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11 “AS HUMANS WE HAVE EVOLVED TO SEEK COMFORT. BUT, THE MARKET PAYS YOU FOR DOING THE UNCOMFORTABLE THING.” —JACK SCHWAGER
12 EXPERT INSIGHTS SCHWAGER: INVESTORS ARE THEIR OWN WORST ENEMY By Kira Brecht If you only read one book on the markets this year, it should be Market Sense and Nonsense, Jack Schwager's latest book, which debunks many traditional and widely accepted market perceptions. "Almost everything you think you know about investment is wrong," Jack D. Schwager told TraderPlanet in an exclusive interview. "Investors or traders are their own worst enemy. There are some things we want to do as humans that are just wrong for both trading and investing," Schwager explained. Schwager, a long-time futures market expert, has authored many books including the popular Market Wizards series. What makes Schwager's books so valuable is that they offer key insights and lessons to industry professionals yet are still easily understood by individual investors. Schwager's new book is no different. Through the chapters, he tackles widely accepted investing truisms, and reveals the hard numbers on why the opposite is often true. Portfolio managers and individual investors alike will glean valuable takeaways that they can implement to help boost their overall investing success. Pointing to his interview with Bill Eckhardt from The New Market Wizards, Schwager paraphrased Eckhardt’s view of why most traders lose by saying that "as humans we have evolved to seek comfort. But, the market pays you for doing the uncomfortable thing." Human Factor If you are a true believer in the "efficient market hypothesis" Schwager's book will help you see this theory from a new angle. He highlights its flaws and a key missing ingredient—the role of human emotions. Anyone who has traded knows first-hand the roller coaster of feelings that can sweep one away in the euphoria of a huge winner or the devastation of a larger-than-expected loss. And, perhaps in part because of these factors, markets do tend to overshoot on the upside and also on the downside. Continued on Next Page A Market Wizards Dozen: Key Lessons for All by Jack Schwager CLICK RELATED READING R HE E