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Alternative Market Briefing

Jack Schwager's new book debunks commonly held myths about investing

Friday, December 28, 2012

Bailey McCann, Opalesque New York:

"This is the most important book that I have done," Jack Schwager says of his latest release- Market Sense and Nonsense in a recent Opalesque TV interview. "It’s a compilation of everything I have learned about what’s right and wrong with investment, trading and performance evaluation," he says. In the book, Schwager seeks to separate the facts from the fiction in current market folklore in order to help investors and professionals alike gain a deeper understanding about how the market really operates.

For readers, one of the big surprises may be that Schwager says picking the best performing strategies may actually be the wrong thing to do. He says that picking the best recent performer rarely equates to similar future returns. By way of an example, Schwager picks the best 10 S&P sectors and best hedge fund strategies over different time horizons. "Bottom line, what I came up with is no matter how you do this exercise, you almost consistently find that picking the best does worse than the average. So certainly in return risk terms it's even more extreme."

He explains that if investors instead divided their investments among all hedge fund strategies rather than picking the best at a given time, they will do better. Even more surprising his data shows that picking the worst performing stra......................

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