The idea to read the book came about after I queried Shakerchi on investment strategies. I had spent my entire life in debt, including at one point as much as £30,000 in credit card debt. Suddenly, I was debt free and was putting 10% of my income into a separate bank account. I had no idea what I was going to do with it hence by decision to talk to Shakerchi about investments.
Unfortunately, Shakerchi is used to dealing with people who have millions to invest and here I was asking him what to do with my £5,000? I now have an investment strategy, but I am still searching the Internet for literature on Investments for Dummies. To date I have still not found anything that is suitable. If anybody has any suggestions then I’m all ears.
Back to Market Wizards and it is essentially a series of interviews carried out by Schwager; transcribed word for word. The interviews were conducted in 1989 and the participants were some of the smartest and most successful investors in the world at that time. He has also written The New Market Wizards (1992), Stock Market Wizards (2001) and Hedge Fund Market Wizards (2012) and numerous other books of the same genre.
So what did I learn?
Being from the poker industry I found so many parallels between trading, poker and life. If you are a professional poker player, and enjoy reading, then this will be a fascinating book for you to get your teeth into. Also if you interview people – like I do – then you can learn some invaluable lessons. One of the interesting distinctions had to do with how life started out for these super traders. In poker, most of the top professionals got lucky. They won something early in their career that created a bankroll so they could take higher shots. They were also winning money at a time when people were trying to give it away. I reckon there are an awful lot of talented poker players who are no longer in the game because they just couldn’t catch a break at the beginning of their career. But in trading the opposite seems to be true. All of these very successful men all started off as successful losers. They were trapped in the old cycle of borrowing money, losing it and then borrowing some more. It reminded me of some of the backing arrangements I see in modern day poker.
When the traders eventually stopped losing the markets were spectacular for them. I lost count of the amount of time a trader said it was difficult not to earn money armed with the right knowledge. This reminded me of the early days of Internet poker when a lot of people made their fortunes. There are a lot of traders who have the same set of skills. It’s the same with poker and in life in general. But over the long run probability will separate the men from the boys and the women from the girls.
It was interesting that almost all of the people interviewed believed that in order to join the higher echelons of trading, you must have been born with an innate gift or inner radar for trading; this was also a view supported by the author. I say interesting, because the view is contrary to that posed by Daniel Coyle in The Talent Code where he believes it is hard work, dedication and timing that is key. One thing I am learning during my own journey is there are many views in life, and you can learn something from them all if you have an open mind.
All of these highly successful people were successful because of their degree of attitude rather than approach. They were persistent and confident in almost a stubborn sort of way. They did not give in easily. They had a desire and a belief and they went for it. I feel this in myself when I am flying, and notice it lacking in those who flounder.
One incredibly important learning principle was patience. In the beginning of their careers they lacked it. They wanted to get rich quick and this hurried approach led to mistakes. These mistakes became fatal because they were over trading. In life, the same is true. I am finding that success takes time and hard work. You need to be at ease with this knowledge and understanding. Making mistakes is critical to your advancement. Just make sure that the mistakes cannot kill you. Do not over trade. Play within the confines of your bankroll and when the clearly defined situation presents itself you will be ready.
All of these traders cited a mentor as being critical to your success. I have found this to be so true myself. There are plenty of people in this world who can teach you something that you do not know, and take you under their wing. Don’t be afraid to seek them out and ask. The worse that can happen is they say no. They also showed tremendous courage. If you have the patience to understand success comes with time, then you will need courage on your side. You need courage to try, succeed, fail and then keep on keeping on.
Losing begets losing. If you find yourself in a slump then you are going to turn to pessimism quick smart. Only yesterday I lost yet another writing contract. It hit me hard and I was in a very pessimistic mood. I was aware of what was going on and I tried very hard to remain optimistic. I found it really tough and in the end decided to concentrate on some other area of my life that was good. Over time I forgot about the loss of the contract, because I was thinking about something else. If you are losing, if life is giving you a few shots to the kidneys, then focus on something else more positive.
Last but not least a great piece of advice that I picked out of these precious pages.
“Don’t get into situations where you can lose a great deal of money for reasons you don’t understand.”