podcast and actually talk to 0:02:26.600 --> 0:02:30.720 some of the most intelligent and influential and important people 0:02:31.639 --> 0:02:35.800 in the industry in business and finance on Wall Street. Uh. 0:02:35.840 --> 0:02:38.400 We kicked a few ideas around. Someone had suggested, how 0:02:38.440 --> 0:02:41.160 about a television show I said, no, go get Joe. 0:02:41.200 --> 0:02:43.320 Reason thought to do that. I don't want to do TV. 0:02:43.480 --> 0:02:46.239 I I don't want to wear a suit and tie 0:02:46.240 --> 0:02:47.799 every day, and I want to shave. I don't want 0:02:47.800 --> 0:02:50.560 to have to go on a diet. Um. I've dropped 0:02:50.560 --> 0:02:52.600 about twenty pounds, but to do TV I would have 0:02:52.600 --> 0:02:54.520 to drop another twenty and that would be a lot 0:02:54.560 --> 0:02:57.000 of work. So when they said what do you want 0:02:57.000 --> 0:03:00.680 to do? My answer was I'm want to sit with 0:03:00.720 --> 0:03:06.240 these people and have an adult conversation about important things. Well, podcast, 0:03:06.280 --> 0:03:10.360 what do you mean? And the elevator pitch was Mark 0:03:10.400 --> 0:03:14.200 Marin's WTF meets Charlie Rose. But I went back and 0:03:14.200 --> 0:03:18.519 looked at my notes, and my notes said a podcast 0:03:18.680 --> 0:03:24.079 version of Jack Schweger's Market Wizards. And that was really 0:03:24.120 --> 0:03:29.880 the motivation for this show. And so who better to 0:03:30.080 --> 0:03:35.480 do our hundred podcast? Then the man the legend himself, 0:03:35.600 --> 0:03:40.720 Jack Schweger. He is the author of numerous market wizards books. 0:03:40.760 --> 0:03:43.480 The first one is Market Wizards, the second one is 0:03:43.600 --> 0:03:47.280 New Market Wizards, the third one is Hedge Fund Wizards. Uh, 0:03:47.320 --> 0:03:50.080 plus a number of of different books on options and 0:03:50.120 --> 0:03:53.120 trading and futures. And you know he he has been 0:03:53.160 --> 0:03:56.320 a trader his whole career, and and the writing and 0:03:56.560 --> 0:03:59.760 editing started as a sort of side project, but obviously 0:04:00.120 --> 0:04:03.600 it blew up on its own. Um A quick another 0:04:03.680 --> 0:04:08.480 digression about Jack and I. So, I don't know. I'm 0:04:08.520 --> 0:04:10.640 a new being in the industry. I'm around for less 0:04:10.640 --> 0:04:16.040 than ten years. The first book anybody gives me UM 0:04:16.080 --> 0:04:19.039 to read when I'm studying for my series seven a 0:04:19.120 --> 0:04:22.479 hundred years ago, uh was Market Wizards, and I just 0:04:22.560 --> 0:04:26.080 devoured it. And I wasn't fascinated by the fact that 0:04:26.200 --> 0:04:29.360 all these different traders and fund managers in all these 0:04:29.400 --> 0:04:33.880 different fields somewhere commodities, somewhere where equities, somewhere, bonds, somewhere, 0:04:34.800 --> 0:04:39.080 more complex products, somewhere really simple strategies. There was a 0:04:39.240 --> 0:04:43.360 theme that ran through all of these interviews. And so 0:04:43.440 --> 0:04:45.600 not only did I devour the first book, but I 0:04:46.040 --> 0:04:48.520 reread it every five years. I find it to be 0:04:49.320 --> 0:04:52.880 absolutely fascinating. And the second time I read it, I 0:04:53.000 --> 0:04:55.760 want to say that was nine or two thousand or 0:04:55.800 --> 0:04:59.880 something like that, I decided to do something I almost 0:05:00.080 --> 0:05:04.599 never do, which is write a review on Amazon dot 0:05:04.640 --> 0:05:08.120 Com for the book, and you'll see, other than whining 0:05:08.160 --> 0:05:11.359 about you know, a poorly made product. I almost never 0:05:12.040 --> 0:05:15.520 do book reviews. Uh, I got stuff to do. I 0:05:15.520 --> 0:05:19.039 would rather read books than write book reviews. So I 0:05:19.160 --> 0:05:21.919 happened to be so moved by market Wizards that I 0:05:21.960 --> 0:05:24.240 wrote a review of it. This was I don't know 0:05:24.720 --> 0:05:28.440 one oh three something like that and posting on Amazon 0:05:28.640 --> 0:05:32.599 completely forget about it. Fast forward to episode I don't 0:05:32.600 --> 0:05:36.440 know fift something like that, and Jack Schwager is one 0:05:36.440 --> 0:05:38.599 of our early guests. He was nice enough to come on, 0:05:39.160 --> 0:05:43.000 and he not only reminds me that I wrote a 0:05:43.120 --> 0:05:48.360 review of market Wizards for Amazon, but yeah, Amazon does 0:05:48.400 --> 0:05:51.160 this sort of crowdsourcing thing where you could thumbs up 0:05:51.200 --> 0:05:54.479 or thumbs down a review, And it turned out that 0:05:55.000 --> 0:05:59.320 the readers of the Amazon page on market Wizards had 0:05:59.400 --> 0:06:03.200 made that at the top review of market Wizards. Go 0:06:03.320 --> 0:06:07.919 to Amazon click positive reviews. It's the first one, Jack says, 0:06:08.000 --> 0:06:11.000 it's it's been the first one for over a decade. 0:06:11.680 --> 0:06:15.320 Who knew. Just one of those funny little ironies. Fifteen 0:06:15.400 --> 0:06:18.279 years ago, I wrote a review of a book that 0:06:18.360 --> 0:06:22.120 I thought was really really interesting and important, and now 0:06:23.000 --> 0:06:28.320 in it turns out that our one guests on Bloomberg 0:06:28.400 --> 0:06:34.040 Radio's Masters in Business show and podcast is the same 0:06:34.120 --> 0:06:40.120 gentleman Jack Schweger. So with tremendous amount of excitement, I 0:06:40.160 --> 0:06:47.200 am thrilled to present our podcast here. He is author 0:06:47.240 --> 0:06:54.480 and trader Jack Schweger. This is Masters in Business with 0:06:54.520 --> 0:06:59.039 Barry Ridholts on Bloomberg Radio. I have a special guest 0:06:59.080 --> 0:07:03.040 today who is should be very well known if you 0:07:03.080 --> 0:07:06.640 are an investor or trader and like to read books 0:07:06.800 --> 0:07:11.680 about the craft. His name is Jack Schwager, and I 0:07:11.720 --> 0:07:13.920 have to tell you the first book I have received 0:07:14.040 --> 0:07:17.280 in the industry when I began was Market Wizards. I 0:07:17.320 --> 0:07:20.320 make it a point to reread it every five years 0:07:20.400 --> 0:07:23.800 or so. There are now three versions. There's Market Wizards, 0:07:24.240 --> 0:07:27.960 New Market Wizards, and Hedge Fund Wizards, as well as 0:07:27.960 --> 0:07:31.440 an audio book of actually all of them are three 0:07:31.440 --> 0:07:35.560 are now Jack Schweger. Welcome to bloom Thank you very 0:07:35.560 --> 0:07:37.400 good to be here again. So so I really didn't 0:07:37.480 --> 0:07:42.520 give your your background and introduction enough of a play up. 0:07:42.960 --> 0:07:46.800 You're you're in addition to being an author, you're a trader. 0:07:46.800 --> 0:07:49.200 You've written a number of books on technical trading and 0:07:49.240 --> 0:07:53.720 future trading along those lines as well as an entrepreneur. 0:07:54.600 --> 0:08:00.880 I cannot under estimate I cannot under emphasize how influential 0:08:01.280 --> 0:08:04.680 Market Wizards was. When when did the first book, first 0:08:04.680 --> 0:08:08.680 Market Wizars came out, and how many copies has that, 0:08:09.200 --> 0:08:11.880 you know, printings? It first of all, has been translated 0:08:11.960 --> 0:08:14.680 in so many language I mean weird language, I mean 0:08:14.800 --> 0:08:17.800 languages I wouldn't all expect, like Turkish and Croatian and 0:08:17.840 --> 0:08:20.800 the Vietnamese and whatever. You know. So, and you have 0:08:20.840 --> 0:08:23.320 no idea they sell these books. They make it a 0:08:23.360 --> 0:08:25.760 contract and you have no idea what it sells. So 0:08:25.960 --> 0:08:28.560 and the China and China is like there's two official 0:08:28.600 --> 0:08:31.720 language versions, not to count the bootleg versions. But that's 0:08:31.720 --> 0:08:35.680 true of everything. But absolutely, when whenever someone talks about China, 0:08:35.720 --> 0:08:39.520 there should be implied in parentheses not to count the 0:08:39.520 --> 0:08:42.720 bootlet that's that's that's a given. So in other words, 0:08:42.880 --> 0:08:44.839 but I would guess, I would guess between all the 0:08:44.960 --> 0:08:47.439 you know, all the books I've written globally, i'd say 0:08:47.440 --> 0:08:51.240 probably a couple of million sold. That's huge. And for 0:08:51.280 --> 0:08:54.439 those people who may not be familiar with Market Wizards, 0:08:54.600 --> 0:08:58.920 the premise of the book is essentially, let's speak to 0:08:59.000 --> 0:09:02.839 some some very six sucessful investors and traders and see 0:09:02.880 --> 0:09:06.839 how they do and what their secret sources and what's 0:09:06.880 --> 0:09:09.720 fascinating In the book, you spoke to people who are 0:09:09.760 --> 0:09:14.000 commodities traders, bond traders, equity traders, currency traders, and there 0:09:14.000 --> 0:09:18.280 were some really consistent themes. No matter what these people 0:09:18.280 --> 0:09:21.439 were doing, whether whether they were long term investors or 0:09:21.679 --> 0:09:24.959 or the shortest of short term traders, certain themes came 0:09:24.960 --> 0:09:27.120 out in the book over and over again, right, And 0:09:27.120 --> 0:09:28.720 and that was what I was trying to do. I 0:09:28.720 --> 0:09:30.920 was write, what is the secret source, what separates this 0:09:31.000 --> 0:09:35.720 group of extremely successful successful and just off the child 0:09:35.920 --> 0:09:38.760 and some of them, I mean just extraordinary and and 0:09:38.760 --> 0:09:40.960 and the people I've interviewed included sort of the most 0:09:40.960 --> 0:09:44.920 famous traders. We're gonna go into the specifics about some 0:09:45.000 --> 0:09:47.360 of them, Okay a few minutes. So so as far 0:09:47.400 --> 0:09:50.880 as the the lessons, and there are tons of them. 0:09:50.920 --> 0:09:53.200 And I probably in the later books when I did summaries, 0:09:53.840 --> 0:09:57.240 I might have had, like, you know, forty points forty points, 0:09:57.240 --> 0:09:59.719 and you had all or if you had ad all 0:09:59.760 --> 0:10:02.840 the like all the common denominators, I wouldn't be surprised 0:10:02.840 --> 0:10:04.440 if it got close to a hundred. So it's kind 0:10:04.440 --> 0:10:07.240 of hard to just say which ones, but what the 0:10:07.960 --> 0:10:11.440 fact that they were radically different from each other was 0:10:11.520 --> 0:10:14.240 maybe one of the most important common denominators, because what 0:10:14.280 --> 0:10:17.680 it spoke to is they each found their own way. 0:10:17.280 --> 0:10:20.480 I can't tell you how many times people, uh, you know, 0:10:20.600 --> 0:10:24.120 we'll ask me or write me, what traders should I follow? 0:10:24.160 --> 0:10:26.720 That's right, what trader should I follow? Or who's the 0:10:26.720 --> 0:10:29.320 best trader you know? And and you know to me 0:10:29.520 --> 0:10:32.679 that that's it has no that question has no answer, 0:10:32.880 --> 0:10:34.880 And the question actually makes no sense. It makes no 0:10:34.920 --> 0:10:37.679 more sense than somebody calling me and asking me, I've 0:10:37.720 --> 0:10:39.679 got to go buy a suit, what side should I get? 0:10:39.679 --> 0:10:41.679 And I've never seen the person. I mean, it's as 0:10:41.679 --> 0:10:45.120 relevant to question as that. So these people found would 0:10:45.120 --> 0:10:47.520 work for them, and it was always different. So let's 0:10:47.520 --> 0:10:49.959 talk about a couple of themes though that run through 0:10:50.000 --> 0:10:53.480 all the traders. Let's let's start with discipline, probably the 0:10:53.559 --> 0:10:57.439 single most important lesson at least that I took. What 0:10:58.000 --> 0:11:02.560 was the general take on being a disciplined persson when 0:11:02.559 --> 0:11:04.480 I asked? I asked that question to a lot, you know, 0:11:04.559 --> 0:11:07.360 some questions I I tried to count the interviews and 0:11:07.440 --> 0:11:10.000 conversational format. You know what you're like? You you do right? 0:11:10.080 --> 0:11:14.520 So we'll discuss. You are the inspiration, so and you know, 0:11:14.640 --> 0:11:17.480 don't start. I would have like questions sort of back up, 0:11:17.559 --> 0:11:19.760 you know, but I'd like talk and talk, you know, 0:11:19.760 --> 0:11:22.600 and sometimes going at two days of conversation sometimes and 0:11:22.600 --> 0:11:24.600 only the end would I like, look, did I miss anything? 0:11:24.600 --> 0:11:29.400 And usually nothing, you know, usually picked up everything. So, um, 0:11:30.280 --> 0:11:32.240 I got off a tangent to it. I was kind 0:11:32.280 --> 0:11:35.800 on The original question was on discipline. Discipline, right, So 0:11:36.600 --> 0:11:39.640 one question I asked, did ask everybody or just about 0:11:40.200 --> 0:11:43.720 is what what separates you know? What differentiate too? What? What? 0:11:43.760 --> 0:11:47.080 Why are you different? And and discipline was the single 0:11:47.120 --> 0:11:51.960 most answered, you know, answer to that. That was the 0:11:51.960 --> 0:11:54.680 most common answer to that question was discipline. Now, when 0:11:54.800 --> 0:11:56.920 let's let's dig in a little bit. When they say 0:11:56.960 --> 0:12:00.600 their disciplines, are they referring to keeping them most in check? 0:12:00.640 --> 0:12:03.720 Are they referring to I have a methodology and I 0:12:03.840 --> 0:12:06.560 find it follow it no matter what? What did they mean? 0:12:06.679 --> 0:12:09.160 And and those two are not separate? Um? Yeah, but 0:12:09.200 --> 0:12:12.400 they mean primarily I've got a methronology and I'm not 0:12:12.480 --> 0:12:14.800 gonna straight from it. And I know you at your 0:12:14.880 --> 0:12:17.800 trader and I'm I'm a trader. And but anybody's trade 0:12:17.840 --> 0:12:19.640 and knows this that if you if you've got an 0:12:19.640 --> 0:12:22.720 approach that sort of work. And to be clear, no 0:12:22.840 --> 0:12:26.520 approach work, no, no approach works any great amount of time. 0:12:27.040 --> 0:12:30.640 Everything falls into that affairs just just a question of probabilities. 0:12:30.640 --> 0:12:33.680 But if you've got an approach that over time probabilities 0:12:33.720 --> 0:12:35.400 are in your favor and you make more money than 0:12:35.440 --> 0:12:38.120 you lose and you keep control. If you've got that 0:12:38.559 --> 0:12:43.120 approach and you've got rules or trades that you do, uh, 0:12:43.160 --> 0:12:45.280 and you're losing some of them, that's fine because you're 0:12:45.280 --> 0:12:47.040 gonna lose on a certain percentage. But when you do 0:12:47.120 --> 0:12:49.520 stuff that is counter to what you're supposed to do, 0:12:49.800 --> 0:12:51.400 like well, I got, I got. This is how I 0:12:51.400 --> 0:12:53.320 get into a trade. And then you look at the market. Gee, 0:12:53.360 --> 0:12:55.240 you know, let's take it. We got Brexit going on here, 0:12:55.360 --> 0:12:57.280 you know, and you've got this market crashing. Boy, this 0:12:57.360 --> 0:12:59.320 must be really over sold. It's not really part of 0:12:59.320 --> 0:13:02.240 my trade. But I'll take a flyer the pounds down 0:13:02.360 --> 0:13:05.360 eighteen cents, you know, that's probably good for a balance. 0:13:05.520 --> 0:13:08.360 I'll buy it. Those type of trade. So that's breaking discipline. 0:13:08.520 --> 0:13:10.079 That's not part of your plan, that's not part of 0:13:10.120 --> 0:13:12.920 your approach. Unless your plan is unless randomly file the 0:13:12.920 --> 0:13:15.679 headline and the news and chase everything, well, those people 0:13:15.679 --> 0:13:18.599 don't stay in business that well, or that this is 0:13:18.640 --> 0:13:20.960 this is actually going. My my example wasn't just the 0:13:20.960 --> 0:13:22.920 opposite sort of like you're gonna you're gonna try to 0:13:22.920 --> 0:13:24.559 pick the bottom and you know you're gonna try to 0:13:24.600 --> 0:13:27.120 catch the falling knife, so to speak. Um and and 0:13:27.160 --> 0:13:29.079 some people could that could be, that could be in 0:13:29.120 --> 0:13:32.000 a strategy in fact, catching a following knife. I've been 0:13:32.040 --> 0:13:34.920 through traders who do trade like that. But you have 0:13:34.960 --> 0:13:37.200 to have um. But then you know what you're getting out. 0:13:37.280 --> 0:13:39.160 You know you you think it's gonna hold here and 0:13:39.200 --> 0:13:41.280 if it doesn't, your out. So that's but just to 0:13:41.320 --> 0:13:44.120 blindly take a trade that's not part of your your approach, 0:13:44.200 --> 0:13:47.240 that's where that would be breaking discipline or more more important, 0:13:47.280 --> 0:13:49.959 even more important is is not getting in and we 0:13:50.040 --> 0:13:52.240 we and I know I'm sort of preaching to the 0:13:52.320 --> 0:13:53.720 choir when I talk to you, but you know all 0:13:53.760 --> 0:13:55.240 of this stuff, and this is I know you've got 0:13:55.280 --> 0:13:58.160 the exact same view. Getting in is the least important part. 0:13:58.240 --> 0:14:00.240 Getting out. That's what you gotta worry about. That's what 0:14:00.240 --> 0:14:02.680 people don't worry about I used to jokingly sell there's 0:14:02.720 --> 0:14:05.120 a million books on what to buy, but other than 0:14:05.240 --> 0:14:10.000 justin mamos what to sell exactly. Hey, here's your exit 0:14:10.640 --> 0:14:13.720 and that and that's when the discipline and that's where 0:14:13.720 --> 0:14:16.600 the discipline comes in. Yeah, exactly. So let me back 0:14:16.679 --> 0:14:18.480 up and talk a little bit about you, because people 0:14:18.520 --> 0:14:22.240 may not be familiar with with your background. So how 0:14:22.280 --> 0:14:26.120 did you find your way to finance? Oh? Purely accidentally, 0:14:26.560 --> 0:14:30.040 I graduated, um, you know, from from an Ivy League 0:14:30.040 --> 0:14:33.720 school for which to ground. I went to Brown with 0:14:33.800 --> 0:14:36.280 a master's in economics, and I kind of expected sort 0:14:36.280 --> 0:14:38.200 of day after graduation, i'd sort of stick my head 0:14:38.200 --> 0:14:39.920 out and I'd have five offers, you know, and all that. 0:14:40.440 --> 0:14:42.160 And I didn't know how to look for a job. 0:14:42.160 --> 0:14:44.640 And my first maybe, I mean, I had the temporary point, 0:14:44.640 --> 0:14:46.160 but the first real job is looking for So I 0:14:46.200 --> 0:14:50.040 went to employment agencies and I get they probably haven't 0:14:50.080 --> 0:14:54.360 chased since that they don't exist. Yeah all right, So 0:14:54.800 --> 0:14:56.720 but they weren't very effective, and I like a two 0:14:56.720 --> 0:14:58.800 weeks I think, you know, I didn't hair back anythings. 0:14:58.800 --> 0:15:01.240 I got frustrated. So I just at the time New York, 0:15:01.240 --> 0:15:04.520 the New York Times had a help not a help wanted, 0:15:04.600 --> 0:15:08.560 but but position wanted a section and so for about 0:15:08.640 --> 0:15:12.400 six job secret so like I think it costs me 0:15:12.520 --> 0:15:16.040 like fourteen dollars or fifteen dollars. I put a two 0:15:16.040 --> 0:15:18.960 line ad in and something along the line, uh, you know, 0:15:19.080 --> 0:15:22.400 masters and an economics minor and math looking for an 0:15:22.400 --> 0:15:26.480 analytical job pretty much. And I had about I don't 0:15:26.480 --> 0:15:31.200 know the sixteen seventeen responses to that, uh all but one. 0:15:31.720 --> 0:15:34.640 All but one were come ons. In other words, the 0:15:34.760 --> 0:15:38.560 people they want you to say, they want you exactly 0:15:38.560 --> 0:15:39.960 they want you to buy. It was like these chain 0:15:40.000 --> 0:15:42.600 cell you know you they'll sell you, uh two thousand 0:15:42.640 --> 0:15:44.800 dollars worth of soap bubbles and you go find double 0:15:44.840 --> 0:15:46.160 people to sell at that type of thing. I went. 0:15:46.320 --> 0:15:49.120 I went to one of these, uh thinking I was 0:15:49.160 --> 0:15:53.000 going to a meeting of the company, and uh that 0:15:53.040 --> 0:15:54.440 it was a manager. I said, well, I said, I 0:15:54.480 --> 0:15:56.560 asked even the phone, this is not a sales we 0:15:56.600 --> 0:15:59.440 have sales, but this is and I'm expecting to meet 0:15:59.440 --> 0:16:01.440 this group of uh you know, at ah at the 0:16:01.960 --> 0:16:04.840 quarterly meeting or whatever. And I walked in. It is 0:16:04.920 --> 0:16:07.280 like this huge auditorium and it's like a display in 0:16:07.320 --> 0:16:09.040 the front. And then and they have her on a 0:16:09.080 --> 0:16:12.040 film with I think of Sebastian Cabital telling you, telling 0:16:12.040 --> 0:16:13.600 how great this product. And then they have a guy 0:16:13.640 --> 0:16:16.160 who has some sort of chemist who fell off a 0:16:16.240 --> 0:16:18.320 roof supposedly, and while he was in the hospital to 0:16:18.320 --> 0:16:21.040 think how he can make his life his wife's job easier, 0:16:21.360 --> 0:16:23.520 and sort of came up with this miracle cleaning product 0:16:24.000 --> 0:16:26.560 and anyway, and and then they have a guy come 0:16:26.560 --> 0:16:28.800 out and tell you how he drives a portion uh 0:16:29.120 --> 0:16:31.040 makes uh you know, how you can make ten dollars 0:16:31.240 --> 0:16:34.040 spare time. Really literally, this was it. Uh. I went 0:16:34.120 --> 0:16:36.400 to one of these obviously, and then any calls I 0:16:36.440 --> 0:16:40.000 got there after. But there was one legitimate call, and 0:16:40.040 --> 0:16:43.800 that legitimate call, as fate would have it, was a 0:16:43.840 --> 0:16:48.280 research analyst position that was being vacated by Michael Marcus. 0:16:48.760 --> 0:16:52.760 Michael Marcus who ultimately who was leaving to become a trader, 0:16:53.640 --> 0:16:57.920 and um, he ultimately became an incredible trader. We can 0:16:57.960 --> 0:17:00.760 talk more about him later if you want. But he 0:17:01.200 --> 0:17:03.280 and I met as he was leaving and I was 0:17:03.320 --> 0:17:05.919 going in and sort of he still was in New 0:17:05.960 --> 0:17:08.000 York for a while and he would get together for lunches, 0:17:08.080 --> 0:17:11.400 you know, because this uh well, this was a firm 0:17:11.440 --> 0:17:14.520 called at the times called the Rentals Securities, which then 0:17:14.600 --> 0:17:17.600 mergeds the Dean Withino Reynolds and went into you know, 0:17:17.680 --> 0:17:22.040 multiple ultimately it became well yes or who, I don't 0:17:22.040 --> 0:17:24.160 know where they ultimately ended up. I didn't stay. I 0:17:24.160 --> 0:17:26.600 I stayed for two years, and you know I was 0:17:26.880 --> 0:17:30.600 I started out like making two thousands less than my secretary. Um, 0:17:31.080 --> 0:17:34.240 why shared with the research director. And I was doing 0:17:34.440 --> 0:17:38.160 I and enough analyst, we're doing really almost all the work. Um. 0:17:38.560 --> 0:17:40.520 And then after two years, I just stuck and I 0:17:40.560 --> 0:17:44.040 was writing for for the Predecessor. Now it's called Modern Trading, 0:17:44.040 --> 0:17:45.919 and then before that was called Futures, and before that 0:17:45.960 --> 0:17:49.440 it was originally called Commodities Magazine. And that's why I 0:17:49.440 --> 0:17:51.919 started writing. As I started writing, and you know, column 0:17:52.000 --> 0:17:54.080 I came. So so two years I had a little 0:17:54.080 --> 0:17:55.880 bit of a reputation. I went and stuck my head out, 0:17:56.119 --> 0:17:59.879 you know, instantaneously got a job, uh you know as 0:18:00.000 --> 0:18:03.160 research director. Triple my salary, triple that salary, and so 0:18:03.160 --> 0:18:05.000 so I left it that so, I you know, I 0:18:05.080 --> 0:18:08.400 didn't stay at Reynolds too long. I'm Barry Rihults. You're 0:18:08.480 --> 0:18:11.880 listening to Masters in Business on Bloomberg Radio. My special 0:18:11.880 --> 0:18:15.399 guest today is Jack Schweger. He is the author of 0:18:15.440 --> 0:18:19.400 the famous Market Wizard series of books, as well as 0:18:19.400 --> 0:18:23.440 being a trader and entrepreneur. UM, let's talk a little 0:18:23.440 --> 0:18:27.560 bit about the role of luck and skill with traders. 0:18:27.600 --> 0:18:31.520 And I want to ask, what is a deceptively simple question, 0:18:32.440 --> 0:18:37.440 how difficult is trading as a profession, as a as 0:18:37.480 --> 0:18:39.840 to a profession when you can actually earn a living, 0:18:40.440 --> 0:18:43.760 extremely extremely difficult than I don't think most people are 0:18:43.760 --> 0:18:45.439 cut out for it. In fact, I don't think I'm 0:18:45.480 --> 0:18:49.200 cut out for it. I know I've never wanted to. Uh. 0:18:49.320 --> 0:18:52.040 If I were really good, then I maybe would have 0:18:52.160 --> 0:18:54.040 entertained the idea of being a full time trader. But 0:18:54.080 --> 0:18:57.120 I never was good enough, you know. UH, Being good 0:18:57.240 --> 0:19:00.280 enough to be net profitable in the markets as very 0:19:00.359 --> 0:19:03.600 very different from being good enough to your living, coming 0:19:03.600 --> 0:19:05.600 from that you're you know, you're you're you're paying for 0:19:05.640 --> 0:19:09.879 your expenses. So I never had that particular confidence that 0:19:10.040 --> 0:19:12.000 I was I was good enough. And the only reason 0:19:12.359 --> 0:19:15.800 I'm even profitable as a trader, uh is just because 0:19:16.320 --> 0:19:18.640 I've I've just spoken his own e people, and I've 0:19:18.680 --> 0:19:23.200 had so much experience. I actually as my my natural instincts, 0:19:23.280 --> 0:19:27.400 uh are pretty poorly attuned for trading. I think most people. Yeah, 0:19:27.400 --> 0:19:29.680 well actually most people's are, and I'm no exception. And 0:19:29.720 --> 0:19:32.000 in fact, some of the traits that are important for 0:19:32.000 --> 0:19:35.320 good trading. Which something you asked before, what one? That 0:19:35.440 --> 0:19:38.560 one that comes up all the time is patients. Um, 0:19:38.640 --> 0:19:40.640 you know, somebody like Jim Rogers has a great line. 0:19:40.680 --> 0:19:43.520 He says, I don't do anything until there's there's money 0:19:43.600 --> 0:19:44.960 lying in a corner on the floor, and all I 0:19:45.000 --> 0:19:46.040 have to do is to go and pick it up. 0:19:46.359 --> 0:19:48.320 So yeah, yeah, patients, just to wait for something that's 0:19:48.320 --> 0:19:51.080 like a real setup, you know, a real fat pitch um. 0:19:51.320 --> 0:19:54.159 And and similarly to stay with a position. You know 0:19:54.200 --> 0:19:57.760 that the famous line from Reminiscences of a Stock Operator, 0:19:57.920 --> 0:20:00.720 which I like the girl paraphrase, but I think it 0:20:00.800 --> 0:20:03.080 was it might be the exact quote he said. It 0:20:03.160 --> 0:20:05.919 was never uh. And for those listeners who don't know 0:20:06.000 --> 0:20:09.359 the book, it's it's a book with the father's book 0:20:09.359 --> 0:20:13.200 about Jesse Livermore. The Livermore is never identified. Everybody knows 0:20:13.240 --> 0:20:17.240 it's Livermore and where the protagonist says. Uh. Talking about 0:20:17.280 --> 0:20:19.199 what his success was due to, he says, it was 0:20:19.280 --> 0:20:22.800 never my thinking that made the money. It was my sitting. 0:20:23.119 --> 0:20:25.399 Got that my sitting. So he said, hey, I'm not 0:20:25.440 --> 0:20:27.680 so smart. It's just I was able to stay and 0:20:27.760 --> 0:20:30.360 stay and stay with a position I was working out. 0:20:30.400 --> 0:20:33.439 So those that all speaks to patients. And it's a 0:20:33.440 --> 0:20:36.479 trait that I my wife is listening to this recording 0:20:36.480 --> 0:20:38.800 in the next room and actually probably would not ahead 0:20:38.840 --> 0:20:40.639 when I say, you don't want to be with me 0:20:40.680 --> 0:20:42.560 in the same car during a traffic jam. I am 0:20:42.560 --> 0:20:45.840 not a patient person. That's that's that's interesting that there's 0:20:45.880 --> 0:20:49.680 a wonderful book, you know, given all the wonderful books 0:20:49.920 --> 0:20:56.200 on behavioral economics and and how people's cognitive issues are 0:20:56.320 --> 0:21:00.000 are so very suspect. Frank Portnoy, who's probably best known 0:21:00.000 --> 0:21:02.880 and for writing the book Infectious Greed, wrote a book 0:21:02.880 --> 0:21:06.479 a few years ago called weight Um and it's a 0:21:06.520 --> 0:21:12.000 fascinating look at the psychology behind that exact thing behind patients. 0:21:12.440 --> 0:21:15.280 And it really is a trait that can be learned. 0:21:15.720 --> 0:21:19.800 It's so important for for both traders and investors. Uh, 0:21:20.119 --> 0:21:23.240 just look, you mentioned Brexit in the crazy market. You know, 0:21:23.440 --> 0:21:25.719 I'm pretty confident that twenty years from now, when we 0:21:25.760 --> 0:21:28.879 look back, this is gonna be a blip that we 0:21:28.960 --> 0:21:32.720 will have forgotten, just like Abola was forgotten. Just like 0:21:33.240 --> 0:21:36.080 you know, zekea I suspect is the next one that 0:21:36.240 --> 0:21:39.200 makes huge headlines and then two years later it's like, oh, 0:21:39.200 --> 0:21:42.320 whatever happened to you know, whatever happened to the chicken flu? 0:21:42.440 --> 0:21:44.439 Wasn't that a big thing that was coming along? And 0:21:44.920 --> 0:21:47.800 so anyway, um, let's so let's talk a little bit 0:21:47.840 --> 0:21:52.280 about Look, how can somebody who's had a good run 0:21:52.320 --> 0:21:57.680 of trades identify the difference between trades that are based 0:21:57.720 --> 0:22:01.040