我从史上最伟大的股票交易员身上学到的东西……——Jack Schwager

Yo yo yo, Mr. Jack Schwager, how are you, man? It is an absolute pleasure to have you here. I don't think you need a huge introduction, but I just want to start by saying it's a pleasure to meet you. Congratulations on the launch of your most recent book, Market Wizards: The Next Generation.

I got a copy right here in front of me. It's great to have you here. How is everything?

Great. Thanks.

Awesome. I hope I don't do too much talking, but I want to start by giving you a quick introduction, so you know who I am and who you're talking to in the audience. I'm Thread Guy on the internet. My name is Michael in real life.

My quick background is that I started trading, if you could call it that, with sneakers—flipping Supreme, streetwear, and participating in the internet hustle culture in the late 2010s. I was really introduced to this game through crypto and NFTs. In 2020 and 2021, we were trading crypto. In the 2023, 2024, and 2025 cycle, we were trading a lot of meme coins and everything on-chain.

Near the end of 2025, the crypto market took a massive hit. It was boring and slow, and there wasn't a lot of volatility. I was trying to figure out, since I'm live every day, what we were going to talk about and what we were going to trade.

You look over at the stock market and see these AI stocks and semiconductor stocks making new highs after new high. We really pivoted everything we were doing toward paying attention to stocks. Then, as this Iran war has really kicked into gear with the U.S., we started paying attention to commodities and trading oil, and the stream has devolved into basically all assets across all markets.

It's funny because, compared to a lot of the wizards you interview in your books, I feel like I learned trading backwards. I came to stocks after I had already been trading for 4 or 5 years full-time.

A funny story is that, very early, near the end of 2025, when I was talking about stocks a lot, I posted a clip from the stream. Chris Camillo replied to it, and it got all this engagement. I had never heard of Chris Camillo in my life. I clicked on his Twitter profile, and his banner said “Unknown Market Wizards.”

I thought, “Wait, I'm reading this book right now.” I was somewhere in the middle of the book. I opened it and scrolled to the Chris Camillo chapter. For someone like me, who got started in these alternative markets and learned trading second, Chris Camillo was like the Ivy League. I almost cried when I read the Chris Camillo story. It was the greatest thing I'd ever read in my life.

I reached out to Chris, and he came on the stream a couple of months ago. He maybe gave us the best interview we've ever done. So, just a personal thank-you for all the work that you've done and for introducing me and the audience to some unbelievable people.

Sure. Thanks.

Yeah, of course. I guess to start with a funny bit, I feel that, having read a bunch of your books, it always seems like near the end you say you're done. This is the last release. You're done. There's no more. This is it. And then you put out The Next Generation, and you've also teased that you're working on a new hedge fund book as well.

Why do you keep going? What is it? Why do you keep going?

Well, I never intend to write another book after I finish a book, and I always end up seeming to write another book. I do like writing, so that is an underlying factor, but I wasn't intending to write this book.

It came about because, as you may have noticed prominently, there is a co-author in this book, George Coyle. I've never worked with a co-author before, nor did I have any intention to.

What happened is that we had a mutual acquaintance who asked me if I could look at some of George Coyle's articles. He had been writing about great traders, and he had written an article about Michael Marcus, who happens to be Chapter 1 of the first Market Wizards book. He wanted to know if he had gotten it right because I personally knew Michael.

I read it, and it was pretty good. We spoke, and I gave him some suggestions. I think at the end of that conversation, or maybe the next one, I said, “George, you write pretty well, and you've got some interesting stuff. If you want, I'll introduce you to my editor.”

He declined, which he now says was kind of a bonehead thing to do, but he did. He wasn't intending to write a book. He was just writing these articles for his own self-education, or simply to retain that knowledge after doing the research.

We continued having these periodic conversations, and he wanted me to be part of the book because he was using a lot of my material and a lot of my books as source material. At one point, he sent me 2 full chapters, and I said, “I could write my take on these and add a conclusion section.”

I wrote that up and submitted those chapters to my editor. He said, “Yeah, this is good, but you know what would be better? If you did actual interviews.” That threw us right back to the old Market Wizards format.

That's how this book came about. George offered to bow out, and I said, “No, if it wasn't for you, I wouldn't be working on this at all.” So we did it. We co-authored this book, and I tried to instill in him all the things I do—the style, the methodology, and all of that. The end product comes out pretty much sounding like any other Market Wizards book, I think.

You know what's crazy? I'm reading—I have this big reading list, because there aren't that many great finance books. Reminiscences of a Stock Operator was where I started. It's probably my favorite.

I'm reading More Money Than God right now, and it's the story of the hedge funds through basically every decade. It references your interviews verbatim. I would read the Druckenmiller chapter, and then yesterday I was reading your Druckenmiller chapter. I'm thinking, “I've read these words before.” The influence of your work across future media is unbelievable.

Yeah, and I want to give a plug to that book. More Money Than God is an excellent book.

It's so good.

Well written and well researched. It's one of the best books written on finance.

It's a crazy one. I'm curious about some personal stuff. You've interviewed—I’m sure there's an exact number, and you probably know it—a lot of traders, including a lot of the best ones. Are you friends with traders in your personal life? There's this bit where comedians don't like to hang out with comedians and whatnot.

Yeah. No, I'm not. I'm friendly with a number of the traders that I've interviewed, but I'm not in touch with them regularly. Somebody like Peter Brandt, I consider a friend, but we see each other only rarely. There's nobody that I'm in regular contact with.

Yeah, the last time I saw Chris—or spoke to him—we were in occasional contact. Somebody like Jason Shapiro is also an occasional contact, but nobody as a regular friend. The Chris chapter is so good.

You brought up Michael Marcus, and I want to ask you about that. I read, I think, the first chapter with Michael Marcus. The book is 37 years old or something like that, and there's an excerpt where he talks about—I think it was 1989—how he had this period when he was trading currency markets and had to stop because they were 24/7 and he was losing money.

He was waking up every 2 hours. It destroyed his marriage. It was destroying his life, trading these 24-hour markets. This was 30-something years ago.

Fast-forward to 2026. The way I learned to trade was in crypto, and it's only 24/7. That's the way it is. There are all these new platforms and assets coming out, including perpetuals to trade tokenized stocks, where all markets are going in this direction—24/7.

It was funny to see how something from back then is now being pushed as the new norm. Can you talk a little bit about the evolution of markets from when you wrote that first book to where we are right now?

Yeah. There have been a lot of tremendous changes. Let's begin with when I wrote the book. Marcus—we had pits in the futures, and there was no electronic trading in stocks. This was completely pre-electronic. Of course, now it's all virtually electronic, so that's certainly a huge change.

The original book was written after the advent of the PC, but the people I interviewed had trading careers that spanned well before the advent of PCs. You're talking about a completely different age in that respect.

Now, not only do you have PCs, you have supercomputers. You have multiple quant firms with hundreds of Ph.D. mathematicians and physicists working on strategies, supercomputing power, and AI, which is of course becoming more and more dominant.

The technological change, which has affected everything, has certainly affected the markets. The biggest changes are all these technological innovations.

Do you think it's more difficult now to trade with this overwhelming level of access and information? We're on Twitter 24/7, with what you might call headline terrorism coming at you every second. Do you think it's more difficult for traders to operate in this new era?

Well, first of all, one positive thing is that traders have access to virtually anything right now.

Yeah.

So, all the data. Back in my early days—my career goes back to the early 1970s, well before PCs—there were no chart screens. The first firm I worked for had this giant board with changing prices, and it would click every time the price changed. It was a different world.

Getting charts basically meant getting a weekly printed chart. You had to make special efforts to get a quick delivery over the weekend, and then you had to keep it up by hand on a daily basis. Forget intraday—even daily was a stretch. That was all manual and on hard paper, not on a screen.

Nowadays, you've got all the data, all the screens that you need, and all the indicators, if that's what you're into. There's a lot more fundamental information, too. There are people in this new book who do things that couldn't have been done without access to PCs and the information they provide. In that sense, it's leveled the field somewhat.

On the other hand, as I mentioned, you have giant firms with amazing computing power competing. At the end of the whole thing, though, I'm left with one fact: I'm finding traders for this newest book—and it was also true in the last book I did, Unknown Market Wizards, back in 2020—whose track records were as good as any of the more famous Market Wizards I interviewed beginning in the late 1980s.

So, despite what you would think, with all this additional competition and greater efficiency, apparently there are still enough ways for some people to achieve incredible success.

When did the bucket shop era disappear?

I don't know. I think probably after the 1929 crash, but I'm not sure. There were all sorts of reforms that came after that, and I would assume bucket shops would have been included in that grouping, although I don't remember for sure.

Of course, the book Reminiscences of a Stock Operator that you mentioned—that wasn't the bucket shop era.

The interesting thing is that even though it's a complete anachronism, that book is still relevant. It was relevant when I read it 40 years ago, and it's still relevant today. It was inspirational in a way, because when I read it, I was struck by how relevant a book written in a different era still was to the current world of trading.

The reason for that is because it captures important psychological aspects of trading, and human psychology doesn't change. It remains relevant. My goal when I wrote the first Market Wizards book was to hopefully write something that would still be relevant 40 years later—which I guess, 60 or 65 years later, was the case.

65 years.

65 years after I read Reminiscences.

65 years is unbelievable. I like reading all your old interviews. I'm also obsessed with the pits, but we'll do that as a different—I'll go down that rabbit hole later.

When I read some of these old interviews, like the ones with Paul Tudor Jones and Stanley Druckenmiller, I came up in an era where people were clicking in and out of trades all the time. In the crypto era, I'm very familiar with this sped-up, all-day-every-day sort of trading.

When I read these older interviews, it feels like these traders talk about their trades almost as the trades of the decade. The 1980s were about 1987, and they talk about the couple of defining trades of that decade. It paints this picture—I don't know if it's true—that in the 1970s and 1980s, trading was a lot slower and more calculated, and they were taking fewer positions. Is that accurate? Has that evolved?

Yeah, it's accurate for a simple reason. As we mentioned, before the advent of the PC, there was no data. Even intraday data might have been available in some form at some sophisticated firm, although there weren't sophisticated firms in those days—maybe by the 1980s, but not in the 1970s.

The data simply wasn't there, or if it was, only very isolated entities had access to it. You had nothing to trade—you only had daily data. You didn't have intraday data. Once you get intraday data, you open up the possibility of much quicker trading.

Of course, that evolved to the point that nowadays you have quite a number of proprietary trading shops that do only day trading. Two of the traders in this book began in one. One is still with a prop shop, although I think they give him leeway to hold positions longer. The other trader basically left because he eventually saw that there was more opportunity in going longer term beyond day trading. Even though he had been very successful day trading, he wanted to expand to trading on longer time horizons.

That's the answer as to why there's a lot more quick trading. Some traders in this book still trade very short term. For one trader in the book, half an hour would be a long-term position, and if a trade isn't working, two minutes would be long term.

That's crazy. I know Lucas is the one I know the most because he's on Twitter, and I've been following him for a long time. His story is nuts—the opposite of the slower-paced, long-horizon, mellow traders like Paul Tudor Jones.

I was at the Knicks game yesterday, and they were doing Celebrity Row on the big-screen jumbotron. They showed Taylor Swift, and right behind her was Paul Tudor Jones on the phone, yelling at someone.

So, you wrote the chapter with Paul Tudor Jones.

Yeah.

In the chapter, the market was open. Before I read your chapter, I had seen this really niche Paul Tudor Jones movie called Trader.

Yeah, I've seen it.

You've seen it before? And if I know this correctly, I believe he tried to buy up and burn all the copies.

I think he did a good job of destroying the copies.

I'm trying to get a copy right now, but nobody can find it. There was one that sold on eBay like—

I think he did a good job of destroying copies.

There was someone on eBay like 15 years ago that sold one for like $2,000. I'm trying to track it down, but it's on YouTube. I hope he doesn't get it removed. I downloaded it.

It's about an hour long, and he's nuts. He's screaming and calling in orders. He's in the middle of an interview, calling in orders, then he puts on the shoes—the special tennis shoes—and just does the whole thing. It feels very modern, where he's in the classic pits, screaming and barking at people.

So, you interviewed him in person.

Yeah.

While the market was open.

Yeah, while he was doing all that.

So, you're interviewing him and he's shouting out, "Buy 300 S&P, sell 200," and so on.

He had phones to each of the major pits. He would shout orders to the various pits while we were doing the interview.

I had asked him, "Look, we can do this after the market closes," because I knew it would be better to do it that way. But he said, "No, come at whatever it was—1:00 or whatever the time was." So I did, and we had the interview while he was doing all this trading at the same time.

People were bringing him messages, phones were ringing—it was kind of bedlam. But at least in those days, that was the way he traded.

Was he focused during this? Was he locked in on your interview?

Yeah. Oh, yeah. I think he's a multitasker in that sense.

You also wrote that he was super paranoid about answering your questions and was giving you—

Yeah.

—bizarre answers. Was that a normal thing?

No, he was paranoid. I believe—and it's been a long time since I wrote it—that it was because he was bearish. I interviewed him after the crash of 1987, but he was paranoid about saying something that could perhaps have been related to being short or thinking about being short, because shorts are always scapegoats.

If I remember correctly, that might have been what it was, but I don't remember for sure. If you read it recently, you probably know better than I do.

I was confused, though, because I'm thinking about how long it's going to take for this thing to get published. It's not like it's going to be broadcast to the world in a week or so.

But I have a question for you on the older-trader topic. I'm a big NBA fan.

In the modern era of basketball, there’s this running bit on the internet that we’re done with the ’90s. The younger generation will upload footage and clips of the ’80s and ’90s players and compare them to Steph Curry and LeBron, talking about how they don’t look that skilled. The game is slower, they don’t look that athletic, they don’t look that good, and the modern era shoots better, is quicker, handles the ball better, and moves better. It’s always this LeBron-over-Jordan argument.

So I’m curious: these ’70s, ’80s, and ’90s legends of trading, like Paul Tudor Jones—and some of them are still going and doing great—but maybe some of the ones who stopped in the ’80s, or peaked in the ’80s or ’70s. If you threw these guys into the modern era of 24/7 markets, 100 screens, and information coming at you at all times, could they perform equally as well? Better, worse? How do you stack up the modern era versus the old era?

Yeah. I think it’s really a personality question. None of those traders—even if they were in an era like the modern one, where you can trade in seconds if you want to—would trade that way. That’s not their style. Druckenmiller, I mean, he still trades his own account, I guess, but he doesn’t trade that way. He probably trades the same way he always traded, which was to have fundamental ideas that he believes strongly in.

He does look at charts and things like that for timing purposes and for risk-management purposes, but his style hasn’t changed. I think every person develops a style that’s comfortable for them. By definition, all the traders in my early books were in an era where you couldn’t trade in that super-fast fashion during the main part of their trading careers, and therefore that wouldn’t have been one of the options. They all developed styles that were not like that, so there were no traders comparable to that in the first book.

The first time I ever heard Stanley Druckenmiller speak was about a year ago, in, I think, a Morgan Stanley interview. I went back and read your chapter, so I got the firsthand read, all the lore, and then I read your chapter. He was about 33 in your interview.

From the way I understand it, when you had Druckenmiller, he had done incredibly well, and it was after all the 1987 stuff. He had done very, very well, but I don’t think he was as highly regarded as he is now. I kind of look at him as the GOAT, at least as I understand it. Did you know at the time, when you were speaking to him at 33, 35, whatever, that he just had it at a level that maybe some of the other guys didn’t?

No. I thought he did, like the other people I interviewed. By the time I interview these people, they’ve had enough success.

They may not have been as big as they became in later years, like somebody such as Kovner, Jones, or Druckenmiller, because they continued through their whole careers. But they had still established records of 10 years or more. Nobody was a flash in the pan, although Paul was an exception. I interviewed Paul when his track record was only about 5 years old, but he had about 5 years of 100%, three-digit returns, and that was good enough.

Do you feel pressure when you interview somebody that your stamp is going to live? You solidify people pretty strongly when you interview them in the book.

Solidify in what way?

As in, they were a wizard in Market Wizards. If they go on to do something incredible, it’s like, of course. And if they go on to do really poorly—

That wasn’t true in the first one. When I wrote the first Market Wizards book, it was just another book. Over time, as I’ve done more of these books and many of these traders became very famous—more famous—I guess that occurred.

Nowadays, or even with the last couple of Market Wizards books I’ve done, it’s almost unusual for me, almost unheard of, I would say, to interview somebody who hasn’t already read some of my books. In many cases, I interview people who got into the business because they read my books. So it’s come full circle.

It has come full circle. One of the things you talk about a lot, and you mentioned it earlier, is edge decay. I feel like I’ve looked at a bunch of traders who represent a specific era. This guy dominated the 2020 cycle, and then 5 years later the game has changed a little bit and they’re just not doing as well. Or they were really good for 1 regime, or at 1 specific time and place.

How do you think about eras in trading and traders and markets? Why is it the case that a specific trader will dominate 1 era and then not be able to repeat the success they had in future markets?

Depending on the approach, many approaches will only work in certain market environments. In the current book, there’s 1 trader who does phenomenally in 2021 but continues to use the same approach in 2022, and it’s disastrous because the market has changed.

A lot of it has to do with changes to the market environment. I’m always trying to find people who will survive it, who will do well, who will still be around, or who will continue to move up an equity curve through different environments. That’s what I’m trying to do. It’s not always the case, but hopefully most times it is.

It makes sense. When I first started trading, one of the most intimidating aspects was that everyone talks about edge. This word gets used so much: edge, edge, edge. I spent a lot of time afraid to take positions because I felt as if I needed to have this mythical, definitive edge that I could point at and say, “I’m guaranteed to be right,” or, “I’m guaranteed to win in this spot because I know something that everybody else doesn’t know.”

Even if you’ve interviewed hundreds of traders, how do you think about the idea of edge? More specifically, how definitive is it? How tangible is it for specific people versus others?

There has to be some edge, because otherwise trading is like gambling. The market can go up or it can go down, and if there’s no reason, nobody would be right unless they have some approach that’s better than random.

Everybody has transaction costs. Even if commissions are 0, there are still transaction costs because of slippage on the trade, both getting in and getting out. Over time, you’ll bleed transaction costs if you have no edge, so you need some sort of edge.

An edge doesn’t mean that you’re right all the time, or even right most of the time. In fact, most of the traders I interview are wrong more than half the time, and in many cases wrong more than 70% of the time. The difference is that when they’re right, they make a lot more than they lose when they’re wrong, in almost all cases, although not all.

As far as what an edge is, it varies. It depends. Let me think of a few examples from this book. All these traders in this next-generation Market Wizards book are solo traders. They’re trading on their own, at home. They’re not managing money and they’re not in a firm. A couple of them are, though. One of them is with a prop firm, but he’s still trading on his own.

Take 1 of them who has not had a losing month. He’s become a super expert on merger arbitrage and knows every nuance about it. He’s developed a methodology where he doesn’t lose. He has losing days, but he has no losing months. He doesn’t make a ton of money, but he earns a decent living trading, because trading is basically his monthly income.

His edge is that his knowledge and expertise in that area of merger arbitrage are superior to the general market. For example, a merger deal comes out and the market rallies, and he knows that the particular company is domiciled in Maryland instead of Delaware. That would mean nothing to virtually the entire investor universe, except he knows that if it’s in Delaware, the merger is much more likely to go through, while in Maryland it’s easier for the company to block it if it wants to.

He has that piece of information not because he has inside information. He’s just done so much research that he knows all this stuff.

He never had a losing month.

What’s that?

He’s never had a losing month. Literally.

Are you numb to these unbelievable metrics and stats and audits that you see at this stage?

Yeah, I’m numb in the sense that I’ve interviewed a lot of people who have done it. In this book in particular, you would think it would be very hard to find people with extraordinary records, given all the competition and efficiency out there. But there are 2 guys in this book who, at the last time I communicated with them, were both near half a billion dollars.

One started with $40,000. The other had worked for firms and accumulated several million before going out on his own, then turned that into half a billion. But take the guy who turned $40,000 into half a billion. That’s pretty extraordinary.

Do you believe this idea that a trader could have an intuitive edge? We call it the “ball tingle,” where there’s no way to define it. They could define it if they tried, but they just—

Yeah, I do believe that. I’ve seen it, and it’s true.

Gut feel and intuition are misunderstood. What they really are is the result of traders who have been immersed in the markets for decades—or, in this group’s case, maybe not multiple decades, but a decade or longer—and have devoted an extraordinary amount of time to trading and research. The hours they keep are mind-boggling.

If you spend that much time exposed to the market, or to anything, and you have a passion for it—which is important—you accumulate a lot of experience. By experience, I mean tens of thousands or hundreds of thousands of instances. Not all of that is recallable in the conscious mind, but I think what really happens is that they’ve seen so many things that, when something similar starts lining up, they may not say, “This is like XYZ,” but somewhere in their subconscious, something clicks: “This is just like that other situation.” That’s what intuition is. I would term intuition subconscious experience.

You said you’ve seen it. I mean, you’ve probably seen it many times.

Yeah. Yeah.

Wow. I’m obsessed with the pits. That Paul Tudor Jones movie is one of my favorites ever. I just missed that era. I was born too late.

How different was it? You did some of these interviews—I mean, you lived it—but you also did some interviews live in the pits as well. How different was it?

I didn’t do them in the pit, but I did interviews with traders who were pit traders. Somebody like Tom Baldwin, who was, at the time, the largest single trader in the T-bond pit.

I did interview people who had experienced it, and in the Paul Tudor Jones chapter there’s a great story about his worst trade ever, which occurs in the background of the pit.

Okay, okay, okay. Tell the story first, and then I’ll ask the question.

Yeah. It’s a great story for many reasons. Paul is down on the cotton floor, trading the cotton market.

For background, cotton’s old-crop last month is July, and October is kind of the beginning of the new crop. July, because it’s the last of the old crop, and the stocks that are deliverable, can be an important factor.

What the market had done in that particular situation was decline for many months, then go sideways. One day, it broke to a new low and bounced right back in.

For those of you who are chart-oriented—and this is the kind of thing I’ve written about in Market Wizards books as well as in some analytical books—when a market breaks to a new low and then rallies right back, that can often be a bottom, a bear trap. The idea is that when it finally breaks to new lows and takes out those stops, it wipes out all the weak holders, and then the market can rally from there. That’s the underlying premise, and it happens more often than not—probably better than 50% of the time.

Paul sees this and says, “Okay, it’s a bottom.” He has an order go in for a large number of contracts, more than he should buy given the amount of money he’s managing. It represents a very large portion of his capital.

At that same moment, from across the pit, a broker flies across with his hands raised, saying, “Sold.” That broker is the broker for the cotton merchant who owns most of the deliverable supply. In that second, Paul knows he’s dead. The rest of the pit knows he’s dead.

He tries to sell some, but within seconds the market locks limit-down and doesn’t trade for the next few days. Every day, it opens limit-down. By the time he can get out, he’s lost 65% of his investors’ money.

He came to the brink of quitting the business. That incident instilled money management in him. He questioned everything—whether he would even continue in the business—and said, “Why am I putting myself in this position? Why don’t I make my life a matter of pleasure rather than pain?” From that point on, he became almost religious about money management.

Do you think somebody like that could ever actually quit?

He came very close to quitting. What I encounter in every book, and especially in this last book and the first Market Wizards book, is people failing multiple times early on before they finally succeed.

It’s a quality shared by many of these traders that they continue when most people would have quit long before. It feels like temperament.

I’ve thought about it. What would I do? People always ask, “What’s the number?” You interview some guys who have extraordinary returns, and it’s like, why are you still going? You made $100 million, $250 million, a billion. Why are you still going after it?

That’s a great question. In fact, in this book, some of the people who have made $100 million or several hundred million are actually questioning that. One of them is struggling with whether he wants to quit and is certainly paring down his trading.

Two of them are at that stage where they want to quit but are still trading. They can’t give it up completely, but they do want to move on to other things. They recognize the question: Is this really what I want to do full-time for the rest of my life?

That question does occur to people. It’s never the money. Once you get beyond $100 million, what’s the point? It’s not the money.

Wow. You tell the Paul Tudor Jones story, and a guy comes swooping across with the “Sold.”

Yeah.

That’s a big part of the color you can’t get in electronic trading.

No, you can’t.

What’s the scene like? Everybody generally knows what everybody’s in, especially if you’re taking super-public positions. People around you are aware that Paul is in this, or that this guy just sold. How does the scene work as far as knowing who’s in what and what they’re trading?

Back in the early days, people knew who the broker was a broker for, and that was a good example of how there was some information.

People also talked about the early Market Wizards book. I think there were a couple of people I interviewed who talked about the sound of the pit and how it would sometimes grow and crescendo. That was itself kind of a signal.

It was a living, breathing thing. The visceral element of being there and hearing the sound change was itself a signal.

Oh, my God.

Yeah.

You could hear when prices were going up and getting louder. There was strength behind the move.

You could tell from the noise level, and from a sudden shift in the noise level, that something was going on.

Do you think guys like Paul—because they talk about him as this macho gunslinger, screaming in there—do you think being in that environment, boots on the ground in the pit, was an enhancer for his style, or was it a distraction?

It depends. It depends on whom you’re talking about. Michael Marcus tried to be a trader from the floor, but he was a very shy, quiet guy. He had trouble getting anybody to hear or see him, so he couldn’t function in that environment.

He was your first boss, or you worked with him at your—

No, Marcus. This is kind of interesting. I’m a believer that life is very heavily influenced by fortune, good and bad. A lot of what happens to us isn’t necessarily because of what we do, but simply because of chance.

It so happened that my first job out of graduate school was as an analyst. On my first day, the fellow was cleaning out his desk and leaving to become, in quotes, “the trader.” That fellow was Michael Marcus.

We chatted a little bit, and in those days he was still staying in New York.

And so we ended up getting together every month or two for lunch and spoke and communicated. Then he went out to Malibu as a trader, and that's where I eventually interviewed him in those days. So I kind of knew him just by that chance luck.

Through Michael, he told me about Ed Seykota, who we considered the best trader he knew. This was coming from somebody who, in those days, had turned $30,000 into $80 million, so you kind of pay attention. He led me to Ed Seykota, and then the book, of course, ended up including him because I knew him, and also because Marcus hired Bruce Kovner. Three people in that book.

A core element of that first book was that, by chance, I met Michael Marcus on the day I came in for my first day of work. So, a lot of luck in that.

The last thing I read before I got on here today was the Ed Seykota chapter. In the very beginning, you tell the story that you had a time crunch. You only had a couple of hours, and he tells you, “I knew you were going to say the whole day.”

You say the whole day, and you're sitting down talking to him five minutes in, and he's like, “How many minutes fast is your watch?” And you're like, “Yeah, yeah, what?” I just met this guy an hour ago, and keeping a fast watch is something that I've done for a while, and he just snipes it.

Have you ever been intimidated by some of these guys when you go to their houses?

Not intimidated, but I tell that in the book because he's a very perceptive guy. In the first few minutes of our phone conversation, and then in our early conversation in person, he kind of pegged me.

I'm a textbook guy who kind of runs late—not late, but just likes to get to the last second, sort of make every meeting exciting. You know, we get there in time. He assessed that about me.

As far as intimidation, I recognize that, first of all, forget about the trading side. On the trading side, I never consider myself in the same ballpark, and I'm not. I don't consider myself, per se, a trader.

If you're writing a sports book and you're interviewing sports people, obviously that doesn't mean that you're in the same league because you're interviewing sports stars. So the same thing applies here.

The intimidation, if there were going to be any, would be on the intellectual side. I'm not a dumb guy, but I'm not a genius like some of the people I've interviewed. I've never been intimidated, though. I feel that I can always hold the same level of conversation.

He turned $30,000 into $80 million.

Yeah, yeah.

This is like—

And that's with the company he was with, this early trading firm called Commodities Corporation, which was one of the very, very early trading firms back in the ’70s and into the ’80s. They were taking out, I think, 20% a year for expenses.

Whoa.

So he did that with 20% coming out every year.

Whoa. And that's Bruce Kovner, Michael Marcus, and Ed Seykota at Commodities Corporation.

What's that?

Yeah.

Yeah. That was the name of the firm.

They wrote about it in More Money Than God.

Yeah, yeah, yeah. It's probably in there, too. So More Money Than God and my books cover a lot of the same territory in some cases.

Okay. This is kind of a cliché, but I have to ask it. I'm sure it's probably the most asked question you ever get: Who is your Mount Rushmore of the best traders, pound for pound, that you think stack up against anybody? If you had to pick four or five?

It's hard to say “best” because people excel in different ways. For longevity and pure return-to-risk power, somebody like Ed Thorp, who ran 2 hedge funds—but just take the first hedge fund: 19 years, 3 losing months, each of those losing months less than 1%. That's kind of mind-boggling.

I think the guys in this book who took a smaller sum of money and made half a billion—that's mind-boggling. In every book, there are people who have extraordinary records. Michael Marcus, as we mentioned from the first book, and somebody like Stan Druckenmiller, who went 30 years with approximately 30% a year.

So, all in their own ways, there are a lot of traders who are spectacular.

Who do you think had the highest peak—the highest prime over a couple-year period? Who had the best prime, even if it was only a couple of years? Forget longevity and forget down years. I'm talking about a couple-year era where it was unlike anything you've ever seen.

Well, I wouldn't say unlike anything I've ever seen, because again, in every book—

You've seen some traders who have that, right?

Yeah.

Wow. Okay, one more thing I want to ask you about. In one of the books, you talk about efficient market theory.

Yeah.

You put this quote in there—I don't know if I'm going to get it right—about how the chance of the 1987 Black Monday was equivalent to picking a random atom out of the universe, spinning around with your eyes closed, and picking the same atom a second time.

Right.

Which is crazy. Do you think that as time goes on, and digital trading advances, math advances, AI advances, and quantitative high-frequency trading advances, we get closer to this idea of efficient markets? Can it ever actually be reached?

I would have thought so. If you had asked me maybe 10 years ago, I would have said no, ultimately. But here we are, and I just did this book, and there are still the most extraordinary records that I've encountered—or at least as amazing as any I've encountered. So apparently we're not there.

These types of records don't happen by luck. Sure, anybody can have a good 3 years, especially in a bull market, and that doesn't prove anything. But once you get decade-long-plus records through bull and bear markets—and people have—and you start talking about return-to-risk statistics in some of these cases, people say, “Oh, the Sharpe ratio is above 1. It's a big deal.”

I don't use the Sharpe ratio, by the way. That's a different subject, but since most people are familiar with it, I'll talk in terms of the Sharpe ratio. The people I interview in some of these books can have—not the Sharpe ratio, but let's say return-to-risk measures that are equivalent.

The fault of the Sharpe ratio is that it penalizes big gains, which works against the people I interview. If you have return-to-risk measures, like an adjusted Sortino ratio, that don't penalize big gains, then if you think in terms of 1 being “above 1 is really good,” we're talking about people at 10 or 15.

They're not even outliers. We're way beyond. If you're thinking in terms of the solar system, we're not talking about people on Mars or Jupiter. We're talking about Pluto and beyond. They're completely off the scale in terms of return-to-risk.

You don't get that if the markets were efficient. I didn't find the only 9 people in the world who have this. These are just people we came up with, and I'm sure there are tons of others that I don't know exist. So, yeah, I don't think the markets are there yet.

Will AI get there? I'm not even there. I don't think so, because there's a big difference between applying AI to things like science versus applying it to trading.

When you're dealing with science—physics, biology, drug development, or weather forecasting—you're dealing with physical properties. While weather forecasting, particularly longer-term forecasting, is extraordinarily complex, the physical laws are fixed. They don't change. All physical laws stay the same.

For biology, maybe biology evolves, but essentially, at any point in time, biological reactions work the same way. Whereas in trading, you're not dealing with a set of facts.

Sometimes, let's say, you get a bullish unemployment report that has more employment than expected. It's better than expected. Sometimes it's bullish for the stock market, and sometimes it's bearish. You see both cases.

You can do the same thing for almost any type of input. What an input means for how the market will react is always changing. It's not a fixed law. I think that introduces a level beyond complexity. It's not the complexity so much as the inability to define what the relationships are.

So I think that will hold back AI from solving the market.

In a way as well. But when you apply it to anything that is science-related, with enough learning and enough power, it can break through problems and come up with solutions that would have been unreachable otherwise. But I think trading is different.

It’s crazy: even in Reminiscences of a Stock Operator, the conclusion is that he doesn’t think it’s possible to beat the market over a prolonged time. That was the conclusion all the way back then, which is—

Well, no. Livermore was one of the greatest traders of all time, and in terms of today’s dollars, I think he made billions several times, but he also lost it. He had a problem with risk management. As great a trader as he was, he had a big problem with risk management. He may have had it for certain runs, but then he somehow always blew it.

So he made a fortune, lost it, made a fortune, lost it. If he had been rigorous throughout on risk management, I think he would have been successful throughout. It happens—I see it in every book I write. It happens at least sometimes, even to great traders.

In this book, the trader I mentioned who turned $40,000 into half a billion had a couple of instances along the way where he broke his own rules and took giant losses. Interestingly, after we had finished the chapter, I got an email from him saying, “Look, I want to be upfront. I don’t want people to think I’m just kind of tooting my own horn. I just had my worst loss ever.”

We had another follow-up interview on that worst loss ever, and that one, I think, finally gave him religion. He instituted automatic controls to prevent himself from doing that again. Livermore could presumably have done the same thing. So, no, I think it is possible to be successful throughout, and somebody like Dan Miller has been for a long career, as have many other people.

Why don’t you like the Sharpe ratio? Is it because it penalizes the big gains?

Yeah. The Sharpe ratio, without getting into the math of it, bottom line, is return over standard deviation, which is a measure of volatility. Actually, that’s a whole different subject, because volatility itself is not necessarily a good measure of risk, although it can be strongly correlated many times. But in any case, it penalizes volatility.

I’ve interviewed traders whose records look like: lose 3%, lose 2%, lose 4%, lose 1%, make 50%. That Sharpe ratio will hate that record. It will super-penalize it. But if you take a track record where every month it changes by not that much, but you get this period where—a Sharpe ratio, let’s say, of a market where, like, a bear market in stocks where it’s going down and going down—you can have a huge cumulative loss, and it may not even show up as bad on the risk penalization.

Got it.

And somebody has a giant return. So I don’t like the Sharpe ratio because it penalizes upside volatility the same as downside volatility. I’ve never met an investor who felt uncomfortable or complained that they made too much money. Who called to complain when they invested with a manager, the manager made a huge return, and they were unhappy about the volatility? Never happens.

What measurements do you like the most outside of pure returns?

Okay, so there are 2. I personally use 2. One is the Sortino ratio, which is similar to the Sharpe, but it only uses down months.

I should say here that virtually everybody calculates it wrong, because while the statistic only uses losing months, the typical way most services report it is that they include all months, which makes it very biased. That means the Sortino will always end up looking better than the Sharpe, even for traders whose worst losses are worse than their best gains. Because of this, they’re only using half the data to dilute the return.

The way I do it is, without getting into the math, if you multiply the way most people report it—what I call the adjusted Sortino—by the square root of 2, it then becomes comparable to the Sharpe ratio without the bias, without this penalization of upside volatility.

Then I have a measure that I kind of use as my own, which I don’t know if anybody used before or whatever. I’ve been using it for decades now, and I wrote about it decades ago. It’s called the gain-to-pain ratio.

It’s simply the sum of—you could do it on monthly data, you can use it on daily data, but let’s say monthly data—you sum all the returns, and then you divide it by the sum of all the losses, the absolute value of all the losses. That statistic penalizes every loss you have; it sort of diminishes your statistic, but only the losses.

If you have a lot of losses, then it’ll show up in that denominator. So it’s very simple: just the sum of all the returns divided by the absolute value of the sum of the losses.

I’m going to have to try that. Thank you. How much in your day-to-day life are you thinking about markets if you’re not working on books?

Yeah, so really, it depends. Ironically, for the last few months, or maybe even since January, I’ve been—normally, I don’t trade a lot, but the last few months I’ve been trading more than typical.

If I get involved in trading and I don’t have other things that I’m doing—I’m not writing another book right now and I’ve got more time—then I start trading, and if it’s going okay, I may be spending more time. So recently it’s been every day because I’ve been trading, but there are long stretches where I hardly trade at all.

If I’m busy with other stuff, I may not be trading at all. If I hit a losing streak in trading, I’ll stop. I may walk away from it and not trade at all for a while, until I feel like going back to it again. So it really depends when you catch me. It’s not a major point in my life; it’s one element of my life.

What are you trading right now?

Well, right now I’m trading mostly—there are times when I traded almost all futures. Recently, I’ve been trading almost all stocks. Although at the moment, I’m trading futures, equity futures, pretty much as an easy way when I want to hedge or go net short. So I’ve been trading those as well, shorter-term.

Are you a bull right now?

No. I went from leveraged long at the beginning of this week to—now, with my futures position that I put on today—I think I’m net short. So I’ve gone from over 100% long to net short.

But that could literally change in a few days, right? That’s a pretty big change. So what I’m saying now is good for today. I kind of respond to what the market’s doing.

One more market question and I’ll give you a wrap. I’m curious what you think of this evolution, where it seems like everybody is trading things like Robinhood, and then the emergence of crypto and these alternative markets, where everybody’s retail, everybody is trading, and it feels like a trend that’s only going to accelerate. What do you think about that?

Yeah, I think there’s more trading because there’s something in our society, and also, I think, in the younger generation, that is attracted not just to trading specifically, but to the whole idea of betting on stuff. Prediction markets have gotten huge; they’ll get bigger. That just seems to be part of our society at the current moment. And sports betting—so there are 3 things, and they’re all related.

The thing that’s—well, I guess prediction markets are also places where people can have an edge. They’re very good at assessing politics or world developments or whatever. There are people who are particularly better at it than other people. So, like trading, you can gain an edge. Sports betting is the same. Some people are expert enough to get a little bit of an edge in sports betting, enough to cover the spread.

Those are all kind of one kind, where it’s possible to come out ahead if you have enough expertise, as opposed to something that’s just dumb, like casino gambling, where the odds are against you. The longer you play, the surer you’ll lose. So I would distinguish that, but those other types of endeavors have the possibility to come out ahead, and apparently that’s a great attraction to people.

Have you ever thought about an alternative Market Wizards—sports betting, prediction markets?

No, no, no. I haven’t. I guess I’ve got enough on the trading side. To me, trading is more interesting. Prediction markets are interesting. Sports—I’m not enough of a sports fan. I’m not a sports fan per se, so that’s not a natural attraction for me.

Okay. Although I suppose somebody could do it—if there are some Market Wizards out there, or sports wizards out there, with long-term betting records, I guess that could be a book.

It won’t be written by me.

It won’t be me. Maybe co-authoring is in your horizon. But, Jack, we’re over an hour. You actually stayed an hour and 7 minutes. Man, thanks for coming on. I’m a huge fan.

I know you probably get that from a lot of traders, but you’re a huge inspiration for me, and you’re a huge inspiration for a lot of people who watch the streams—traders everywhere.

So, on behalf of that entire community, thank you for all that you’ve done and thank you for coming on the stream. We have the book here, Market Wizards: The Next Generation. I’ll put your links everywhere—Amazon, everywhere they can buy it. Congratulations on the new book. Can you give us a sign-off: a finance- and trading-centric book recommendation list?

Oh, a list of your recommended books?

Yes.

Okay. I have to preface this by saying that, oddly enough, I rarely read trading books. I don’t read many trading books. But I did put together a list on Quora of recommended books related to trading. In some cases they’re about trading, but they’re not necessarily what people think of as trading books.

I made that list about 5 years ago or so, and it’s on Quora. I guess if you put my name—

Okay.

—it should be searchable. But—

I’ll go find it.

I guess if you Google “Quora Jack Schwager recommended books,” maybe that comment will pop up.

I’ll hunt it down and share it, but—

You can put a link to it. I need to put a link to it.

Okay, I’ll put a link to it. Anything else you want to sign off with, leave us with?

Yeah, I’ll leave your audience with one thing that I think is absolutely 100% correct advice: the most important thing you can do is protect your capital. You have to be religious about having some sort of risk management to make sure that no single trade can take you out. I’ll leave you with that.

Paul Tudor Jones mode. Jack, you’re an inspiration, man. Thank you so much for coming on. Thank you so much for your time. I look forward to getting through this book, and have a great rest of your day, man.

Okay. It was fun. Thanks.

All right, brother. That’s the GOAT, man. And wow.