Stock-market

I thought this was an excellent book. If you like the stock market or history, you will like this book. The author goes back to the beginnings of the stock market. He spends a lot of time talking about the 1700 and 1800's, how Wall Street got started. Read how J. P. Morgan played Allen Greenspan. How he raised 20 million dollars in 15 minutes! Read about a stock that went from 200 dollars to a thousand! Read about the big dogs in the market who made and lost millions. The only thing I didn't like about it was the author didn't spend as much time on the Great Depression as I would have liked. That is my only complaint. An excellent book.

Kevin

As a trader who had read tens of trading books, I still found this one interesting and helpful. I like its variety of content (that the author introduced a lot sentiment indicators like CBOE Put/Call Parity + Volatility Index, RYDEX Mutual Fund Flows, Volume indicators for QQQ and S&P 500 Depository Receipts), plus the author's writing style and integrity (the author did quoted frequently from other writers). Some technical tools like MACD, ADX were discussed, but only briefly. In fact, I like Chapter 12 about trading psychology and money management, Appendix D favorite quotes the most.

To conclude, if you want to read an intermediate to advanced level trading book, and that you are appreciative of logical and contrarian trading, this one is for you.

p.s. I like Mark Douglas, Bernard Baruch and Jesse Livermore very much. As the author does appreciate these "gurus", I admit that my positive comment may be a little bit biased.

Price Headley successfully combines his obviously well-tested market analysis and trading theory with practical step-by-step guidelines in this compact, yet amazingly complete trading treatise. There are so many real gems contained in this small book I can only urge beginning and advanced traders alike to grab a copy and read it...several times over.

Headley introduces a few unique and intuitively appealing indicators for determining market trends, stock selection and entry-exit techniques, as well as his considerable insights on working with more well-known indcators like the VIX, Rydex and put/call ratios.

I was particularly impressed with his work on directional options trading and his superb treatment of the type of money management and psychology that is absolutely critical if one is to develop consistent success at trading. I suspect that even long-term professional traders will find much that is new, or at least refreshing and useful, in these pages and I certainly won't be surprised to see "Big Trends in Trading" join the short list of must read classics in the years to come.

I loved this book! From the contrarian aspect of going against the crowd in the early chapters to the part I found most invaluable, the "Trading Psychology and Money Management" section at the end the book was very informative. Mr. Headley takes you into the mind of what it means to be a trader and to be successful in the markets. He may be a CFA and a Market Techniciaon MTA, but he should be given a PhD in trading psychology. The last chapter on this is worth twice the price of the book. Of the books I've read on trading in recent years, this one is one of my favorites. I've had the privilege of reading Trading for a Living by Dr. Elder, and Pit Bull by Martin Schwartz, (two of my favorites I'll list) and've now been given a new and fresh angle on trading, while holding true to some of the basic disciplines of what it means to be a trader. I found Mr. Headley's "crowd sentiment" indicators to be impressive, while the last chapter on psychology will be referenced many times over to be sure. Of the tens of books I've read on trading, this one has been given a forceful shove into my top three, which I'm sure I'll read over and over.

This is a very interesting and clearly written book. From an academic standpoint, it effectively digs some dent in the Efficient Market Hypothesis. The author addresses ten classic situations, some of them well known, when markets are not efficient.

However, the author does not make a convincing case that retail investors can exploit these inefficiencies efficiently. In other words, the anomalies the author depicts amount to separate trading strategies which should potentially help you achieve the "buy low - sell high" optimum. However, these trading strategies are associated with much higher transaction costs and taxes than a buy-and-hold strategy of an index fund. Additionally, some of these strategies are very labor intensive and information intensive. These are added costs. Finally, these strategies will cause you to cash out of the market frequently. The holding of cash balances will further reduce your return compared to investors who remain fully invested.

When all is said and done, will you come out ahead exploiting these market anomalies after you factor all added costs? The author stated that he "generally" does come out ahead of the market. However, he does not support this vague statement with any documentation. Also, he adds that going forward his strategies may be less effective because of ever changing market conditions. Thus, once a market anomaly is exploited by a few investors, the market's ever evolving efficiency erases this anomaly.

Although the book is very interesting, it is no substitute to sound investment strategies based on the Efficient Market Hypothesis. It is a far safer and easier to profit from the market's overall efficiency than to attempt to profit from its few and fleeting marginal inefficiencies.

If you are interested in this subject, I strongly recommend the classics by Burton Malkiel: "A Random Walk Down Wall Street" and "The Random Guide to Investing." I also strongly recommend John Paulos excellent "A Mathematician Plays the Stock Market." These books all suggest that you are better off focusing your energy on proper asset class diversification that reflects your risk tolerance. And, in turn invest for the long term through index funds of these respective asset classes.

This book is more academic than practical, which is not a bad thing. I enjoyed reading it and found it to be well researched and very educational. Just remember, however, that any systematic strategy that makes money in the stock market will become ineffective as soon as it becomes well known (anyone remember "Beating the Dow" or its offspring, "The Foolish Four?"). So read this book if the topic interests you, but don't expect to cash in by exploting these anomalies.

Also, A Random Walk addresses some of these anomalies and explains why, given transaction costs among other things, one cannot profit from them.

The financial markets give investors a chance to make money when they work - and when they don't. When markets work efficiently they uncover the true value of an asset by pegging its fair price for informed buyers and sellers. When for a variety of reasons markets are inefficient they misprice assets. When the specific circumstances of that mispricing are recognized and persistent (viz. predictable) it is an anomaly. The regularity of anomalies offers investors, at least in theory, the opportunity to profit by taking a position that recognizes the temporary nature of the mispricing before it rights itself. These anomalies are the subject of Singal's study which takes its title from the updated 1970's classic exposition of the efficient market hypothesis by Princeton Economics professor Burton Malkiel.

This is a detailed look at ten market anomalies. Singal's goal is to move us well beyond descriptions and academic evidence and offer trading strategies intended to achieve an outsized market return. Each chapter summarizes key points and projects potential returns from implementing the outlined strategy. Additional market anomalies are briefly identified in the final chapter. As a bonus of sorts an appendix gives the most detailed explanation of short selling I have read.

From a practical standpoint some anomalous situations would appear to be more exploitable than others. Mergers between public companies occur with some frequency, so an understanding of how to play the merger premium paid by acquiring companies for their target is useful. Changes to the composition of the S&P 500 Index and their impact on stock prices occur with less frequency, but this is balanced by opportunities from the January and "New December Effect" (mark your calendars). From anecdotal observations, I am not convinced by the author's discussion of the Weekend Effect, and the chapter on International Investing seems like a fair argument for diversification rather than an anomaly. The so-called Value Line Enigma identified in the final chapter is perplexing to this reader, since the supposed outperformance of their recommended stocks runs directly counter to a similar study of mutual funds picked by Morningstar. An apples to oranges comparison to some, perhaps, but it is a sufficiently known study to warrant comment. A chapter dealing with currency forward rates will be beyond most non-professional investors. I would have liked to have heard more about spin-offs, the long-term overperformance of "independent" subsidiaries occasionally distributed to shareholders of a parent company. Singal identifies the simpler, "sharper" corporate mission as the reason. Actually, it may be strong sponsorship and generous, upfront management incentives which spark those returns.

The question remains, does this serious academic study offer practical trading strategies to investors bent on gain. The answer is that Singal has so many ideas packed into the book that investors will be influenced in the aggregate in their trading decisions. Not to be aware of these market biases exposes traders to more uncertainty and risk than may be necessary.

This book was great! A headhunter caught me off gaurd with a great opportunity, but I had to make a decision faster than I was comfortable with. I got myself smart in about 2 days, and was able to negotiate a much better compensation package. I'd recommend it to anyone in a negotiation-situation.

Stock options have always been a big mystery to me. This book helped me understand what employers are talking about with stock options. I found tons of "insider" tips and real-life examples that I will put to use right away. In particular, I found the "secrets" of negotiating for stock options-- especially the tricks companies use to reduce stock options grants--to be especially eye-opening. I also learned how to think of myself as an investor and not just an employee--something I had never done before.

I've been able to adjust my own opportunites to negotiate for options. In addition, I found the book fun to read. The writing is fresh, clear, and the concepts easy to understand, even for a novice like me. I also found the glossary of terms and Internet resources to be very helpful tools. I highly recommend this book for job seekers and those who really want to know how to negotiate for all they're worth.

This book gives you an inside view of one company's philosophy on using market psychology to make money in the market. Dorsey examines various approaches people use toward this end, before describing his own.

He begins by showing us how the market is not rational. Never has been, never will be. I personally experienced this during the dotcom stock bubble. I had shares of stocks that, per rational theory, should have done remarkably well. I did not own shares of Yahoo--which, per rational theory, was a total dog. My stocks stayed flat, while Yahoo soared. So much for rational theory. If you get nothing else from this book, the explanation of that lesson alone makes it worth reading.

Next, Dorsey delves into the three general concepts of psychological trading. All of these seem good on the surface, but results are inconsistent. Maritimers long ago learned how to navigate by triangulation. Dorsey navigates the stock market the same way, with his "triunity" approach. He shows how looking at the intersections of the three general concepts produces consistent results.

You may have read books espousing some "can't miss" philosophy or another. Don't worry--Dorsey lets the reader know his triunity approach still requires judgment. For example, if the indicators are in a certain area, that would be an indication that the market is about to hit a peak.

Dorsey explains that his method might miss the peak. And, it might miss a trough. But if you are not greedy, his method would appear to be a useful tool for profitable investing. Remember, pigs eat well but hogs get slaughtered.

Most reviewers of Woody Dorsey's recent book, "Behavioral Trading," will probably approach it from the viewpoint of one interested or involved in the stock market or, at least, evaluate it as a work within the field of economics or finance. Since I am by training a philosopher and not a player in the market nor an expert in matters of business and finance, I am going to concern myself briefly with a "philosophical" view of the work. I will leave it to others to discuss whether or not the tactics and strategies suggested by Dorsey will actually prove profitable in the financial markets.

What does the scholarly discipline of philosophy have to do with Woody Dorsey's book about the marketplace and financial investing? Well, in a word, everything. Two of the three main branches of philosophy, specifically metaphysics and epistemology, help to provide the grounding for behavioral trading and Dorsey's Triunity Theory which analyzes and suggests the methods and strategies for profitable market investing. This is, in fact, a perfect example of what is called "applied philosophy," that is, the application of philosophical knowledge and principles to practical situations. And Dorsey is upfront about this. For instance, he states that his basic theory, the Triunity Theory, "is a practical philosophy of market behavior, which is based on the simple but profound structure of man himself." Furthermore, Triunity Theory "is a practical philosophy which can be very profitable." Dorsey suggests that his theory is both philosophical, regarding its foundations and implications, and practical, regarding its applicability to real situations and its profitability.

Triunity Theory is based on the proposition that we "have a brain composed of three distinct developmental levels: reptilian, mammalian, and specifically human. These three separate brain functions relate to emotion, thought, and action." The Triunity Theory itself contains three components: Mood, Mind, and Body, and these relate to the three separate brain functions. "Psychologicals" are the Mood of the market and draw on psychological knowledge. Financial traders need to explore what are called emotions in the financial market. The primary thrust of behavioral finance is to acknowledge the irrational aspects of investing. "Fundamentals" are transient investment themes that make up the Mind of the market; they are everything we think about the market. Behavioral traders need to be cognizant of the role that bias, propaganda or spin plays in the financial markets, and must be aware of the symbolic information in the marketplace and the media and incorporate this as part of their trading strategy. "Technicals" make up the Body of the market and represent the physical manifestations of the market's action, such as price, volume, and volatility. To understand and to predict the market requires the practice of all three parts of the Triunity Theory and the behavioral trader "must never draw a significant conclusion based on the metrics of only one of Triunity Theory's components."

The new investing paradigm described by Dorsey is called behavioral finance. It is the union of psychology and economics, applying ideas derived from both to trading in the financial markets. The role of irrationality in financial markets, says the author, has always been ignored by economics. At the heart of behavioral finance is the study of the emotional brain and "The nominal premise of behavioral finance is to reject the limitations of rationality and embrace the potential of irrationality." Thus far, according to Dorsey, behavioral thought has focused on "identifying the innumerable irrational quirks, fetishes and foibles, or human habits, which are aspects of human nature." Since the markets are more psychological than logical, the behavioral trader, to be successful, "must be prepared for, and acknowledge the role of, irrationality in the financial markets."

There are many metaphysical and epistemological ideas, principles, and implications involved in Triunity Theory and in the methodologies of behavioral trading. At various points throughout the book, philosophers, both ancient and modern, are referred to and some of the most important and traditionally debated philosophical problems are discussed. Moreover, their importance to contemporary financial practices is pointed out. In Chapter 8, for example, Dorsey brings up the famous body-mind problem which was mainly created by René Descartes in the 17th century. Descartes maintained that the Mind was most important and the body merely a lesser reality. What does this have to do with financial trading? Listen to Dorsey: "Descartes came down on the side that the mind is immortal and immutable compared to the body. This presumption is at the heart of the fallacy of 'rationalism.' On Wall Street they still think that the Mind, or Investment Themes, rule everything. They have always dismissed the body or, the 'Technicals,' just because Descartes effectively told them to." Then there is the problem of perception. Dorsey presents Plato's famous allegory of the cave, which suggests we live in a world of appearances. What do we know and how do we know it? In the context of behavioral trading, do we "know" the market? The "question of perception and interpretation is at the heart of behavioral finance."

And there is so much more discussed in this adventure into applied philosophy: the idea of the "random walk," chaos theory, the invisible hand, Thomas Kuhn's concept of paradigm shift, complexity theory, fractal geometry, and even a Buddhist koan. Besides Plato and Descartes, already mentioned, there is consideration of Carl Jung, Niccolo Machiavelli, Aristotle, Adam Smith, Charles Darwin, Claude Lévi-Strauss, Thorsten Veblen, and David Ricardo, all of them classical philosophical thinkers. Dorsey is to be commended for showing how the scholarly discipline of philosophy impacts the world "out there," the one that everyone lives and works in. In the spirit of the late philosopher Mortimer Adler, who taught that "philosophy is everybody's business," I recommend this book to all those who think the study of philosophy has nothing to do with real life. In fact, and Dorsey's book is an excellent illustration, philosophical concepts and principles are at the root of all human thought, emotions, and actions.

Long time market commentator Woody Dorsey, the theorist behind market semiotics, sees Wall Street as a continuum of the agora or the medieval street fair: a place where people congregate and trade, motivated by their own psychological drives. But if investors are still behaving based on the same visceral emotions that drove exchanges of goats in ancient bazaars, what does that forecast about how the market will act today? According to Dorsey, quite a lot. Interspersed with anecdotes that range from biography to paleontology to horse training, he offers principles and techniques that explain marketplace behavior in a way investors can understand and utilize. Begin with how he scans newspapers, a methodology worth remembering, and continue through his explanation of the Triunity Theory, a new system for understanding behavioral finance. Agree or disagree with his contrarian thinking, we believe his interesting diversions and innovative economic thinking will sweep you along. Dorsey brings many subjects together, but the two most interesting are, of course, why people behave as they do and how it affects the market and your money.