Jack D. Schwager Quotes

“Being a successful investor and winning in the stock market is a matter of skill and discipline and not luck alone.”

“Good traders liquidate when they are wrong, great traders reverse when they are wrong.”

“One of my favorite patterns is the tendency for the markets to move from relative lows to relative highs and vice versa every two to four days. This pattern is a function of human behavior. It takes several days of a market rallying before it looks really good. That’s when everyone wants to buy it, and that’s the time when the professionals, like myself, are selling. Conversely, when the market has been down for a few days, and everyone is bearish, that’s the time I like to be buying.
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“The ability to change one's mind is probably a key characteristic of the successful investor. Dogmatic and rigid personalities rarely, if ever, succeed in the markets. The markets are a dynamic process, and sustained investment success requires the ability to modify and even change strategies as markets evolve.”

“Investors often make the mistake of equating manager performance in a given year with manager skill. In some instances, more skilled managers will underperform because they refuse to participate in market bubbles. In fact, during market bubbles, the best performers are often the most imprudent rather than the most skilled managers.”

“Traders focus almost entirely on where to enter a trade. In reality, the entry size is often more important than the entry price.”

“You can use charts to give you a plus or minus toward your view, but you can never start with the chart.”

“Actually, the best traders have no ego.”

“Another way to determine the direction of the general market is to focus on how the leading stocks are performing. If the stocks that have been leading the bull market start breaking down, that is a major sign the market has topped. Another important factor to watch is the Federal Reserve discount rate. Usually, after the Fed raises the rate two or three times, the market runs into trouble.”

“Excessive worrying about taxes usually leads to unsound investments in the hope of achieving a tax shelter.”

“I am always thinking about losing money as opposed to making money.”

“I feel my success comes from my love of the markets. I am not a casual trader. It is my life. I have a passion for trading. It is not merely a hobby or even a career choice for me. There is no question that this is what I am supposed to do with my life.”

“I figured out that for every dollar I made trading, 30 percent was going to the government, 30 percent was going to support my planes, and 20 percent was going to support my real estate. So I finally decided to sell everything.”

“If you don’t stay with your winners, you are not going to be able to pay for the losers.”

“It is impossible to consistently outperform the market by using any information that the market already knows.”

“Kovner lists risk management as the key to successful trading; he always decides on an exit point before he puts on a trade. He also stresses the need for evaluating risk on a portfolio basis rather than viewing the risk of each trade independently. This is absolutely critical when one holds positions that are highly correlated, since the overall portfolio risk is likely to be much greater than the trader realizes.”

“One of my rules was to get out when the volatility and the momentum became absolutely insane.”

“One of the jobs of a good trader is to imagine alternative scenarios. I try to form many different mental pictures of what the world should be like and wait for one of them to be confirmed. You keep trying them on one at a time. Inevitably, most of these pictures will turn out to be wrong—that is, only a few elements of the picture may prove correct. But then, all of a sudden, you will find that in one picture, nine out of ten elements click. That scenario then becomes your image of the world reality.”

“Those who want to win and lack skill can get someone with skill to help them.”

“Traders shouldn’t stick their heads in the sand and just hope it gets better.”

“Being wrong is acceptable, but staying wrong is totally unacceptable.”

“Either go at it full force or don’t go at it at all. Don’t dabble.”

“Make the calls. Maybe they won’t talk to you, but I guarantee that if you don’t call, they won’t talk to you.”

“Michael Jordan didn’t become a great basketball player because he wanted to do product endorsements. Van Gogh didn’t become a great painter because he dreamed that one day his paintings would sell for $50 million.”

“Even a poor trading system could make money with good money management.”

“Failure is not predictive.”

“I have found that confidence is one of the most consistent traits exhibited by the successful traders I have interviewed.”

“In trading, 80 percent of your profits come from 20 percent of your ideas.”

“The idea that trading success is tied to finding some specific ideal approach is misguided. There is no single correct methodology.”

“The people who are really successful in trading are tremendously hard workers.”