Friday, October 10, 2008

Book Recomendation

It seems appropriate to me to post this book review again. I read and reviewed this book back in April of 2007. I found it an interesting read then and a necessary read now.

Anatomy of the Bear: Lessons From Wall Street's Four Great Bottoms

What Is It About?

This book explores the nature of a bear market at its apex (although I suppose nadir more aptly describes). The book inspects four distinct bear market bottoms: August 1921, July 1932, June 1949, and August 1982. This book does not try to time when a bear market begins or ends; rather the book focuses on understanding when all excess in the market has been rung out, or in others words, trying to understand when the bear becomes satiated.

By examining events leading up to each bottom, the structure of the market during that time, and the state of the market and economy at the bottom of each bear, the author presents a balanced examination of similar factors present during all four periods. To do so the author makes the case that while each period has its uniqueness, certain characteristics present during each period examined such that one may develop an analytic process which may assist during a future bear period. Written well, the book presents the material in an interesting manner.

What Did I Get Out Of It As A New Investor?

Bear markets happen. Absent non-participation in the market, all are touched by the bear to some degree. While it is futile to predict when a bear may begin or end, enough similarity exists in the past among the great bear markets to signal opportunities to purchase stocks. This book helps a new investor or trader recognize when unwarranted and continued fear of the bear lacks justification. In short, if one cannot avoid the bear, one can at least hope to co-exist in a manner which does the least damage.

Whether one chooses to describe a market as fundamentally undervalued or technically oversold makes no difference. While it may be difficult to predict when a bear market will end, looking to past bear markets can be useful to discern when the continuing damage caused by the bear will abate. It is at this point when the purchase of equities must be considered. On this point the book is helpful in teaching an investor and trader what factors to examine.

The Good News

An accessible yet through examination of bear markets for the investor or trader which provides valuable information on the history of market bottoms.

The Bad News

Those seeking a simple buy or sell indicator to avoid bear markets may find disappointment with this book; rather, the book excels in helping the reader develop a thoughtful and broad understanding of market bottoms to aid in future analysis.

The Bottom Line

Written in a clear manner and to the point, this book covers the subject in a manner uncommon to the subject. Most works on bear markets focus on the damage a bear does, this book instead focuses on knowing when to take advantage of the positive buying opportunities a bear provides.

Friday, January 25, 2008

Point & Figure Charting - Book Review

Point & Figure Charting: The Essential Application for Forecasting and Tracking Market Prices (Wiley Trading)

What Is It About?

This book covers the Point and Figure method of stock charting. Based on the theory that stock prices are simply a reflection of supply and demand the book explains to the reader what Point and Figure charting is and how to utilize Point and Figure Charts. Easy to understand explanations and the included CD with tutorial provide the reader with an easy to grasp understanding of the subject.

What Did I Get Out Of It As A New Investor?

The subject of stock charting is anathema to many investors. I am of the opinion that stock charting, like every mode of investing, has its place and value to each individual. Point and Figure charting may be the best example of stock charting for the new investor. Straight forward without many complicated patterns to learn and study, Point and Figure charting simply seeks to divine supply and demand with respect to the stock, ETF, or mutual fund studied. Coupled with fundamental analysis, Point and Figure charting may provide the investor with an additional tool in making investing and trading decisions. This book does a fine job of explaining how.

The Good News

For the new investor and trader looking to explore stock charting this book and the method it covers provides a simple straight forward explanation on how to do so.

The Bad News

Those who reject the idea of stock charts as a useful process will not find much value here.

The Bottom Line

Stock charting exists. New investors and traders are a curious lot. This book helps such individuals determine whether stock charting appeals to them as a useful tool or is nothing more than a distraction.

Other Related Reading:

Saturday, January 05, 2008

The 15 Most Important Investing Blogs For New Investors or Traders

As I mentioned in my last post I had a good year and have done well in my first two years investing. While it may be luck I would like to think that at least part of my success the past two yeas is due to skill. Not my own of course but rather the skills I have appropriated from reading various blogs.
In what has become a semi-annual feature I like to recognize the blogs that I feel have contributed most to my education as an investor and trader. At the end of my first year I posted on the top five blogs I read my first year investing. I followed up with an another top five blogs for the first half of 2007. To recap the first ten are:
One of the few bloggers I would actually pay to read.
Smartest blogger I read.
Best all around site to learn about every aspect of investing.
Short term, long term, chart analysis, book reviews, educational links, reviews of trading tools; you name it Mike seems to provide it.
Part Groucho Marx and J.P. Morgan, Howard Lindzon does a great job of discussing, with humor, the underlying businesses represented by stocks.
Read this site and you just may unleash the inner power of your mind to increase market performance while at the same time controlling the destructive mental tendencies we all have that decrease investing performance.
Great resource for an investor or trader looking to utilize options as a means to enhance market performance.
Think of him as the Bo Jackson of blogging. Can do it all and do it well. Insightful market commentary on all time frames and every style of investing and trading.
Perhaps the best blog to read on applying the teachings of Benjamin Graham.
Provides a comprehensive review, with links, to some of the best investment and economic related posts on the Internet.
Adding to the above ten are the following five blogs that I have found worthwhile reading during the second half of 2007:
Great site that mixes different styles of investing and trading. One of the best things about this blog is that the blog does a good job of explaining why and how to have buy and sell discipline in selecting stocks.
Great resource for the new value investor looking to learn more about value investing and how it is practiced.
The blog is a trading journal of an individual who has a system for writing covered calls. The blog details that system as well as the trades made using the aforementioned system. Good starting point for those interested in options.
Best site that provides links to the best articles, blog posts, and resources for the value investor.
Solid site that provides worthwhile market insight from a professional money management firm.
While I read a lot of great blogs, the above fifteen are those that I feel have done the most to advance my understanding of investing and trading.

Wednesday, January 02, 2008

Value Blog Review Year End Results 2008

As long time readers of this blog will remember my first year of investing in 2006 resulted in a 19.62% return. 2007 was my second full year investing and I am quite pleased that I was able to achieve a return for the year of 29.75%.
While I am obviously pleased with the absolute return, I am obviously satisfied with the relative return when compared to the various indexes, i.e., DOW, S&P, etc. Moreover, I have also achieved my stated goal from a relative point of view by earning a greater return than the risk free rate on what I would earn paying off my mortgage.
Overall my first two years have produced an annualized return of 26.82%. While I hope, and will try, to continue this blistering pace for the next 25 years, my expectation is that it won't. That is because two good years could be entirely the result of good fortune as opposed to any skill on my part. With that said, for those interested, in my next couple of posts I will discuss those things that I believe contributed to my success.

Wednesday, November 07, 2007

Future Blind - Blog Review

Future Blind

A newer blog that I enjoy is Future Blind. Future Blind looks at investing from a value-fundamental perspective. The blog also takes a look at general economic trends with an eye towards innovation. The posts on Future Blind are well written and the valuation analysis are detailed. While Future Blind does not post everyday, each one is a is worth waiting for as they excel at informing the reader.

Future Blind

Monday, October 15, 2007

Payout Yield - Blog Review

An interesting blog that covers share buybacks is Payout Yield. Payout Yield analyse announced share repurchase for their payout yield. Taking the announced buyback as well as the current dividend payment, Payout Yield examines the yield a shareholder might expect from the combined cash return.
While Payout Yield does not post often. it does provide an excellent resource for those interested in share repurchases.

Sunday, October 14, 2007

COTS Timer - Blog Review

A blog that does a good job of focusing on developing and implementing a trading system is the COTS Timer blog. The COTS Timer blog focuses on trading using the Commitments of Traders (COTS) Reports. The COTS Timer blog provides a helpful resource for those interested in reading how to use a trading system.