Marty Schwartz is another rock star trader profiled in Market Wizards. After completing his service in the Marine Corps, Schwartz earned a MBA at Columbia Business School. After graduation, Schwartz became a securities analyst. Following eight frustrating years as a securities analyst, Schwartz became a full time independent trader in 1979. The star trader achieved trading fame during the U.S Trading Championships, run by Norm Zadeh, a professor at Princeton University. In the competition, Schwartz had larger profits than all of the other traders combined, and returned 781 percent in the …

This is part of a series of future posts summarizing and analyzing key points made by traders interviewed in Market Wizards by Jack D. Schwager. Market Wizards is a collection of interviews with some of the world’s most successful traders and investors including Paul Tudor Jones, Michael Steinhardt, and Bruce Kovner. The book is widely recommended by traders and investment professionals and is included on the Sharpe Investing Recommended Reading List.
This first post focuses on a section about Larry Hite titled Respecting Risk. Managing risk is the key focus of Hite’s investment strategy. …

There are now a variety of small cap international exchange traded funds (ETFs). Small cap international exposure can be an important part of investors’ asset allocations. Theoretically, investors who stay the course and invest for the long run can benefit by investing in this asset class that has low correlations to common indexes and high expected returns. The three ETFs this post focuses on are the WisdomTree International Small Cap Dividend Fund (DLS), SPDR S&P International Small Cap ETF (GWX), and the iShares MSCI EAFE Small Cap Index Fund (SCZ).
WisdomTree International Small Cap Dividend Fund (DLS)
DLS tracks the WisdomTree International Small …

As key mortgage financiers Fannie Mae and Freddie Mac face financial crisis combined with continued problems in the brokerage sector, the SEC has restricted short selling in these distressed areas. The plan will last 7 days, starting Monday July 21, with the option to potentially extend the order 30 days. The order has been extended additional days.
In his testimony before the Senate Banking Committee on Tuesday, the regulator’s chairman, Christopher Cox, said that the S.E.C. will issue an emergency order adding a “preborrower requirement” on the shorting of Fannie, Freddie …

I just finished reading Liar’s Poker by Michael Lewis. Liar’s Poker is Lewis’s account of his four years (from 1984-1987) working on Wall Street for Salomon Brothers. This book is also on the Sharpe Investing Recommended Reading List. Lewis details his career from the first days of training to his later success in bond sales and trading.
The book is filled with Wall Street greed, trickery, deceit, innovation, and power struggles. I think this book is an excellent and very enjoyable read, and I would highly recommend Liar’s Poker to anyone interested in …

LIBOR stands for London interbank offered rate. Banks in London, similar to the United States, can exchange money between banks. LIBOR is the rate at which banks borrow funds from other banks in the London interbank market.
LIBOR Calculation
LIBOR is an average of actual rates used by banks. To calculate LIBOR, the British Banker’s Association (BBA), surveys a variety of banks that reflect the general market. The BBA then surveys the different bank’s interbank interest rate quotes. These quotes are made available to the public.
The top and bottom quartile of the …