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Schwager on risk Michel Pireu     | Business Day Tuesday, December 4, 2018
From a Nithin Kamath interview with Jack Schwager:

NK Do you still believe you shouldn’t take more than a one percent risk on a trade?
JS I think it was in New Markets Wizards that I said you should limit your risks to a very small level. I might have said about 1% or 2% or less. Now I feel it should be 1% maximum and ideally half a percent or less. So yes, I believe if you want to succeed, your loss on each trade should be limited to about 1% of your total equity, or less. Too many people think ‘Oh, 5% is not a big deal.’ Well, a few 5% losses and you're out of the game.

NK Nevertheless some traders succeed without rigorous risk-management rules.
JS That’s because their ability to identify value stocks and hold those positions was good enough for them to realise extremely good gains with acceptable draw downs. Martin Taylor, who at the time I interviewed him, I think it was 2011, was down about 14%-15%t and the position causing most of the loss was Apple. And yet, I'd never seen anybody so bullish on a position as he was on Apple. To put it in context, this was when Apple was $350 before the split, and six months later it was at $700. He saw that the analysts were basically extrapolating previous earnings into the future. And he understood that what they were missing was the giant explosion in sales that was going to occur overseas, particularly China. Had he applied rigorous risk-management his whole approach would have crumbled. So there are managers out there who are the exception. But, if an expert skier can go down a ski-hill at what may seem like an unsafe speed, that doesn't mean it's okay for everyone else to try to do the same thing.
 
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