Review of Technical Analysis: Power Tools for Active Investors (Hardcover)

For novices interested in technical analysis, there is so much material here it might seem overwhelming.But believe me, the effort at exploration is worth it.I've been successfully applying Appel's work since 1984, and this all-encompassing treatise was like looking over his shoulder, soaking in his 30 years of wisdom on the markets.

I was especially interested in the section on the relative strength comparing the performance of the NYSE to the NASDAQ.This area of the book alone is worth the price of admission.

Professionals in the field are likely to be familiar with most concepts in the book. But over the years, I've found many misapply the use of MACD, an excellent indicator Appel invented which has become a staple in technical analysis.All would be advised to read how Appel uses his own invention.

There's something for everyone in this book, novice and professional alike.Few have contributed more to technical studies and money management than Gerald Appel.Don't just put this on your bookshelf--read it, use it and learn from it.It will make you a better investor and trader.



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Review of A World of Wealth: How Capitalism Turns Profits into Progress (Hardcover)

I find it very easy to accept the Washington Times review posted here.It is a very good overview of Mr. Donlan's book.Too good, perhaps, as it almost convinced me not to bother writing one of my own, but this book deserves some comments.

Tom Donlan has done an exceptionally good job of describing the capitalist system and its operation in terms that are, at one and the same time, sufficiently sophisticated to attract specialists, yet intelligible to a much broader public.Mr. Donlan's viewpoint is very obvious; he's "pro-capitalism" and not ashamed to say so, yet he does not beat you over the head with it.When discussing climate change, for example, he presents Vice President Gore's viewpoint and his own, but without the overly-emotionally, anti-intellectual verbiage so common these days from both sides of this issue.Rather, he discusses what Gore's conclusions may mean in terms of the capitalist system's response.As he says, "Global warming is not just an environmental problem; it is also an economic problem."Donlan rightly emphasizes a subject that will become increasingly important as we move from debate to action.

"A World of Wealth" is not a polemic so much as it is a patient and intelligent explanation of a system that most of us think we understand, but few of us can explain in any detail.By focusing on how capitalism and free markets work in a straightforward manner, Donlan brings us back to the basics of the system that has provided is with so much wealth to enjoy and to squander.His emotional commitment to capitalism is clear, but it is his plain-spoken analysis that makes this book worth reading by anyone, socialists included.

I enjoy reading books on finance and economics.Books like Mohamed el-Erian's "When Markets Collide," Nicholas Taleb's "Fooled by Randomness," and Robert Shiller's "Irrational Exuberance" inform me and provide deeper insight into important ideas and trends.But I would liken Thomas Donlan's "A World of Wealth" to Fareed Zakaria's "The Post-American World".They stand in a somewhat different class.They are intelligent, thought-provoking, and deal with very important topics, yet they are also eminently readable and understandable by anyone with a decent education, regardless of their technical training.This should be no surprise.Both Zakaria (formerly editor of Foreign Affairs and currently editor of Newsweek International) and Donlan are professional journalists and both have many years of editorial experience for publications that demand excellence.They know how to communicate their thoughts clearly and succinctly on topics of great importance.That is worth the price of a book like "A World of Wealth" in itself.



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Review of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital Made a Fortune Investing in the Stock Market (Hardcover)

I read this book hoping for some insight to some of the specific trading strategies RevShark uses, as I have read his website and newsletter periodically throughout the past few years and find myself usually enjoying and agreeing with his market insights.I was a little disappointed in that regard. If you are an investor just starting out, then the book will help you understand that much of what you see on CNBC and read in magazines like "Money" and "Kiplinger" will not help you become a successful investor.Buy and hold is dead, and this book explains why. But for an experienced trader, there is very little here.There were no specific trading strategies, just a summary of some basic ideas from technical analysis and chart reading. There was also a chapter on investor psychology, but again, nothing that has not been discussed in many other books. I was expecting more.

If you are a new investor, may I suggest that you instead get "How to Make Money in Stocks" by William O'Neil. The ideas in the two books are very similar, but explained much better in O'Neil's book.



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Review of The Volatility Edge in Options Trading: New Technical Strategies for Investing in Unstable Markets (Hardcover)

A friend of mine in the trading industry suggested I read this gem of a book ... within a single weekend I did just that ... and what a gem it is!

Jeff Augen has put together a fine body of work in this book within which there are some seriously valuable nuggets of information.

The volatility spike graphs are a novelty in this business that anyone studying and trading volatility should benefit from.Essentially what he's uncovering is "differential volatility", in other words whether the volatility is being caused by buyers or sellers.

Typically, falling prices (due to selling action) will cause greater volatility, but not always.Sometimes the volatility is caused by rising prices.By understanding the direction in which the greater volatility of the underlying is occurring, the trader is able to position trades more appropriate to that skew.For example if the spikes indicate thatvolatility is caused by buying action then the calls may well be undervalued in advance of the next spike up.The trader can then make a double whammy trade, correct in direction and correctly in volatility.

Other nuggets include Jeff's slant on expiration date and earnings cycle trading, and the concept of stocks pinning to the strike, all of which are essential chapters in the book.

You'll be a more knowledgeable trader for reading this book and you should become a better trader for sure.




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Review of Beating the Market, 3 Months at a Time: A Proven Investing Plan Everyone Can Use (Hardcover)

I got a couple of useful ideas fromthis book, but overall I was disappointed. The most useful ideas are (1) market sectors that outperform over one three-month period are more likely to outperform over the next three-month period, and (2) how to use ETFs to implement a timing-rotation strategy based on the first idea. The disappointments: (1) This is a thin book: 218 pages with large print. Take away the notes and index and it's 196 pages. (2) There seemed to be some internal conflict in just how to use allocations to create proper portfolios. After a while, I was not sure just what was being recommended. If I got it right, four different investment strategies ended up being recommended, and then blends of those were discussed. I got confused. Partly this may be the result of the book having two authors, and they apparently wrote different chapters independently. I'm not sure everything got reconciled. (3) The end of the book wandered into retirement topics, healthcare costs, social security...in other words, non-investing topics. This was unnecessary, annoying, and one wonders whether it was done because they needed more pages.



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Review of Are You a Stock or a Bond?: Create Your Own Pension Plan for a Secure Financial Future (Hardcover)

Wealth Odyssey: The Essential Road Map For Your Financial Journey Where Is It You Are Really Trying To Go With Money?


Dr Milevsky does an excellent job discussing the dual uncertainties of retirement planning: uncertainty of longevity, and uncertainty of portfolio duration. Both deal with trying to determine how long you or your money may last, while recognizing that both time periods need to overlap - in fact one might argue that the portfolio time period needs to be nanoseconds (ideally with perfect knowledge) longer than your longevity. The human capital approach is excellent since it relates the long term economic value of a person's labor, as a total dollar value; to the total dollar value that person needs to sustain their living standard throughout retirement.

There is controversy in the profession concerning the allocation of assets considering the nature of a person's source and nature of their income along with those assets. However, putting concepts out there for discussion is how incremental improvements occur. Another controversial approach has been forwarded in Spend 'Til the End: The Revolutionary Guide to Raising Your Living Standard--Today and When You Retire by Laurence J. Kotlikoff and Scott Burns. Their approach is to smooth your spending over your entire lifetime. Dr Milevsky's approach is to determine how to sustain it. The theme of both works is how to evaluate your standard of living and then how to sustain it in the long run.

Dr Milevsky's formula and excel use if very useful for most people. In practice though, most people would have a hard time determining an expected return and standard deviation for their portfolio especially considering this is a value they expect for the rest of their life. Median remaining lifespan (MRL) also means there's a 50/50 chance of living beyond the period evaluated. A person would reduce the chance of outliving their assets if they used a lifespan factor than had a lesser chance of being outlived. He acknowledges the fact that the older you get, the older you are likely to get in Chapter 7. However, he does not provide the mathematical means in his discussion (even as an appendix) to adjust for this factor should one want to plan more conservatively. One may argue that you would adjust the MRL as you age. However, that would mean that a person is overspending early and would need to retrench their spending as they age, because they would need to stretch the spending farther than what the plan called for originally - once retired there is no replenishment of assets that are already spent.

His book The Calculus of Retirement Income: Financial Models for Pension Annuities and Life Insurance goes into greater detail about the calculus that supports this book.

A final note: the use of variable annuities with their riders is, as yet, untested as to whether the companies selling them can withstand the test of time for both markets and demographic forces. Demographic changes are an important consideration since variable annuity riders are structured where people need to pay in more for the benefits than the benefits that are paid out (the theme sounds much like the Social Security or the pension phenomena he describes in his introduction).

Putting the nit noy of these aside, this is an excellent primer for most people about the issues they face for retirement. Using the concepts here will do more good than harm for most do it yourselfers.



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Review of The Genius of Instinct: Reclaim Mother Nature's Tools for Enhancing Your Health, Happiness, Family, and Work (Hardcover)

I was expecting much more from this book but I found it generally disappointing.First, Dr. Weisinger has a very poor writing style and could have used significantly more help from a good editor (and a proof reader).There are some obvious typos and some bad grammar (the use of disconnect "with" instead of disconnect "from", for example).The good doctor uses a slew of cliches sometimes even bringing home a point with a terrible allusion to something from popular culture.One example: there is one sentence referring to the lion kings being aware of the circle of life (maybe this was subtle product placement for the Disney movie).In another place he mentions how a clan would face extinction, which could be final.I wasn't aware of the non-final version of extinction.

As far as the content, Weisinger's thesis is that Mother Nature (whom he refers to sometimes as if it were an actual person) has endowed us with instincts that have helped us survive for all this millenia.Because these instincts have brought us succesfully to where we are today, we should become familiar with them and use them to our advantage.This logic holds up well; however, Weisinger's presentation of evidence to support this is often very speculative, running something like this: since this instinct seems to work today, it must have worked in the past to get our ancestors out of some pickle or to help in the process of natural selection of certain traits (and those who exhibit them) over others.He then conjures up (not "conjectures up", as Weisinger often writes) some very detailed scenario of what must have happened and how.Dr. Weisinger must have had access to some primitive Youtube application when researsching his book.It might have helped if Weisinger included references to actual studies and perhaps footnotes, since so many of his claims rely on other people's work.

On the positive side, perhaps the last fourth of the book or so, Weisinger's tale is a little stronger, with an excellent description of and prescription for how to apply novely to increase motivation and curiosity.



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Review of Opportunity Investing: How To Profit When Stocks Advance, Stocks Decline, Inflation Runs Rampant, Prices Fall, Oil Prices Hit the Roof, ... and Every Time in Between (Hardcover)

Gerald Appel is a well-known author, technical analyst (and developer of the Moving Average Convergence Divergence (MACD) indicator) who has written a practical guide to investing while dispelling a number of Wall Street myths on along the way.His book's purpose is to help readers who have limited time on their hands become active intelligent investors, as well as to help those individuals who are willing to put in more time and effort.

In the book, Appel covers specifically which vehicles to invest in, the timing of the buys and sells, and how to construct a portfolio that is diversified and balanced based on the individual's age and financial situation.Throughout the book, he stresses the importance of active, informed, self-directed investing instead of the out-of-date and risky buy and hold approach which "may or may not service investors purposes in the future."

The author suggests that investors focus not only on the U.S. stock market, but also on the overseas markets. He recommends investing in U.S. stocks, bonds, and money market instruments, as well as the more unfamiliar foreign bonds and stocks, real estate, and investments in foreign countries.

Appel kicks off the book covering the myth of why buy and hold is not a risk-free investment strategy compared to active management. He shows that by using a few indicators such as the NASDAQ/NYSE ratio, direction of interest rates, public sentiment, and the Best Six Months Strategy (buy at end of October and sell in May and go into cash until next October) that investors can reduce their risk and obtain decent investment performance. For example, by using the NASDAQ/NYSE relative strength ratio with a 10 dma crossover signal, according to Appel it is possible to beat the market's performance with about half the risk.

In another chapter, the author compares three diversified mutual fund portfolios showing how different market segments work well together to reduce risk and improve returns.He covers the basics of how to select the best mutual funds by providing the most important characteristics to consider for the long run.Furthermore, he illustrates how to pick funds that are in the top decile of performance.

Appel devotes a separate chapter to income investing suggesting short-term bonds with high credit ratings, and current interest flow.In a section on maximizing safety he mentions T-bills, money market accounts, and setting up a bond ladder with wide diversification.He also reviews what to focus on for maximum potential returns, as well as balancing risk and return.A follow-on chapter reviews the keys to securing junk bond yields at Treasury bond risk levels.Another chapter reviews investing in REITs while another covers investing abroad using open-end and closed-end funds as well asETFs.

Appel favors ETFs as a new way to invest replacing the typical mutual funds.He contrasts the pros and cons of ETFs, the different ETF categories, and how to create and maintain a diversified portfolio.He provides three specific sample portfolios for different types of investors.

The author's market timing approach encompasses both fundamental and technical analysis.On the fundamental side he reviews the P/E ratio, bond yields, earnings yields and provides guidance on how to interpret the readings. On the technical side, he discusses the four year and presidential election market cycles, advance decline line, and new high new low breadth indicator.

Overall, Appel provides readers with a time-tested practical approach to take control of their investments.For those readers that prefer investing using their own skills this book will provide and excellent plan for moving ahead and succeeding.




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Review of Technical Analysis: The Complete Resource for Financial Market Technicians (Hardcover)

Charles Kirkpatrick II, CMT, and Julie Dahlquist, Ph.D., the authors, have decades of experience in using and/or teaching technical analysis on the college level.Their subject mastery is apparent in this well-written all-inclusive textbook , which is clearly and logically written.Each chapter builds on the knowledge learned in prior chapters. In addition, there is an extensive 18-page bibliography.

This 672-page 23-chapter book is written in a college textbook style.For example, each chapter begins with a handful of objectives, followed by the subject matter including large easy-to-read charts and tables (many created using TradeStation charts and data from Ned Davis Research, Inc.), and ends with a conclusion section, as well as review questions.

In the introduction to the subject, the authors review the history of technical analysis, as well as the importance of trends, and the controversy surrounding the validity of the random walk hypothesis and the efficient market hypothesis.Next, the focus is on market indicators (Dow theory, market sentiment, market breadth indicators (ARMS Index, 90% down days, new highs and new lows, and percent of stocks above their 10 and 30 dmas), cycles and patterns, and fund flows into the market.Also reviewed are breakouts, stop placements, retracements, and moving averages.

There is an extensive review of chart construction, chart pattern analysis and trend confirmation using bar charts, candlesticks, and point-and-figure charts.Also covered is a discussion on cycles, Elliott wave, Fibonacci and Gann.Furthermore, there is a discussion of trading and investing and market and issue selection.A chapter on system design and testing, and money and risk management provides additional insight into the subject.

The knowledge imparted by this book can benefit financial professionals, individual investors, college students; financial journalists who want to learn the key concepts of technical analysis, and other interested parties. In addition, this book can also be used as a study guide for the Certified Market Technician (CMT) designation.

This book is substantial in content and a welcome addition to the field.Those wishing to increase their technical analysis knowledge even further, can read books by John Murphy, Greg Morris, Thomas Dorsey, Martin Pring, Steve Nison, and of course the joint work of Robert Edwards andJohn Magee.




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Review of Trading Commodities and Financial Futures: A Step by Step Guide to Mastering the Markets, 3rd Edition (Hardcover)

Too much novice information, considering this is the internet age and three quarters of the book can be found for free by just looking a little which is what the internet/search is for. Hardly anyone that knows "nothing" about investing is going to start trading commodities first, which it seems the book is addressed to.

This book would have been hot about 1985, helping you calculate a simple moving average with a pencil and paper. It really needs updating to remove anachronisms.

The big illustrated trading system TMVTT should be taken with a pound of salt. I have tested these kind of algorithms using trading software on historical data and their results are unimpressive in my opinion. I wrote special code to test the "trend reversal day trading system" as published, and ran it against two years of U.S. Dollar / Swiss Franc through February 2006. Doesn't work. As a concept these systems have their merits as serious reminders of how important it is to trade with the trend, but mechanically they don't work in real markets in general. This has surprised me every time I test mathematically the actual results of these approaches, since I do believe the author is correct in saying they are commonly used in markets, and frankly it could be a big reason why technical analysis has a bad name for a lot of people with casual exposure.


If your trading plan is to hold a contract for a fairly long period (many weeks, months), or you want to be convinced to, this is where the wisdom of the book shines.

The book does have its appeal in the oddest places (some comments on contract terms, agricultural trading rules from the grave) that make you aware of the sincerity of the author and appreciate him overall for the effort.

It took me 2 hours to get through the whole book, and another hour to write the code and test the algorithm. And I'm pretty much done with it. But I'm no novice. But then, you probably aren't either.



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