Market Sense and Nonsense - Hardcover

by Jack D. Schwager (Author), Joel Greenblatt (Foreword by)

Bestselling author, Jack Schwager, challenges the assumptions at the core of investment theory and practice and exposes common investor mistakes, missteps, myths, and misreads

When it comes to investment models and theories of how markets work, convenience usually trumps reality. The simple fact is that many revered investment theories and market models are flatly wrong--that is, if we insist that they work in the real world. Unfounded assumptions, erroneous theories, unrealistic models, cognitive biases, emotional foibles, and unsubstantiated beliefs all combine to lead investors astray--professionals as well as novices. In this engaging new book, Jack Schwager, bestselling author of Market Wizards and The New Market Wizards, takes aim at the most perniciously pervasive academic precepts, money management canards, market myths and investor errors. Like so many ducks in a shooting gallery, Schwager picks them off, one at a time, revealing the truth about many of the fallacious assumptions, theories, and beliefs at the core of investment theory and practice.

• A compilation of the most insidious, fundamental investment errors the author has observed over his long and distinguished career in the markets
• Brings to light the fallacies underlying many widely held academic precepts, professional money management methodologies, and investment behaviors
• A sobering dose of real-world insight for investment professionals and a highly readable source of information and guidance for general readers interested in investment, trading, and finance
• Spans both traditional and alternative investment classes, covering both basic and advanced topics
• As in his best-selling Market Wizard series, Schwager manages the trick of covering material that is pertinent to professionals, yet writing in a style that is clear and accessible to the layman

Front Jacket

When it comes to investment models and theories of how markets work, convenience usually trumps reality. The simple fact is that many revered investment theories and market models are flatly wrong--that is, if we insist that they work in the real world. Unfounded assumptions, erroneous theories, unrealistic models, cognitive biases, emotional foibles, and unsubstantiated beliefs all combine to lead investors astray--professionals as well as novices.

In this engaging new book, Jack Schwager, bestselling author of the Market Wizards series, takes aim at some of the most pervasive market precepts, money management misconceptions, and irrational investor behaviors. From the theory of efficient markets to buying in up markets and selling in down markets, Schwager turns each misguided idea on its head, one at a time. Supported by a wealth of well-documented historical evidence and a healthy dose of common sense, he exposes the truth about the cherished assumptions and fallacious thinking at the core of some of the most respected investment theories and models and explores many common investor errors. In this book, you'll discover why:

• Expert opinion is NOT more reliable than the proverbial dart-throwing chimp
• The markets are NOT efficient
• Low volatility does NOT necessarily imply low risk, and high volatility does NOT necessarily imply high risk
• Market prices are NOT normally distributed
• Investing in equities when markets are doing well is NOT conducive to achieving above-average returns
• Concentrating on funds with the strongest record of returns is NOT a sound strategy
• Past returns are NOT a reliable indicator of future performance
• A hedge fund portfolio strategy is NOT riskier than a traditional portfolio approach
• VaR does NOT provide a good indication of worst-case risk
• Superior performance does NOT necessarily imply manager skill

But Schwager does much more than simply burst bubbles; he offers a sobering draught of real-world investment insight and guidance spanning both traditional and alternative investment classes. Drawing upon his years as an asset manager and trader, he shares priceless lessons on an array of investing topics, both basic and advanced, including portfolio management, risk assessment, investment selection, hedge fund investing, investment timing, and much more.

Market Sense and Nonsense is an indispensable source of real-world market wisdom and investing know-how for investors of every ilk.

Back Jacket

MARKET SENSE AND NONSENSE

When it comes to investment models and theories of how markets work, convenience usually trumps reality. The simple fact is that many revered investment theories and market models are flatly wrong--that is, if we insist that they work in the real world. Unfounded assumptions, erroneous theories, unrealistic models, cognitive biases, emotional foibles, and unsubstantiated beliefs all combine to lead investors astray--pro- fessionals as well as novices.

In this engaging new book, Jack Schwager, bestselling author of the Market Wizards series, takes aim at some of the most pervasive market precepts, money management misconceptions, and irrational investor behav- iors. From the theory of efficient markets to buying in up markets and selling in down markets, Schwager turns each misguided idea on its head, one at a time. Supported by a wealth of well-documented historical evidence and a healthy dose of common sense, he exposes the truth about the cherished assumptions and fallacious thinking at the core of some of the most respected investment theories and models and explores many common investor errors. In this book, you'll discover why:

• Expert opinion is NOT more reliable than the proverbial dart-throwing chimp
• The markets are NOT efficient
• Low volatility does NOT necessarily imply low risk, and high volatility does NOT necessarily imply high risk
• Market prices are NOT normally distributed
• Investing in equities when markets are doing well is NOT conducive to achieving above-average returns
• Concentrating on funds with the strongest record of returns is NOT a sound strategy
• Past returns are NOT a reliable indicator of future performance
• A hedge fund portfolio strategy is NOT riskier than a traditional portfolio approach
• VaR does NOT provide a good indication of worst-case risk
• Superior performance does NOT necessarily imply manager skill

But Schwager does much more than simply burst bubbles; he offers a sobering draught of real-world invest- ment insight and guidance spanning both traditional and alternative investment classes. Drawing upon his years as an asset manager and trader, he shares priceless lessons on an array of investing topics, both basic and advanced, including portfolio management, risk assessment, investment selection, hedge fund investing, investment timing, and much more.

Market Sense and Nonsense is an indispensable source of real-world market wisdom and investing know-how for investors of every ilk.

Author Biography

JACK D. SCHWAGER is a recognized industry expert on futures and hedge funds and the author of the widely acclaimed Market Wizards and Schwager on Futures book series. He is currently the co-portfolio manager for the ADM Investor Services Diversified Strategies Fund, a portfolio of futures and FX managed accounts. He is also an advisor to Marketopper, an India-based quantitative trading firm. Previously, Mr. Schwager was a partner in the Fortune Group, a London-based hedge fund advisory firm, which specialized in creating customized hedge fund portfolios for institutional clients, and also spent over twenty years as a director of futures research for some of Wall Street's leading firms.