tradersams blog

It’s been a while since my last book review – trading has been a bit quiet over the last week.  In the next week I am looking to close down some of my stagnant positions – they looked good when I entered, but I am really only losing interest on the money by not being in cash – or better positions.

The run up in Gold made me a few dollars on the side, as did the movement in the AUDUSD, but I don’t profess to have much in the way of consistent results in those markets.  As I get more used to those markets they may get more attention in this blog.

“How to Make Money in Stocks“, 3rd edition, by William J. O’Neil.

ok – so I am writing here about the third edition, a tad annoying as I had only had the book in my hands about two days before the fourth edition hit the stores (doh).  Apparently the fourth edition is updated to take into account the 2008/9  financial crisis.

The subtitle to the book is ‘A Winning System in Good Times or Bad’, a good reflection of the content of the book.  The author talks in terms of investment consisting of managing investments for the long term, by keeping a close eye on the markets in the short term and having a method to deal with it in its various stages.

The book has has the same basis as many books in the financial market – it talks about share selection and making money (seems pointless saying that really!) – but the book is really putting a share investment strategy in your hands.  In other words, if you read the book and follow the instructions it contains you will have in your hands a full trading selection system for entries and exits.  I must say there’s not as much about money management as I would have liked to see.

The book talks about the CANSLIM method of share selection and investment.  Chase up the google searches above to find information about the methodology.  The method involves combining fundamental investment ideas to select shares, with technical aspects to assist with your timing of entry or exit.  The system is claimed to have been built from examining shares that have made dramatic increases over the last 100 years in the US market.

If you have trouble exiting stocks -read chapter 10 ‘When to Sell and Take Your Profit’.  Then when you have done that – read it again!

Whilst the book is educational in its own right, and can be read by anyone wanting to get into share investment, it is largely a vehicle for promoting the services supplied by investors.com ‘Investors Business Daily’.  The book tells you how to do calculations to determine the stocks they deem most likely to rise dramatically, and the website makes available to you the results of those calculations.  In other words do the calculations yourself – or purchase the results of the calculations from the author by a subscription.

For those financially minded, and if you are not you probably aren’t reading the blog, I have to say its very reasonably priced ($12 USD on Amazon, which is terrific), and I’m off to buy the fourth edition to see what he has to say about the GFC.

In summary – inexpensive book, packed with information, suitable for beginning to intermediate level investors, and well worth a purchase.  In fact you’d spend the $12 for the chapter on “When to Sell” alone.

(text updated 14-9-09, phasing only)