Date of review: February 2021 Book author: Jack Schwager Вook published: 2020
Unknown Market Wizards: The Best Traders You've Never Heard of by Jack Schwager (2020)
Schwager is an author of a famous series of Market Wizards books in which he interviews legendary investors, most of whom are short-term traders.
The Neumann's story and what most traders can teach long-term investors
I decided to listen to the book one night when I could not fall asleep, part of the reason I chose this book was a reference to an earlier book on Market Wizard by one of Oakmarks fund managers, who I respect for their consistent investing based on fundamentals.
Most interviews are with relatively young but quite successful traders trying to predict the next market move. I found it amusing that some of them said they used fundamental analysis in addition to technical – referring to real-life events which could impact market prices (e.g. ECB decision, stimulus measures in the US, OPEC policy) rather than analysing the company's fundamentals.
Nevertheless, there is one very interesting interview – with Jeffrey Neumann – and this is mainly the reason I added the book to the library. The Neumann's story reiterates the benefits of doing the real due diligence of new products by observing consumers and talking to distributors. This has been advocated by Peter Lynch, Philip Fisher (scuttlebutt method) and practised by Warren Buffett in the earlier part of his investment career. It is quite amazing what this can lead to in terms of investment results, especially for a relatively small investment portfolio.
The second main takeaway, which I find important, is what most traders can teach long-term investors – being good at identifying your limits and avoiding overconfidence. This helps to avoid mistakes by not just keeping poor companies for too long, blaming the market for not discovering such a true gem, but also helps to stay open-minded and ready to change the view if facts change materially.
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