Book Summary: Market Wizards

Book: Market Wizards (all five books)

Author: Jack D. Schwager

Below I am summarizing my takeaways from all the five Market Wizards books, categorized in a way that find the most intuitive.

General

I assume that the price for a market on any given day is the correct price, and then I try to figure out what changes are occurring that will alter that price… one of the jobs of a good trader is to imagine alternative scenarios. – Bruce Kovner; fx/futures trader

The price is where anyone is prepared to deal, and it can be anything. – Steve Clark; equities trader

You had managers in 2008 who lost 50%, and in some cases as much as 80%. Why? Because they couldn’t accept they were wrong. You had guys saying they were right, the market was wrong, and they had billions of dollars of embedded value in their portfolio. Their job isn’t to create billions of dollars of embedded value in their portfolio; their job is to make the line go from bottom-left to top-right. – Steve Clark; equities trader

Everyone understands that the market is discounting mechanism. What they don’t realize that the discounting mechanism is not price, it’s participation. It’s not that the price has gone from 50 to 100 and therefore the bullish fundamentals are discounted. Instead, it’s everyone is long, and consequently bullish fundamentals are discounted. Amazon provides a great example. When it reached $7-800 level, everyone thought the price was ridiculous. There was a lot of talk about AMZN being a bubble. It was clear though that the majority of people didn’t own it, or they wouldn’t be calling it a bubble. – Jason Shapiro; CTA trader

When to Buy

I can now say that the big trades are pretty simple. You don’t have to go looking for them, but you do have to wait for them…. One of the mistakes I made in those early years that when nothing was going on, I forced marginal trades, wasting mental and financial capital, instead of waiting for the unicorn that would eventually show up.– Amrit Sall; trader

The best trades are when you have all three things going for you:  (a) fundamentals, (b) technicals (charts should move in the direction that the fundamentals suggest), and (c) market tone (bull market should shrug off bearish news, and respond vigorously to bullish news). – Michael Marcus; commodities trader

There are three things that you need to make money in the market. You need a decent fundamental story, a good trend that looks like it will carry on, and market handling news the way you think it should. – Michael Platt; multi-trader PM

Whenever I place a trade, I think “a year from now when I look back at the chart, will I be able to see in the chart the day and the price I took a position? If the answer is yes, then it’s a good trade, regardless of whether it wins or loses. – Peter Brandt; trader

Worst trading mistake, his “going bust” trade happened because of a spur of a moment decision. – Bruce Kovner; fx/futures trader

I’ve always had my biggest setbacks after my biggest victories. I was careless. – Marty Schwartz; equities trader

If you see the market moving up, without any supporting news, and even better, if in the face of negative news, you know it’s a bull market. – Randy McKay; futures trader

The most powerful word in the markets is “despite”. If you hear or see a comment like “Despite the increase in oil inventories being much higher than expected, oil prices closed higher,” that is the tape telling you what is going to happen. – Jason Shapiro; CTA trader

I had no idea of any reason for what was going on in the markets (re unfolding LTCM crisis)… All I knew that T-bond futures were going limit up every day. That told me something unique was going on. I didn’t need to know why. Once you realize something is happening, you can trade accordingly. Trades don’t have to be based in fundamentals. If you wait until you can find out the reason move, it can be too late. A great Soros quote is “Invest first, investigate later”. You don’t need to get fixates on always needing a nice story for the trade. I am an empiricist at heat. The unfolding reality trumps everything. – Colm O’Shea; trader

In both the abandonment of the gold standard in 1971 and in the Mexico default in 1982, I learned that a crisis development that leads to central banks easing and coming to the rescue can swap the impact of the crisis itself. – Ray Dalio; trader

Although I had a directional bias based on my view of the macro environment, I didn’t take the trade until the lira broke out of its two-year trading range. The market had to prove itself before the trade was entered. – Scott Ramsey; trader

If my directional bias is long, I want to buy gold, and if my bias is short, then palladium stands out as the best vehicle for the trade. Novice speculators, however, would tend to do the exact opposite: they would buy platinum as a proxy for gold because “it hasn’t yet made the move”… Buying a laggard for a proxy for a leader is a bad idea. – Scott Ramsey; trader

I am trying to learn to be an earlier convert in thinks that make no sense… If it trades like a bull market, it’s a bull market. Beyond price action… another indication is how passionately people defend things that make no sense. – Colm O’Shea; trader

Sizing Bets

My approach is to build to a larger size as the market is going my way. I don’t put on a trade by saying “My god, this is the level; the market is taking off right from here. – Bill Lipschutz; fx trader

I’ll keep on reducing my trading size as long as I’m losing [ he varies his trade size by a factor of 100:1 ]. – Randy McKay; futures trader

It’s my philosophy, which has been reinforced by Mr. Soros, that when you earn the right to be aggressive, you should be aggressive. The years that you start off with a large gain are the times that you should go for it. – Stanley Druckenmiller; trader

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. – Stanley Druckenmiller; trader

When to Sell

When volatility and momentum become too much. – Michael Marcus; commodities trader

When something happens to disturb my emotional equilibrium and my sense of what the world is like, I close out all positions related to that event – Bruce Kovner; fx/futures trader

A market that is driven by inflows can have small corrections, but it has to immediately recover to new highs to keep generating new inflows. Otherwise, money inflows are likely to dry up, and the market will fall apart. There this type of market is likely to either trends higher or break sharply. – John Bender; options trader

I handle losing streaks by trimming down my activity. Trying to play “catch-up” is lethal. A costly tendency is to get emotional over a loss and then try to get even with an overly large position – Ed Seykota; trader

Don’t ever average losers. Decrease your trading volume when you are trading poorly. – Paul Tudor Jones; trader

One of the things that Tullis [his cotton trading mentor] taught me was the importance of time. When I trade, I don’t just use a price stop, I also use a time stop. If I think a market should break, and it doesn’t, I will often get out even if I am not losing any money. – Paul Tudor Jones; trader

The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. – Ed Seykota; trader

I don’t sit and speculate with a loss. I learned a long time ago that if you speculate with a loss to get less of a loss, you end up with more of a loss. – Peter Brandt; trader

One of the most suicidal things you can do in trading is to keep adding to a losing position. Learn to take losses. The most important thing in making money is not letting you losses get out of hand.– Marty Schwartz; equities trader

There’s a principle I follow… when I get hurt in the market, I get the hell out, because I believe that once you’re hurt in the market, your decisions are going to be far less objective than they are when you’re doing well. It’s not merely a matter of how much you can afford to risk on a given trade, but you also have to consider how many potential future winners you might miss because of the effect of the larger loss on your mental attitude and trading size. – Randy McKay; futures trader

The most crucial thing in trading is mental capital. You need to be in the right headspace for the next trade. I find that when I go into a deep drawdown, my mindset is not right. I might start forcing trades to make money back. I might get gun-shy about taking the next trade. – Richard Bargh; trader

When I am wrong, the only instinct I have is to get out. If I was thinking one way, and now I can see that it was a real mistake, then I am probably not the only person in shock, so I better be the first one to sell. I don’t care what the price is. – Michael Platt; multi-trader PM

George Soros is also the best loss taker I’ve ever seen. He doesn’t care about whether he wins or loses on a trade. If a trade doesn’t work, he’s confident enough his ability to win on the other trades that he can easily walk away from the position. – Stanley Druckenmiller; trader

He (George Soros) didn’t like the price action, so he got out. He doesn’t let his structural views on how he believes the market will play out in the way of his trading. That is what strikes me about really good money managers—they don’t get attached to their ideas… the macro theme has to be testable empirically in the market. – Colm O’Shea; trader

I understand that my edge comes from the fact that I have become so good at taking losses. A trader’s job is to take losses. A losing trade doesn’t imply you did anything wrong. The hard part about trading is that you can do the right thing and still lose money. There is no direct feedback loop that tells you “good job”. – Peter Brandt; trader

If you have a losing position that is making you uncomfortable, the solution is very simple: get out, because you can always get back in. There is nothing better than a fresh start. – Paul Tudor Jones; trader

If you think you’re wrong, or if the market is moving against you and you don’t know why, take in half. You can always put it on again. If you do that twice, you’ve taken in three-quarters of your positions, and what’s left is no longer a big deal. The thing is to start moving your feet. I find that too many traders just stand there and let the truck roll over them. – Steve Cohen; trader

If I really love the trade and get strongly positioned, and then a month later, it still hasn’t moved, alarm bells start ringing in my heads. I think to myself, “That is a really great idea you have, but the market is just not playing ball”. – Michael Platt; multi-trader PM

If there is a sudden range expansion in a market that has been trading narrowly, human nature is to try to fade that price move. When you get a range expansion, the market is sending a very clear signal that market is getting ready to move in the direction of that expansion. – Paul Tudor Jones; trader

When markets are trending up strongly, and there is bad news, the bad news counts for nothing. But if there’s a break that reminds people what it is like to lose money in equities, then suddenly the buying is not so mindless anymore. People start looking at the fundamentals. – Martin Taylor; EM equities trader

Liquidity is very important. This is why when a merger deal breaks, we cut it straight away because you get a pocket of liquidity. It may be at a much lower level, but at least you have the liquidity. If you wait, the liquidity can dry up, and you will be left with an outsized position in what has become a directional trade. – Steve Clark; equities trader

Whenever I am still thinking about my position when I go to sleep, I begin liquidating it the next morning. If I find myself praying about a position at any time, I liquidate it immediately – Mark Ritchie; trader

Hope should never be in your vocabulary. As soon as you say “Boy, I hope this position comes back”, you should reduce your size. – Mark. D. Cook; equities trader

I also realized that by holding on to some of my losing positions for extended periods of time, I was tying up my capital. Therefore, the impact of large losses went beyond the losses themselves, since holding on to these positions were keeping me from making profits elsewhere. – Mark Minervini; equities trader

When to Stay In the Trade

Ed Seykota never got out of anything unless the trend changed. – Michael Marcus; commodities trader

Most important rule is hold on to your winners and cut your losers. Both are equally important. If you don’t stay with the winners, are not going to be able to pay for the losers. – Michael Marcus; commodities trader

People will generally choose a sure gain over a lottery with higher expected gain, but they will shun a sure loss of an even worse lottery, as long as it gives them a chance of coming out ahead. These evidently instinctive human tendencies spell doom for the trader. One common adage on this subject is: you can’t go broke taking profits. That’s precisely how many traders do go broke. Amateurs go broke by taking large losses, professionals go broke taking small profits. The problem in a nutshell is that human nature does not operate to maximize gain but rather to maximize the number of winning trades. This desire to maximize the number of winning trades (or, to minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely correlated to performance. – William Eckhardt; programmatic trader

Two of the cardinal sins of trading—giving losses too much rope and talking profits prematurely—are both attempts to make current positions more likely to succeed, to the severe detriment of long-term performance. – William Eckhardt; programmatic trader

Most people don’t distinguish between drawdowns in open equity (partial surrender of profits in a winning trade) and closed equity (drawdown in a losing trade). If I protected open equity with the same  care I protected closed equity, I would never be able to participate in a long-term move. – Mark Ritchie; trader

I believe that if you’re trading very volatile instruments and you are completely out of the market when it reverses, then you will never get back in again. I will always have some net long exposure even I am bearish. For example in 1Q19, even though I was still very bearish, I was 20% net long. As a result when markets reversed to the upside in March, I didn’t feel bad about buying more, since I had made some of the money on the rebound. It was mentally easy for me to double my net long exposure to 40%.. –Martin Taylor; EM equities trader

Since most small to moderate profits tend to vanish, the market teaches you to cash them before they get away. Since the market spends more time in consolidation than in trends, it teaches you to buy dips and sell rallies. Since the market trades through the same price again and again and seems, if you wait long enough, to return to the price it had visited before, it teaches you to hold on to bad trades. The general idea is that what works most of the time is nearly the opposite of what works in the long run. – William Eckhardt; programmatic trader

Most people are more afraid of making money than losing money… there is no real reason to sell a stock just because it’s up 20%… they are only afraid to losing gains. If the stock is down 20% they won’t sell it. What they’re really afraid of is not being right. That’s why they won’t sell it when it’s down 20%–because that would confirm they were wrong. – Joe Vidich; equities trader

You need to develop a plan of your strategies for various contingencies. That way you won’t get swayed by every news item that hits the market and causes prices to move up or down. – Gary Bielfeldt; t-bond futures trader

Don’t think too much about what the market’s going to do: you have absolutely no control over that. Think about what you’re going to do if it gets there. You shouldn’t spend much time thinking about the rosy scenarios because if that happens, there’s nothing for you to do. Focus instead on those things you want least to happen and what your response should be.– William Eckhardt; programmatic trader

A particularly valuable indicator is if a market doesn’t respond to important news in a way that it should, it is telling you something very important. Another one is something that Ed Seykota taught me, is when the market makes a historic high… no matter how many people tell you why the market shouldn’t be that high, or why nothing has changed, the mere fact that price is at new high tells you something has changed. – Larry Hite; trader

A stock going to new highs is typically a bullish event because the market has eliminated the supply of all previous buyers who had a loss and were waiting to get out at even. That’s why stocks often run rapidly once they hit new ground—at the point there are only happy investors; all the miserable people are out. – Mark Minervini; equities trader

Stops

Whenever I enter a positions, I have a pre-determined stop. I know where I’m getting out before I get in. – Bruce Kovner; fx/futures trader

I start by deciding where the market would have to go for me to be wrong. That’s where I place my stop. The most common money management error I see is people setting stop losses that are really pain thresholds… They will get out because their stop is hit, and they are disciplined. But very soon afterward, they will want to get back in because they don’t think they were wrong. That is how day traders in Nasdaq lost a ton of money… they kept on repeating the same trading mistake. – Colm O’Shea; trader

Tops & Bottoms

Many traders spend too much effort picking tops and bottoms. They try to put their own opinion of what will happen before the market action. – Randy McKay; futures trader

The time to go against hysteria is when market starts moving in gaps. – James B. Rogers, Jr.; trader (formed Quantum with Soros)

We were quite happy to be part of the bubble, but to do it in positions that were highly liquid, so that we could exit the market quickly if we wanted to. One of the biggest mistakes people made was to join in the bubble, but to do it in positions for which there was no exit. All markets look liquid during the bubble, but it’s the liquidity after the bubble that matters. We did a lot of our trades through options… being long options, you can never have a major drawdown. If the bubble continues, you make nice returns; if it collapses, you just lose the premium. – Colm O’Shea; trader

I never use valuation to time the market. I use liquidity considerations and technical analysis for timing. Valuation only tells me how far the market can go once the catalyst (catalyst being liquidity) enters the picture to change the market direction. – Stanley Druckenmiller; trader

Being short equities is a very hard trade because they might still keep going up for a long time. After a bull market that has gone for years, who is managing most of the money? The bears are all unemployed. You have a few very flexible smart people, but they run relatively small amounts of money, so they don’t matter at all either. They managers who are relentlessly bullish will be the ones who end up managing most of the money. So, you shouldn’t expect a big bull market to end up in any rational fashion… You should expect the transition to a bear market to be quite sloe, but then for the move to be enormous when the turn does happen. – Colm O’Shea; trader

I think the natural way to trade a bubble is from the long side, not the short side. Tops are messy, and reversals in bear markets are horrendous. Nasdaq went from 1,500 in late 1998 to over 5,000 in early 2000 without any meaningful corrections. After breaking down in very whippy fashion to under 3,100 in June 2000, the market then rallied back to near 4,300 in the next two months. This was 40 percent rebound in a market that was clearly dead. Postbubble dead cat bounces can be vicious. – Colm O’Shea; trader

Never sell the strongest markets until they fail first. – Scott Ramsey; trader

Value is irrelevant in times of market stress; it’s all about positions. They (market makers) know that markets will trade against positions… Analysts, on the other hand, don’t think about anything else other than how smart they are. – Michael Platt; multi-trader PM

To identify a top in a rising market, you need the uptrend line to be broken. The correct way to draw an uptrend line is from the lowest low to the highest low immediately preceding the highest high, making sure the line doesn’t pass through any prices between the two points. Once the trend line is broken, I look for an unsuccessful test of the recent high. The third and final confirmation would be downward penetration of the most recent relative low.– Victor Sperandeo; options trader

Do you know what happens in a bull market? Prices open up lower and they go up rest of the day. In a bear market, they open up higher and go down rest of the day. When you get to the end of a bull market, prices start opening up higher. – Joe Vidich; equities trader

Mental State

I think it’s very important for everybody to come to a point when they feel inside that the universe is friendly. – Michael Marcus; commodities trader

I am able to win at such a high percentage of time because I have a real fear of the market. I have found the greatest traders are the ones who are most afraid of the markets. – Mark Weinstein; trader

No matter how successful you become, if you let your ego get involved, then one bad call can put you out of business. – Stuart Walton; equities trader

Being preoccupied with not losing interferes with winning. Trading not to lose is not a good strategy. You need to trade to win. – Ari Kiev; psychiatrist at S.A.C.

Fear cripples people who have been in the business too long. Very few people maintain their ability to take risk throughout their career. Most don’t. Most can’t. They have had too many bad things happen to them, too many fat tails, and it damages people. – Steve Clark; equities trader

You have to maintain your perspective. There is more to life than trading. – Richard Dennis; commodities trader

You hear many traders say that you have to do the opposite of your gut response—when you feel good about a position, you should sell, and when you feel terrible about it, you should buy more. In the beginning that’s true, but as you condition yourself for abnormal response, somewhere along the line, you get skilled. Then your gut becomes right.– Mark Minervini; equities trader

Emotions are your friend, not your enemy. Part of my trading process is to ask myself where I am on the emotional scale. Am I highly afraid? Am I highly greedy? What is your respect for the risk level right now?.– John Netto; trader

Being emotionally deflated would mean lacking conviction in what I am doing. It is misleading to focus on short-term results… but on the flip side, I also avoid the emotional elation when things are going well. There is no way to play just one side of the street. – Richard Dennis; commodities trader

When you’re in a losing streak, your ability to properly assimilate and analyze information starts to become distorted because of the impairment of the confidence factor. You have to work very hard to restore that confidence, and cutting back trading size helps achieve that goal. – Bill Lipschutz; fx trader

Whenever I am down, the frequency of my trading steps up… I increase my activity, not my exposure. I don’t get out of the trade that is hurting me completely; I just reduce the position size. Then the next trade I do, I feel compelled to make money. It doesn’t even matter how much. The point is to rebuild my confidence. – Mark. D. Cook; equities trader

Making Mistakes

You have to be willing to make mistake regularly; there is nothing wrong with it. – Bruce Kovner; fx/futures trader

Most traders lose money because they’d rather lose money than admit that they were wrong. What is the ultimate rationalization of a trader in a losing position? “I’ll get out when I’m even” Why is getting even so important? Because it protects the ego. – Marty Schwartz; equities trader

You have to learn how to lose; it is more important than learning how to win. If you think you are always going to be a winner, when you lose, you will develop feelings of hostility and end up blaming the market instead of trying to learn why you lost. Limit losses quickly. – Mark Weinstein; trader

A lot of losing traders I have known thought they had to make money consistently. They had a paycheck mentality. At best, I am right only 50% of the time, and sometimes I am right only 30% of the time. However, when I am right 30% of the time, I am earning eight times as much on my winners as I am losing on my losers. Traders have to ask themselves whether they can handle being right only 30% of the time, or do they feel they have to be right day after day? It is that latter perspective that holds a lot of people back. – Amrit Sall; trader

Risk Parity

When economic growth expectations are volatile, stocks and bonds will be negatively correlated because if growth slows, it will cause both stock prices and interest rates to decline. However, in an environment where inflation expectations are volatile, stocks and bonds will be positively correlated because interest rates will go up with higher inflation, which is detrimental to both bonds and stocks . – Ray Dalio; trader

Options Trading

We love long-term options. Options math works a lot better over short intervals. Once you extend the time horizon, all sorts of exogenous variables are introduced that can throw a wrench into the options-pricing model… the models assume that volatility increases with the square root of time. This assumption may provide reasonable approximations for shorter term intervals, say one year or under, but if you have a very low standard deviation, and you extend it for a very long time, it doesn’t scale properly. For example, if a one-year standard deviation is 5%, assuming that the nine-standard deviation will only be 15% is probably an underestimate. – Jamie Mai; trader

Black-Scholes model doesn’t make these type of distinctions. If gold is trading at $405, it assumes that the probability that it will be trading at $360 a month from now is smaller than the probability that it will be trading at $385. What I’m saying is that under the right circumstances, it might actually be more likely that gold will be trading at $360 than at $385. – John Bender; options trader

Technical Analysis

Technical analysis is like a thermometer. It reflects the vote of the entire marketplace and thus, does pick up unusual behavior. – Bruce Kovner; fx/futures trader

Most things that look good on a chart—say, 98%–don’t work. The human mind was made to create pattern. “Too fine an eye for pattern will find it anywhere.” – William Eckhardt; programmatic trader

One reason why many types of technical analysis don’t work too well is because such methods are applied indiscriminately. For example, if you see a H&S patter in a young market, market is not going to die so quickly, however, if you see the same formation in an old market, there’s much better chance of that pattern being an accurate indicator of a price top. – Victor Sperandeo; options trader

There is a danger when people start thinking of charts in terms of forecasting. Charts are wonderful in finding specific spots for asymmetric risk/reward trades. Large long-term patterns no longer work. Trendlines no longer work. Channels no longer work. Symmetrical triangles no longer work. The only thing I have found that still works are patterns that are shorter-term—less than a year and preferably less than 26 weeks—that have a horizontal boundary (could include H&S, ascending and descending triangles, and rectangular consolidations. – Peter Brandt; trader

What is unique about the stock market is that it has far more short-term countertrends vs other markets. – Bruce Kovner; fx/futures trader

Demonstrably commodities are trending, and stocks are random. – Richard Dennis; commodities trader

You can tell a lot by volume. If the volume doubles one day and the stock moves to a new high, it is telling you people are interest in the stock and buying it. – David Ryan; equities trader

When a stock that has been moving up starts consolidating, you want to see the volume dry up. You want to see a downtrend in volume. Then when the volume starts picking up again, it could mean the stock is ready to blast off. On the other hand, if you continue to see high volume in a consolidation phase, it could mean a lot of people are getting out of the stock. – David Ryan; equities trader

One of the best patterns is when a stock goes sideways for a long time in a narrow range and then has a sudden sharp upmove on large volume. That type of price action is a wakeup call. – Joe Vidich; equities trader

In the stock market, the one indicator I give the greatest weight is the 200d MA. I wouldn’t recommend this as a sole input for making trading decisions, but it does add a bit of useful information to supplement other methods and forms of analysis.– Victor Sperandeo; options trader

I usually go with breakouts. Tight congestions in which breakout occurs for reasons no one understands are usually good risk/reward trades. – Bruce Kovner; fx/futures trader

To get superior performance is not to buy stocks that are near their lows, but to buy stocks that are coming out of broad bases and beginning to make new highs relative to the preceding price base. You don’t want to anticipate a breakout from a base because a stock may never break out. The idea is to buy when there is least probability of a loss. – William O’Neil; equities trader

I don’t like to buy retracements. It is psychologically seductive because you feel like you’re getting a bargain, however the approach contains more than a drop of poison. If the market has retraced enough to make a difference to your purchase price, the trade is not nearly as good as it once was. – William Eckhardt; programmatic trader

Relative strength shows you what the stock has already done. Often by the time you get strong relative strength, the trend  has already exhausted itself. – Michael Marcus; commodities trader

I look for relative strength—at least above 80, and preferably over 90. I avoid buying the highs because I rule out the stocks that are overextended from their base. – David Ryan; equities trader

Overbought/oversold indicators don’t seem to prove out in testing. – Larry Hite; trader

Overbought/oversold type indicators such as RSI and stochastics are nearly worthless. – William Eckhardt; programmatic trader

RSI doesn’t work as an overbought indicator because stocks can remain overbought for a very long time. But a stock being oversold is usually an acute phenomenon that lasts for only a few weeks. –Martin Taylor; EM equities trader

If Nasdaq, a higher beta index, is lagging the Dow, a lower beta index, when the market is up—which is not the price action you expect—and I am long equity-correlated positions, then I short Nasdaq. – Jason Shapiro; CTA trader

Market almost always tells you where it’s going… from the variety of technical input in the stock market (divergence, advance/decline, sentiment, put/call ratio etc). – Mark Weinstein; trader

Simple trend-following methodologies will work again only in a period of high inflation. In stable, moderate rates of inflation, technical trading systems will kill each other off. – Bruce Kovner; fx/futures trader

Shorting

There is no high for a concept stock. It is always better to be long before they have already moved a lot than to try to figure out where to go short. – Joe Vidich; equities trader

The emerging markets are full of sectors where multinationals want exposure, and the only companies they can generally take over are bad companies…. You need to triangulate between the company, the government, and the regulator… it is much more difficult for a foreign firm to take get approval for a takeover of a local compare that is doing well, or about to do well, because the authorities will fear being seen as “selling out” to foreigners. Whereas if it is a bad company, the government and the regulators are much more likely to approve the acquisition because it will be seen as saving the company and saving jobs. –Martin Taylor; EM equities trader

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