Hedge Fund Market Wizards By Jack D Schwager

Book review: Hedge Fund Market WizardsLike Jack D Schwager’s other works, 'Hedge Fund Market Wizards' looks set to become an investment classic, says Matthew Partridge.


By Jack D SchwagerPublished by John Wiley & Sons

Ask anyone working in finance for advice on what investment books you should read, and the chances are he or she will mention one or more of Jack Schwager's three books Market Wizards, The New Market Wizards and Stock Market Wizards.

Indeed, money manager and blogger Barry Ritholz calls the first two "must-read, seminal books for investors and traders". However, the last of the trilogy was published 13 years ago, at the height of the tech bubble. Clearly, the financial environment has changed a lot for the worse since then.

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The good news is that the fourth book in Schwager's series, Hedge Fund Market Wizards, brings the series into the age of austerity. As before, each chapter consists of an edited interview with an individual investment "wizard". He splits his 15 interviewees (14 hedge fund managers and one bank trader) into three categories.

There are "Macro Men", who take large directional bets on currencies and commodities; "Multi-strategy Players", who try to come up with multiple ways to beat the market; and "Equity Traders", who deal solely with shares. The traders in the final section get less individual attention than the others, perhaps because Schwager's own background is in futures and currencies. However, many of the subjects still reveal useful information about their tactics and outlook. Indeed, the interview with value investor Joel Greenblatt (author of The Little Book that Beats the Market) is one of the strongest.

While the book's focus is clearly on trading and investing, there is more than enough human interest on offer for the general reader. For example, Edward Thorp, who invented many of the strategies used in quantitative investing, tells of how he also made an enemy of the entire casino industry when he proved that blackjack could be consistently "beaten" by the average player a revelation that (according to Thorp) led to at least one alleged attempt to kill him.

Like Schwager's other works, Hedge Fund Market Wizards looks set to become an investment classic. While other writers have also tried to profile top money managers, Schwager is more thorough and probing than his rivals. Having run money himself, his questions are focused and he is not afraid to query responses. This lends the conversations an edge they would lack if someone more timid, or with less direct experience of the subject, had carried them out. Required reading for anyone with an interest in trading.

Hedge Fund Market Wizards by Jack D Schwager. Published by John Wiley & Sons, £26.99.

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri