Futures: Fundamental Analysis [Hardcover]

Jack D. Schwager (Author), Steven C.  Turner (Author)

Book Description

Publication Date: May 15, 1995 | ISBN-10: 0471020567 | ISBN-13: 978-0471020561 | Edition: 1

The must-have book for all futures traders

In Fundamental Analysis, the legendary Jack D. Schwager has produced the most comprehensive, in-depth book ever written on the use of fundamental analysis for futures trading. In what is destined to become the bible of the futures industry, Schwager has poured out insights gathered during his long career as a trader, researcher, bestselling writer, and highly regarded authority in the field.

This book is packed with invaluable information you'll use every trading day. "Futures guru Jack Schwager has created the definitive source on using fundamental analysis for price forecasting that no trader can afford to be without." -Tom Baldwin Chairman, Baldwin Group

"This book won't make you a great commodities trader instantly, but it will teach you what you must know to start." -Jim Rogers Author, Investment Biker

"Jack Schwager always provides clear and compelling material on the often opaque subject of futures trading." -Richard Dennis President, Dennis Trading Group

"Jack Schwager's deep knowledge of the markets and his extensive network of personal contacts throughout the industry have set him apart as the definitive market chronicler of our age." -Ed Seykota

Fundamental Analysis is the first book in the Schwager on Futures series-the definitive source on the futures market for the next century that no trader will want to be without.

Jack Schwager is one of the most important and visible figures in the futures industry today. His Market Wizards and New Market Wizards are two of the bestselling finance titles of all time. Now Schwager has created the most comprehensive guide ever for using fundamental analysis for futures trading. The much-awaited Schwager on Futures series greatly expands and updates material first contained in his A Complete Guide to the Futures Markets, which has been the bible of the industry for the past decade.

In this first volume of the series, Fundamental Analysis, Schwager shows traders how to apply analytical techniques to actual price forecasting and trading in virtually all futures contracts currently traded. In chapter after chapter, Schwager draws on what he has learned during his legendary career as a successful trader, researcher, and bestselling investment author to dispense priceless insights.

Explains how to apply the techniques of technical analysis to fundamental data-information not found elsewhere
* Shows how regression analysis works and tells how to use it as a tool for price forecasting
* Includes step-by-step instruction on how to build a forecast model
* Contains a 13-chapter section illustrating the applications of fundamental techniques to individual markets and market groups
* Outlines how to analyze seasonal fluctuations, including seasonal price charts of 27 active markets

Numerous charts, tables, and examples illustrate all key concepts, and the text itself is written in the clear, nontechnical style that has helped make Jack Schwager one of today's most widely read and highly regarded investment writers.

Editorial Reviews

From Booklist

Schwager is best known for his two highly popular "market wizard" books, which consist of interviews with successful futures traders and detail their investment philosophies and strategies. His Complete Guide to the Futures Markets has been a standard reference on the subject since 1984. Now he provides this comprehensive look at fundamental analysis, the investment technique that takes into account a product's or a company's financial performance and basic condition and looks at the state of related industry segments. Schwager contrasts fundamental with technical analysis, the examination of market indicators, and then explains various analytical approaches to investment. He devotes more than 100 pages to demonstrating regression analysis, a mathematical tool used in fundamental analysis. Finally, he looks at specific markets, such as sugar and soybeans, and shows how to apply the analytical techniques he has described. This is the first of an eventual three-volume set, but it does stand sufficiently on its own. Highly recommended for serious investment collections. David Rouse

From the Publisher

Written by a foremost authority and one of the bestselling authors in finance. The most comprehensive book on futures trading, A Complete Guide to the Futures Markets, is now divided into three volumes--this is the first. It provides readers with a synthesis of market analysis as well as practical trading considerations. Analytical techniques are evaluated within the context of the existing world of trade.

See all Editorial Reviews

Product Details

• Hardcover: 656 pages
• Publisher: Wiley; 1 edition (May 15, 1995)
• Language: English
• ISBN-10: 0471020567
• ISBN-13: 978-0471020561
• Product Dimensions: 10.2 x 7.3 x 1.4 inches
• Shipping Weight: 2.5 pounds (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars  See all reviews (4 customer reviews)
• Amazon Best Sellers Rank: #164,503 in Books (See Top 100 in Books)

More About the Author

Discover books, learn about writers, read author blogs, and more.

Customer Reviews

Most Helpful Customer Reviews

23 of 24 people found the following review helpful:

3.0 out of 5 stars Caveat Emptor, November 23, 2001

By 

Mercenary Trader - See all my reviews

This review is from: Futures: Fundamental Analysis (Hardcover)

There is no question that, when it comes to informational books on the futures markets, Schwager is one of the best around. This book meets his high standard of quality and informativeness. I can recommend this book to anyone looking to broaden their knowledge of fundamental analysis and the guts of what affects supply and demand. But I can't recommend the book wholeheartedly, because basing trading decisions on fundamental analysis in itself is such a flawed approach in my opinion.

I used to pay a lot of attention to fundamentals (as a commodity broker). I would spend hours each day looking at news and research to get a feel for the reasoning behind the movement. After doing this for a while, I realized the inherent futility in the approach--if a trade sets up technically I will take it, unless there is some compelling reason not to--and if there is no technical confirmation, I won't take it, period. So fundamental analysis just doesn't play a starring role in either case. Nowadays, I still keep tabs on fundamentals, but mainly to avoid getting hit by a train; not taking action in front of a significant report, going short coffee in the freeze season, stuff like that. Below are a few reasons why my trading has taken on a strongly technical flavor:

1) Most daily news is worthless, and here is why: at any given time, there seem to be half a dozen arguments for being bearish on a market, and half a dozen arguments for being bullish.

When a market has a big move up and the reason isn't clear, the news services pick a couple of the bullish reasons and talk about those. If the market has a move down, they highlight some of the bearish reasons. It's total retrofitting, and thus usually a waste of time (in that there's not much of a way to turn that knowledge into profit).

Furthermore, the "traders" that the newsies interview are often just run of the mill clerks or brokers who don't really know anything special... or if they do know, they aren't telling. The classic filler explanations on the aftermarket newswires center around buzz phrases like "profit taking," "fund buying" and "fund selling." When you read about one of those three, the general translation is that the reporter dragged out an old standby because "who the heck knows" just doesn't make good copy.

2) Many of the best trades are the ones where the move starts before anyone knows why. Bruce Kovner talked about this concept in the first Market Wizards. If a breakout occurs when everyone is expecting it, then everyone is already in, and the odds are not as good because a lot of the buying (or selling) is already done. But if a breakout occurs and no one knows why, then there are 1) potentially powerful hidden reasons for the move, and (2) a whole group of traders who are not in the market yet, and may want or need to get in (or out if the move is against them) once the reason comes to light.

So, by deduction, if some of the best trades are the ones where fundamental reasons are not yet clear, then by paying attention to fundamentals too much, you run the risk of keeping yourself out of the best trades. You have to be willing to sometimes say, "I don't know why this setup is occurring, but the technicals are tellling me something interesting that the news might confirm later." Because the confirmation of "why" often comes after the window of opportunity has closed, you have to be willing to act before the fundamental reasons are clear.

3) Analysts are often biased and have a hesitancy to change views. When an analyst writes down his opinion on a piece of paper and then sends it out for everyone to see, part of his (or her) pride and reputation is staked on that opinion. It is a psychological truth that writing something down, and confirming it to other people, makes a person more committed to that belief. (Humans have a very strong desire to be consistent.) That make the typical analyst very hesitant to change his mind, even when the facts change. If an analyst is bullish one week and then the facts turn bearish the next week, the analyst should change his mind--but the odds are that he will not, because he will be thinking "well, if I was bullish last week and do a 180 to bearish this week, then I will look stupid."

But often that is the right thing to do! Especially for fundamental analysis, being flexible is very important. But most analysts are too worried about their reputations to have that flexibility. This is one reason trends unfold over time--because the masses are hesitant to change their minds quickly, even as it becomes more and more clear that they should.

4) Much of fundamental analysis is either incomplete or just plain wrong. Even if you have 90% of the puzzle pieces, the 10% that you are missing could be important enough to turn the whole picture upside down. Or if you somehow miraculously have all the pieces, you still have to figure out how to weight them properly and determine what the market is going to pay the most attention to. It is almost impossible to get all the facts correctly uncovered and assembled without overlooking anything.

And then there is always the possibility that something could come up by surprise that you were not prepared for. Different analysts with access to the same information will often have directly contradicting opinions on a market. What does that tell you? Generally the only time that the analysts are all on the same page is when the writing on the wall is obvious... and by that time, the move is usually almost done if not over. There is simply no free lunch.

5) Price--the ultimate value judgment of all underlying fundamentals--reveals itself in the technicals. The technicals don't lie (though they can certainly deceive), and they don't harbor an emotional bias. They represent the opinions of the entire market, with a heavier weighting towards the bigger and smarter players, and are thus more reliable than individual opinions subject to bias and error. For a fast mover such as myself, this is what needs to be known. As far as trading goes, I'm typically interested in the next three days or weeks... not the next three months or years.

For the above reasons, fundamental traders caveat emptor.

19 of 21 people found the following review helpful:

5.0 out of 5 stars A MUST FOR WHOEVER WANTS TO START IN FUTURES TRADING, September 23, 1999

By A Customer

This review is from: Futures: Fundamental Analysis (Hardcover)

This Series "Schwager on Futures" is the biggest work has ever been written on futures trading. As a Futures Trader I advise everybody to read these books before to starts any real trading in Futures, that if not taken in the proper way can be very painfull. As a Member of IFTA(International federation Of Tecnical Analisys)I suggest you to read it joint with John Murphy's "Technical Analisys f Futures Markets" and "Intermarket Technical Analisys" this will give you a integral knowledge of Futures Environment that is what you need on your Trading philosophy. I always let these books on my desk because I need them so many times during my trading day. THEY ARE A REAL REFERENCE. The good thing of this series is that you can test your comprension by the various study guides. Reading the book about "Managed Trading" You can even get able to judge the returns of the various CTA and decide when it is better to invest in them and to whom give your money.Probably you are not be interested in the Fundamental analisys book but remember, especially in the commodities markets, EVEN IF YOU ARE GOING TO TRADE TECHNICALLY IS VERY IMPORTANT TO UNDERSTAND FUNDAMENTAL ANALISYS!!! Thank you very much to have spent all this time for read me.

12 of 13 people found the following review helpful:

5.0 out of 5 stars Schwager is very indepth...sometimes too indepth., April 7, 2003

By 

Super Trader - See all my reviews
(VINE VOICE)   

This review is from: Futures: Fundamental Analysis (Hardcover)

This is the most comprehensive books on Fundamental Analysis that I have ever seen. This book along with Schwager's Technical Analysis book are required reading for new futures brokers that I hire to my firm.

Mr.Schwager and Mr.Turner have put a very strong mathematical spin on how fundamental analysis can be accomplished. They dissect government trade reports and analyst reports and put an empirical face on the nebulus act of fundamental analysis.

In the preface of the book Mr.Schwager admits that fundamental analysis is not quite accurate. Which begs the question, "why write such a complex book?"

This book is not for the faint of heart, nor is it light reading. It is quite indepth and for the most part above the heads of many beginning futures investors. In order to understand any of the examples you have to have solid trading reference points in your personal trading life.

I recommended it for intermediate traders primarily.

After being involved with futures for 11 years and authoring three books on the subject, I am always impressed at Mr.Schwager thoroughness in researching.