I take it it covers fundamental superstars as well?
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Market Wizards
- Thread starter OneHipCat
- Start date
I take it it covers fundamental superstars as well?
Quote from eacherlunch:
Quote from Gherkin:
I don't understand this whole thread. Plenty of these guys are still very profitable. (Eckhardt, Seykota, Dennis, PTJ, Cohen, Trout, etc)
Trout retired about a year ago.
The thread has kind of wandered around, but I know I have enjoyed hearing about the long term track record of some of the greatest traders ever...
Interesting link about Paul Tudor Jones:
http://www.streetstories.com/ptj_fw_top100.html
And one about Kovner:
http://www.streetstories.com/kovner.html
http://www.streetstories.com/ptj_fw_top100.html
And one about Kovner:
http://www.streetstories.com/kovner.html
Quote from damir00:
*shrug*. there are fundamental philosophical differences at play here, i don't think it furthers the discussion to attack people's knowledge. one could just as easily suggest certain people need refresher courses in epistomology - but that gets us nowhere.
the counter argument is that given the huge number of traders out there, the number of long term successful ones isn't incompatible with sheer luck. same applies to buffet, frankly.
Well, my whole point was that the results post-publication of the Wizards group would be almost impossibly unlikely to be replicated by a random population of identical number (and with identical trading stakes). Given the negative edge in trading, caused by slippage, commissions, operating costs and taxes, it would be very hard to parlay a small stake into $100 million+ by luck alone, without taking enormous risk on a relatively small number of trades. Even in the latter case, it would be overwhelmingly unlikely that the trader's run would continue for over a decade. Given that almost all the Market Wizards made large numbers of trades over many years, and generally took very limited risk on each one, then if they were purely lucky, they would virtually all be net losers after the 11-16 year period since publication. The chances of being net profitable would be tiny, and the chances of even one becoming a billionaire would be incredibly low. Yet several of them are now amongst the world's richest people. And remember, this conclusion assumes that their initial run which brought them to Schwager's attention was purely down to luck - even given that (IMO highly unrealistic) assumption, the luck thesis is comprehensively rejected.
The "luck" hypothesis does not hold up to even a fairly cursory statistical analysis. Run a Monte Carlo simulation with realistic transaction costs, operating costs, taxes, trade frequency, length of career, max drawdown and max risk per trade, and you will see how unlikely it is.
You mentioned epistemology, but IMO this offers even more support for the "non-luck" thesis. In each book, Schwager notes repeated characteristics that each trader has in common - obsession with the markets, in depth knowledge of trading & speculation, knowledge beyond almost all the competition in their specialist field, intensive hard work and research, lots of market experience, rigorous risk control, and a market "edge" which has been discovered by repeated observation/back-testing, and then real-time trading with money on a forward-looking basis. If the luck thesis held, and skill played no part, then you would expect no commonalities other than willingness to take lots of risk. The centimillionaires and billionaires would all be expected to have had huge volatility, and to have given most or all of it back within a few years. In fact the willingness to take huge risks is almost the exact opposite of their general obsession (with one or two exceptions, who not surprisingly suffered large losses after publication) with keeping drawdowns below an acceptable level, and the number of centimillionaire and billionaire Wizards who subsequently busted out is, as far as I know, zero.
It is IMO an extremely difficult task to try to defend the luck thesis in the face of that evidence. Statistically their results convincingly reject the null hypothesis that they have no edge. Looking at the debate from first principles, their working characteristics are the exact opposite of what a "lucky" field would demonstrate - rather than randomly distributed approaches, they almost all have lots in common.
I'd be interested to know what makes you believe the luck thesis.
P.S. apologies if my tone was off in the earlier post
Quote from darkhorse:
If the market wizards books were full of hindsight bias instead of valuable observations w/ potential for real world application, they wouldn't be of any real value to traders.
Quote from damir00:
that's the just inverse of saying "if it has value, it will be popular", a statement very few would agree with. value isn't determined by the "rightness" of the material, it's determined by what the reader gets from it.
I think you need to examine your assertions a little more closely. I certainly never implied that popularity = value. My point was that the mwizards books have provided real, and in many cases measurable, value to traders. If the interviews were mere recollections of hindsight, this would not be the case.
Your statement regarding "what the reader gets" is questionable as well. While personal value may be subjective, the value of information is not. To assess the value of information, you have to look at the high water mark in terms of application. The formula for cold fusion would be incomprehensible gibberish to 99% of the population, but in the right hands it would change the world. Ergo the information would be quite valuable from an objective standpoint.
Quote from Cutten:
Run a Monte Carlo simulation with realistic transaction costs, operating costs, taxes, trade frequency, length of career, max drawdown and max risk per trade, and you will see how unlikely it is.
i have, and continue to do, and the results continue to astound me on just how little strategy is necessary to have a shot at looking good in the long run. extremely simple strategies involving randomly times entries with either far-out profit targets and tight stops or near profit targets with wide stops produce a surprisingly high percentage of long term winners.
Quote from darkhorse:
I think you need to examine your assertions a little more closely. I certainly never implied that popularity = value. My point was that the mwizards books have provided real, and in many cases measurable, value to traders. If the interviews were mere recollections of hindsight, this would not be the case.
Your statement regarding "what the reader gets" is questionable as well. While personal value may be subjective, the value of information is not. To assess the value of information, you have to look at the high water mark in terms of application. The formula for cold fusion would be incomprehensible gibberish to 99% of the population, but in the right hands it would change the world. Ergo the information would be quite valuable from an objective standpoint.
I think this is a question of perspective, fellas. For damir, who is seeking simple, reproduceable methods, the accumulated market wisdom of the Wizards has little value. While, taking darkhorse's approach to market study reveals the commonality inherent in the Wizards' success, thus; providing a solid underpinning for future growth. In my mind both approaches have value.
I used to play basketball with Monroe over at a buddy's place in Monroe's hometown of New Canaan, CT back in 1986.
Monroe was a pretty decent hoop player, and played while attending Harvard. I found him to be a very likeable guy and super intelligent. His Dad is Chairman Emeritus of American Healthcare Systems and a director of biotech company, CYTC.
At the time, he was trying to figure out whether or not to lease a seat down on the commodities exchange, or go to work for someone like Victor Niederhoffer at NCZ Commodities, which is what he wound-up doing before going off on his own to launch a hedge fund. He had been a floor trading member of the COMEX and the NYFE briefly before he went off and started his own hedge fund in the summer of 1986. He did some very intense quantitative research of futures returns while at Harvard, and programmed a lot of what he learned into various trading systematic trading programs.
During the first Gulf War, Barron's did a huge feature article on him and what it was like to be running a hedge fund during the Gulf War. At the time, Monroe had $60 million in assets and was on his way to some really great performance on a constistent basis. Eventually, a ton of money came in the door and he moved his operation to Bermuda.
In 2001, he wound up selling his entire company and it has been renamed Tewksbury Capital. Last I heard, there was $3.5 billion in assets in Tewksbury.
Monroe was a pretty decent hoop player, and played while attending Harvard. I found him to be a very likeable guy and super intelligent. His Dad is Chairman Emeritus of American Healthcare Systems and a director of biotech company, CYTC.
At the time, he was trying to figure out whether or not to lease a seat down on the commodities exchange, or go to work for someone like Victor Niederhoffer at NCZ Commodities, which is what he wound-up doing before going off on his own to launch a hedge fund. He had been a floor trading member of the COMEX and the NYFE briefly before he went off and started his own hedge fund in the summer of 1986. He did some very intense quantitative research of futures returns while at Harvard, and programmed a lot of what he learned into various trading systematic trading programs.
During the first Gulf War, Barron's did a huge feature article on him and what it was like to be running a hedge fund during the Gulf War. At the time, Monroe had $60 million in assets and was on his way to some really great performance on a constistent basis. Eventually, a ton of money came in the door and he moved his operation to Bermuda.
In 2001, he wound up selling his entire company and it has been renamed Tewksbury Capital. Last I heard, there was $3.5 billion in assets in Tewksbury.
Quote from waggie945:
In 2001, he wound up selling his entire company and it has been renamed Tewksbury Capital. Last I heard, there was $3.5 billion in assets in Tewksbury.
He also started a clearing firm: http://www.randfinancial.com
I know Dunn uses them, probably some other heavy hitters too