If you have not yet read the Market Wizards Remembered piece on Stanley Druckenmiller please do so now. The following video is never before seen or released information about Jack’s interview with Stanley Druckenmiller and what he most remembers about the experience:

As the Chief Research officer of FundSeeder, Schwager plans to select traders discovered via FundSeeder as interview subjects for his next Market Wizards book, tentatively titled Undiscovered Market Wizards. If you would like an opportunity to be featured in this book or to be selected to manage investor capital, or if would just like to enjoy a great trading analytics platform free of charge, click on the link below to sign up for FundSeeder today.

WHAT DRUCKENMILLER LEARNED FROM SOROS

The Market Wizards series is a collection of books written by Jack Schwager that captures the philosophies, traits, experiences, and advice of great traders, seeking to draw out lessons that could help all traders from novices to professionals.

In The New Market Wizards, Schwager interviewed Stanley Druckenmiller, an asset manager who worked his way up from stock analyst to running his own fund, Duquesne Capital Management. After being recruited by Dreyfus, Druckenmiller continued to run his own fund, as well as seven of their funds—an overburdening workload that ultimately contributed to his decision to leave Dreyfus for Soros Management. He continued to run his own Duquesne fund, which achieved an average annual return of near 30% return over its 30-year lifespan, without any losing years. Druckenmiller is widely considered to be one of the best fund managers of all time. The following excerpts from The New Market Wizards focus on Duckenmiller’s experiences and the lessons he learned in working for George Soros, the man he considered to be the best trader he knew.                

Getting back to your career path, why did you leave Dreyfus?

I felt that I was managing too many funds—seven at the time I left. In addition to the actual management, each fund also required speaking engagements and other activities. For example, each fund held four board meetings per year.                               

How could you possibly find the time to do all that?

I couldn’t; that’s why I left. During this entire time period, I had been talking to Soros on an ongoing basis. The more I talked to him, the more I began to realize that everything people had told me about him was wrong.                         

What had they told you?

There were all these stories about turnover at the firm. George had a reputation for paying people well but then firing them. Whenever I mentioned that Soros had tried to hire me, my mentors in the business adamantly advised me not to go.                                       

Soros had actually started referring to me as his “successor” before I ever joined the firm. When I went to Soros’s home to be interviewed, his son informed me that I was his tenth “successor.” None of the others had lasted too long. he thought it was hysterical. And when I arrived at Soros’s office the next day, the staff all referred to me as “the successor.” They also thought it was very funny.                                      

Did you consider simply going back and managing your Duquesne Fund full-time after you left Dreyfus?

That was certainly an option. In fact, Duquesne’s assets under management had grown tremendously without any marketing at all simply because of all the publicity I had received from the strong performance of the Dreyfus funds.                                     

Why didn’t you go that route?

Quite simply, because George Soros had become my idol. He seemed to be about twenty years ahead of me in implementing the trading philosophy I had adopted: holding a core group of stocks long and a core group of stocks short and then using leverage to trade S&P futures, bonds, and currencies. I had learned a tremendous amount just in my conversations with Soros. I thought it was a no-lose situation. The worst thing that could happen was that I would join Soros and he would fire me in a year—in which case I would have received the last chapter of my education and still have had the option of managing Duquesne. In the best case, it would all work out.                                       

Did your relationship with Soros change once you started working for him?                                       

The first six months of the relationship were fairly rocky. While we had similar trading philosophies, our strategies never meshed. When I started out, he was going to be the coach and he was an aggressive coach. In my opinion, George Soros is the greatest investor that ever lived. But even being coached by the world’s greatest investor is a hindrance rather than a help if he’s engaging you actively enough to break your trading rhythm. You just can’t have two cooks in the kitchen; it doesn’t work. Part of it was my fault because he would make recommendations and I would be intimidated. After all, how do you disagree with a man with a track record like his?                                       

Events came to a head in August 1989 when Soros sold out a bond position that I had put on. he had never done that before. To make matters worse, I really had a strong conviction on the trade. Needless to say, I was fairly upset. At that point, we had our first let-it-all- out discussion.                                       

Basically, Soros decided that he was going to stay out of my hair for six months. Frankly, I wasn’t too optimistic about the arrangement because I thought that he had been trying to do that all along but was simply incapable of it. The situation was saved, however, by events heating up in Eastern Europe in late 1989. As you may know, transforming Eastern Europe and the Soviet Union from communist to capitalist systems has been Soros’s main endeavor in recent years. he has set up foundations in eleven countries to help achieve this goal. with George off in eastern Europe, he couldn’t meddle even if he wanted to.                                       

Everything started to come together at that time. Not only was I trading on my own without any interference, but that same eastern European situation led to my first truly major trade for Soros’s Quantum Fund. I never had more conviction about any trade than I did about the long side of the Deutsche mark when the Berlin wall came down. One of the reasons I was so bullish on the Deutsche mark was a radical currency theory proposed by George Soros in his book, The Alchemy of Finance. His theory was that if a huge deficit were accompanied by an expansionary fiscal policy and tight monetary policy, the country’s currency would actually rise. The dollar provided a perfect test case in the 1981-84 period. At the time, the general consensus was that the dollar would decline because of the huge budget deficit. However, because money was attracted into the country by a tight monetary policy, the dollar actually went sharply higher.                                      

When the Berlin wall came down, it was one of those situations that I could see as clear as day. West Germany was about to run up a huge budget deficit to finance the rebuilding of East Germany. At the same time, the Bundesbank was not going to tolerate any inflation. I went headlong into the Deutsche mark. It turned out to be a terrific trade.                                     

How large a position did you put on?

About $2 billion.                                       

Did you have any difficulty putting on a position that size?

No, I did it over a few days’ time. Also, putting on the position was made easier by the generally bearish sentiment at the time. The Deutsche mark actually fell during the first two days after the wall came down because people thought that the outlook for a growing deficit would be negative for the currency.

Your long-term performance has far surpassed the industry average. To what do you attribute your superior track record?

George Soros has a philosophy that I have also adopted: The way to build long-term returns is through preservation of capital and home runs. You can be far more aggressive when you’re making good profits. Many managers, once they’re up 30 or 40 percent, will book their year [i.e., trade very cautiously for the remainder of the year so as not to jeopardize the very good return that has already been realized]. The way to attain truly superior long-term returns is to grind it out until you’re up 30 or 40 percent, and then if you have the convictions, go for a 100 percent year. If you can put together a few near-100 percent years and avoid down years, then you can achieve really outstanding long-term returns.

What else have you learned from Soros?

I’ve learned many things from him, but perhaps the most significant is that it’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong. The few times that Soros has ever criticized me was when I was really right on a market and didn’t maximize the opportunity

As an example, shortly after I had started working for Soros, I was very bearish on the dollar and put on a large short position against the Deutsche mark. The position had started going in my favor, and I felt rather proud of myself. Soros came into my office, and we talked about the trade.

“How big a position do you have?” he asked.

“One billion dollars,” I answered.

“You call that a position?” he said dismissingly. He encouraged me to double my position. I did, and the trade went dramatically further in our favor.

Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig. It takes courage to ride a profit with huge leverage. As far as Soros is concerned, when you’re right on something, you can’t own enough.

Although I was not at Soros Management at the time, I’ve heard that prior to the Plaza Accord meeting in the fall of 1985, other traders in the office had been piggybacking George and, hence, were long the yen going into the meeting. When the yen opened 800 points higher on Monday morning, these traders couldn’t believe the size of their gains and anxiously started taking profits. Supposedly, George came bolting out of the door, directing the other traders to stop selling the yen, telling them that he would assume their position. While these other traders were congratulating themselves for having taken the biggest profit in their lives, Soros was looking at the big picture: The government had just told him that the dollar was going to go down for the next year, so why shouldn’t he be a pig and buy more [yen]?

Soros is also the best loss taker I’ve ever seen. He doesn’t care whether he wins or loses on a trade. If a trade doesn’t work, he’s confident enough about his ability to win on other trades that he can easily walk away from the position. There are a lot of shoes on the shelf; wear only the ones that fit. If you’re extremely confident, taking a loss doesn’t bother you.

How do you handle the pressure of managing a multibillion-dollar portfolio?

I’m a lot less nervous about it now than I was a few years ago. The wonderful thing about our business is that it’s liquid, and you can wipe the slate clean on any day. As long as I’m in control of the situation— that is, as long as I can cover my positions—there’s no reason to be nervous.

The Undiscovered Market Wizards Search

Jack Schwager is one of the cofounders of FundSeeder (fundseeder.com) a new online technology company that provides traders with a free graphic and analytics platform, as well as offering traders worldwide the opportunity to get discovered. FundSeeder’s technology allows traders to verify their track records, benefit from performance analytics and risk management tools, access an emerging manager support structure, find potential trader employment opportunities and, if regulated, connect with investors.

As the Chief Research officer of FundSeeder, Schwager plans to select traders discovered via FundSeeder as interview subjects for his next Market Wizards book, tentatively titled Undiscovered Market Wizards. If you would like an opportunity to be featured in this book or to be selected to manage investor capital, or if would just like to enjoy a great trading analytics platform free of charge, click on the link below to sign up for FundSeeder today.

If you have not yet read the Market Wizards Remembered piece on Jim Rogers please do so now. The following video is never before seen or released information about Jack’s interview with Jim Rogers and what he most remembers about the experience:

As the Chief Research officer of FundSeeder, Schwager plans to select traders discovered via FundSeeder as interview subjects for his next Market Wizards book, tentatively titled Undiscovered Market Wizards. If you would like an opportunity to be featured in this book or to be selected to manage investor capital, or if would just like to enjoy a great trading analytics platform free of charge, click on the link below to sign up for FundSeeder today.

JAMES ROGERS ON PATIENCE AND FADING HYSTERIA

The Market Wizards series is a collection of books written by Jack Schwager that captures the philosophies, traits, experiences, and advice of great traders, seeking to draw out lessons that could help all traders from novices to professionals. The following is an excerpt from Jack about Jim Rogers. A new never before seen video recalling this interview will be hosted to FundSeeder tomorrow. (Since the original publication of this post the Jim Rogers video has been hosted here)

In Market Wizards, the first book of the series, Schwager interviewed James B. Rogers, a phenomenally successful trader, although he would insist on calling himself an “investor,” as opposed to “trader” because of the long-term nature of his market positions. In 1973, he partnered with George Soros to start the Quantum Fund, one of the most successful hedge funds of all time. Rogers left Quantum in 1980 because the firm’s success had led to expansion and with it unwanted management responsibilities. Rogers just wanted to focus on market research and investment, so he “retired” to mange his own money.

Rogers is particularly skilled in seeing the big picture and anticipating major long-term trends. When I interviewed him in 1988, gold had been declining for eight years, but Rogers seemed certain the bear market would carry on for another decade.

“General always fight the last war,” he said. “Portfolio managers always invest in the last bull market. The idea that gold has always been a great store of value is absurd. There have been times in history when gold has lost purchasing power—sometimes for decades.”

Rogers was absolute right as gold continued to slide for anther eleven years. Another market he was particularly opinionated about was the Japanese stock market. At the time, Japanese equities were in the midst of an explosive bull market. Yet, Rogers was convinced there would be a tremendous move in the opposite direction.

“I guarantee that the Japanese stock market is going to have a major collapse—possibly within the next year or two…[Their stocks] are going to go down 80 to 90 percent.”

This forecast seemed preposterous, yet it was absolutely correct. A little over a year after our conversation the Japanese stock market peaked, beginning a slide that would see the Nikkei index lose about 80% of its value over the next 14 years.

The following excerpts from Market Wizards focus on Rogers’s investing philosophy, advice to investors and traders, and his rather cynical view of chart analysis.

It sounds like you have a great deal of conviction when you put on a trade.

Yes, I usually do; otherwise, I don’t bother doing it. One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do. Most people—not that I’m better than most people—always have to be playing; they always have to be doing something. They make a big play and say, “Boy, am I smart, I just tripled my money.” Then they rush out and have to do something else with that money. They can’t just sit there and wait for something new to develop.

Do you always wait for a situation to line up in your favor? Don’t you ever say, “I think this market is probably going to go up, so I’ll give it a shot”?

What you just described is a very fast way to the poorhouse. I just wait until there is money lying in the corner, and all I have to do is go over mere and pick it up. I do nothing in the meantime. Even people who lose money in the market say, “I just lost my money, now I have to do something to make it back.” No, you don’t. You should sit there until you find something.

Trade as little as possible.

That is why I don’t think of myself as a trader. I think of myself as someone who waits for something to come along. I wait for a situation that is like the proverbial “shooting fish in a barrel.”

What is the biggest public fallacy regarding market behavior?

That the market is always right. The market is nearly always wrong. I can assure you of that.

What else?

Never, ever, follow conventional wisdom in the market. You have to learn to go counter to the markets. You have to learn how to think for yourself; to be able to see that the emperor has no clothes. Most people can’t do it. Most people want to follow a trend. “The trend is your friend.” Maybe that is valid for a few minutes in Chicago, but for the most part, following what everyone else is doing is rarely a way to get rich. You may make money that way for a while, but keeping it is very hard.

But actually, your whole style of trading involves staying with a trend for years. So isn’t what you are saying contradictory?

That kind of trend—a trend that is economically justified—is dif­ferent. You have to see the supply/demand balance change early, buy early, and only buy markets that are going to go on for years. By “trend following,” I meant buying a market just because it goes up and selling it just because it goes down.                                     

“What trading rules do you live by?

Look for hysteria to see if you shouldn’t go the opposite way, but don’t go the opposite way until you have fully examined the situation. Also, remember that the world is always changing. Be aware of change. Buy change. You should be willing to buy or sell anything. So many people say, “I could never buy that kind of stock,” “I could never buy utilities,” “I could never play commodities.” You should be flexible and alert to investing in anything.                                                                                

If you were counseling the average investor, what would you tell him?

Don’t do anything until you know what you are doing. If you make 50 percent two years in a row and then lose 50 percent in the third year, you would actually be worse off than if you just put your money in a money market fund. Wait for something to come along that you know is right. Then take your profit, put it back in the money market fund, and just wait again. You will come out way ahead of everybody else.                                                                             

Are you ever wrong on a major position play? That is, are one of your almost sure shots ever wrong, or are they so well selected that they just invariably go?

I don’t want to make it sound like I don’t know how to lose money—because I know how to lose money better than most people—but there has not been a major mistake in a long time. But you have to remember that I don’t trade that often. It is not as though I’m making three decisions a month. I may make three decisions a year, or five decisions a year, and I’ll stay with them.                                                                                

How often do you make a trade?

Well, there is a difference between making a trade and deciding to buy bonds in 1981. I’ve owned bonds since 1981, but I sell around the position. I make trades, but basically I own them. I went short the dollar at the end of 1984. Now, I have made a fair amount of trades in currencies since the end of 1984, but it is basically one trade with a lot of trades around it.                                                                       

Very few investors or traders are as successful as you have been over time. What makes you different?

I don’t play. I just don’t play.                                                                    

I can understand that. But still, very few people can analyze the same fundamentals you are looking at and so consistently be correct in assessing all the variables.

Just don’t do anything until you know you’ve got it right. As an example, until you see American agriculture hit a low, then no matter what happens in the world—unless the world is going to stop eating—you can’t go wrong. American agriculture is now so competitive, and so many marginal farmers have been washed out, that it has to go up. You just watch American agriculture deteriorate, deteriorate, deteriorate, and then you buy. You may buy early or late. In my case, usually a little bit early. But, so what? The worst that happens is you bought it too early. Who cares?                                                                             

Is there anything else besides the fact that you are very selective that sets you apart?

I have no boundaries. I am totally flexible. I am open to everything, and I pursue everything. I have no more compunction about speculating in Singapore dollars or shorting Malaysian palm oil than I do about buying General Motors.                                                                           

What happens when you have one scenario for currencies, one for the stock market, one for the bond market, and not everything meshes?

Then I won’t do anything. It happens all the time. I don’t do anything until all the pieces fit.                                                                         

What is your opinion about chart reading?

I haven’t met a rich technician. Excluding, of course, technicians who sell their technical services and make a lot of money.                                                                        

Do you use charts yourself?

Yes, I look at them every week. I use them for knowledge, to see what is going on. I learn a lot about what is going on in the world by looking at charts.                                                                                    

But you don’t ever look at charts and say, “I’ve seen this type of pattern before and it usually means the market is topping.”

I look at charts to see what has happened.                                                                                  

Not what will happen?

What has happened. If you don’t know what has happened, you’ll never know what is going to happen. The charts say to me that there is a runaway bull market. They give me facts, but that’s it. I don’t say—what is that term you used earlier, reversal?—there is a reversal here. I don’t even know what a reversal is.                                                                                    

A reversal simply is—

Don’t tell me. It might mess up my mind. I don’t know about those things, and I don’t want to know.                                                                                                                                                                    

Any last words?

Good investing is really just common sense. But it is astonishing how few people have common sense—how many people can look at the exact same scenario, the exact same facts and not see what is going to happen. Ninety percent of them will focus on the same thing, but the good investor—or trader, to use your term—will see something else. The ability to get away from conventional wisdom is not very common.

The Undiscovered Market Wizards Search

Jack Schwager is one of the cofounders of FundSeeder (fundseeder.com) a new online technology company that provides traders with a free graphic and analytics platform, as well as offering traders worldwide the opportunity to get discovered. FundSeeder’s technology allows traders to verify their track records, benefit from performance analytics and risk management tools, access an emerging manager support structure, find potential trader employment opportunities and, if regulated, connect with investors.

As the Chief Research officer of FundSeeder, Schwager plans to select traders discovered via FundSeeder as interview subjects for his next Market Wizards book, tentatively titled Undiscovered Market Wizards. If you would like an opportunity to be featured in this book or to be selected to manage investor capital, or if would just like to enjoy a great trading analytics platform free of charge, click on the link below to sign up for FundSeeder today.

FundSeeder is proud to announce a new, exclusive, video content series featuring the work of co-founder Jack Schwager.  Schwager, a trading industry icon, is the author of The Market Wizards series of books. Jack’s books capture the philosophies, traits, experiences, and advice of great traders.  The series seeks to draw out lessons that have helped traders from novices to professionals improve their trading knowledge.

Throughout the fall of 2016 FundSeeder will be releasing never before seen material as part of what it is calling the “Market Wizards Remembered” series. This series will provide Market Wizards fans with never before seen nor heard recollections of what Jack found most interesting from some of his most famous interviews. The series will feature new video content where Jack will recall his interviews with Blair Hull, Ed Seykota, Ed Thorp, James Rogers, Bruce Kovner, Michael Marcus, Monroe Trout, Paul Tudor Jones, Marty Schwartz, and Stanley Drukenmiller to name just a few of the more famous traders featured in the Market Wizards series.

This exciting new material will begin to be released the week of September 19^th, 2016 and will continue to be distributed until the start of the New Year. Jack’s videos as well as selected extracts from his original work will be provided exclusively via the FundSeeder Blog. Traders who are interested in following Jack throughout the series should be sure to bookmark the page and are free to share content with their friends within the trading community when they see fit.

FundSeeder was featured in this month’s Futures Magazine/Modern Trader feature article Finding the Next Top Traders. In the article FundSeeder Technologies’ educational “trader stages” concept is showcased and discussed. Readers can also catch great quotes from the FundSeeder executive team who was interviewed for the story:

The allocators who are signing on with FundSeeder Investments are all institutional. “These are first adopters, people who are going to be allocating to emerging guys. They prefer guys with $500K to $1 million [AUM],” Balarie says.

“These investors who contact us through FundSeeder Investments are doing so because they believe in emerging managers, and they believe that the edge in finding emerging managers is finding them first,” Balarie says. “They may want to allocate to capacity constrained markets or negotiate fees; they come to us and we are handling the introduction. They know exactly what they are looking for to a granular detail. We say give us a mandate, tell us what you are looking for, how much you are looking to deploy, how much per manager because we have managers on our shelf that might be exactly what they are looking for.”

FundSeeder CEO Emanuel Balarie was recently in Chicago to speak about financial technology and FundSeeder’s role in disrupting the trading industry.  Balarie spoke alongside several of the industry’s major players about the FundSeeder software and its capabilities.  FundSeeder’s vision of creating a marketplace for both traders and investors was well received by members of one of the nations largest brokerage industry associations.

Joining FundSeeder on stage was Trading Technologies CEO Rick Lane who had previously been named to Crain’s “40 under 40” list. Also at the event was Barchart CEO Mark Haraburda.  CME Group of Chicago, a leader in Financial Technology innovation, joined the conversation by placing a technologist on the panel. The event was hosted at CME Group’s global head quarters to mark the NIBA’s 25th anniversary as a brokerage industry trade association.