Episode summary
He Spent 38 Years Studying Elite Traders | Jack Schwager on What Never Changes — And What Just Did
Excess Returns
· · 1 hr 2 min · Guests: Jack Schwager
Summary
Jack Schwager says the newest Market Wizards book captures a younger, more technologically shaped generation of traders than earlier installments. He points to video games, prop firms, and the rise of day trading as part of the ecosystem that produced many of the traders, but argues that the real common thread is still unusual risk control, adaptability, and extreme commitment.
He explains that he looks for either huge account growth from a small base or truly exceptional return-to-risk records, often over 10 years or more. He is skeptical of the Sharpe ratio for these traders because it can understate results when losses are tightly controlled, and he prefers deeper drawdown-based measures. Several of the book’s subjects moved from day trading to swing trading or even longer horizons once they realized they could do better with less screen time and more flexibility.
The conversation highlights extreme case studies: Lukas Froelich’s extraordinary 2020 results, Simon Russo’s journey from a $40,000 loan to nearly $500 million, Christian Kullamägi’s repeated blowups before building over $100 million, Phil Goedeker’s short-selling and options-selling discipline, and Rick Bandazian Jr.’s merger-arbitrage niche with no losing months. Schwager also argues that markets may remain uniquely hard for AI because the same inputs can produce wildly different outcomes.
Key takeaways
- Jack Schwager says he wants 10-plus-year records because even exceptional short bursts can be misleading.
- Schwager argues the Sharpe ratio often understates elite traders because downside control matters more than total volatility.
- Simon Russo’s account grew from $40,000 to nearly $500 million, but Schwager says rule-breaking nearly wiped him out.
- Christian Kullamägi’s repeated account blowups were part of his path, not proof he should quit, because each failure lasted longer before the next one.
- Rick Bandazian Jr. survives merger arbitrage by exploiting small, nuanced deal details that bots are unlikely to catch.
- Schwager thinks AI may struggle in markets because identical inputs can lead to very different price reactions.
Notable quotes
“I'm ultimately looking for a story, you know, has to be a good story”
“we're not talking here sharps of one or two you know we're talking like well in some cases not even calculable”
“The markets are different than anything else that I I could think of”
How the episode opens
You're watching Excess Returns, the channel that makes complex investing ideas simple enough to actually use, where better questions lead to better decisions. I've got the Gandalf the Gray of Finance here. He's back with me. We're doing wizards. We're doing market wizards. It always has to be this way. I'm going to get this excited every time. Jack Schwagger, welcome back to Access Returns.
Yeah, thanks. Appreciate it. — I mean, 40 years now of profiling some of the best traders alive. It's been close. 88. So I guess we're what? 38 years. And — You're at 38. All right. We're going to cross the — Not quite 48.
Not quite. All right. Well, we're not going to age you anymore. We know. I mean, so many of us love this series of books. This one with George Coyle is maybe the Am I correct to say this? Youngest, most riskadjusted cohort we've ever seen in one of the books.
Well, yeah. I mean, definitely the youngest group. Yeah. — This is wild. I feel like this is like watching the World Cup and thinking about the young talents where you go there's just something about the youthfulness of some of these people that blew my mind.
I mean there are certain differences that strike out which which um not strike out is maybe the wrong term but strike one. Um and like for example uh not one not too many qu I don't even remember how many mentioned that video playing video games was kind of an influence uh that they were real real fanatics about video games and they ended up being short-term traders and the skills were compatible. So never any prior market wizard book did I ever have any the subject of video games come up you know.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- market wizards
- trader psychology
- risk management
- return-to-risk measures
- option risk hedging
Companies and tickers mentioned
- CVNA
- Carvana
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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