Trading Book Reviews

Book Review: Buy Don’t Hold

[easyazon-link asin=”0137045328″][/easyazon-link] [easyazon-link asin=”0137045328″]Buy – Don’t Hold[/easyazon-link] by Leslie Masonson is called a investing book, but I’m tempted to put it in the trading category. It depends on how you prefer to define the difference between the two. The book’s subtitle is “Investing with ETFs using relative strength to increase returns with less risk”.  Using relative strength makes me think trading, but there are definitely elements of the approach outlined in the book which speaks toward what I would probably think of as investing. In any case, as I noted in [easyazon-link asin=”047179063X”]The Essentials of Trading[/easyazon-link], I look at trading and investing as being functionally the same thing, with perhaps a philosophical difference in approach. I’ll leave it to the reader to make their own judgement.

This book is largely a practical text focused on application. The author outlines a very specific strategy for deciding whether the stock market is to be considered in an uptrend, downtrend, ranging, or turning. His “dashboard” comprises a collection of indicators which are very much technical analysis oriented. They include market breadth indicators, sentiment readings, and some basic price studies. The scoring of the indicators provides the user a market reading from which to develop a strategy. From there, Masonson moves on to picking the best trading/investment vehicle based on relative strength readings. In other words, it’s very much a top-down approach.

On the plus side, the author is very good about explaining the various methods he employs in his strategy. He suggests specific tools (most free, some paid, but not necessarily required) and walks the reader through applying things. On the negative side, much of the first third of the book is dedicated to proving how bad an idea buy-and-hold investing is - definitely overkill there – and I thought in general the writing could have been better. Also, while Masonson does demonstrate the value of the dashboard indicators he uses, he doesn’t actually show a good historical look at how the overall strategy would have done. Still, it’s a book which can certainly provide the fodder for research and development for those interested in longer-term stock market trading/investing and/or asset allocation between and among markets.

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Trading Book Reviews

Book Review: The Motley Fool Million Dollar Portfolio

I realize that most readers of this blog are primarily traders and not investors. As such, the subject of investing in the stock market doesn’t really appeal to many (see The Difference Between Trading and Investing). That said, however, there are those (like me) who do sometimes look for investing opportunities. With that in mind, when I was offered the opportunity to pick up a free copy of [easyazon-link asin=”006156754X”]The Motley Fool Million Dollar Portfolio[/easyazon-link] I took it, figuring a review would be useful for at least some portion of the readership.

[easyazon-link asin=”006156754X”][/easyazon-link]Alas, I cannot recommend this book, even for new investors. I’m not saying it’s horrible or anything like that. I just think there’s better.

First of all, the whole book is an advertisement. The reader is constantly being sold on Motley Fool services of one kind or another. Of course you know going in that the book is going to promote Motley Fool, but it doesn’t need to be so continuous.

Secondly, as I highlighted in my Motley Fool Acting the Part post, there is a painfully obvious error (or rather set of errors) made at the outset of Chapter 3 when the authors are trying to preach the advantage of buy-and-hold investing over active trading. Such obvious mistakes makes me wonder about the attention to detail of the Fools, a problem when you consider company analysis and stock picking is their purported focus.

[easyazon-link asin=”0743200403″][/easyazon-link]Thirdly, while there are some good elements to what the book says, most of it is stuff that’s been said before many times in other places. If you’re really interested in the subject of stock investing, the first place I would go is [easyazon-link asin=”0743200403″]One Up On Wall Street, by Peter Lynch[/easyazon-link]. I read that book back when it first came out – a looonnnggg time ago. There’s a reason it’s one of the best selling stock investing books of all time. Of course there are also loads of Buffett books, but I’m not going to recommend any of those because frankly there aren’t many who can invest the way Buffett does.

If you want to see a good breakdown of the book’s contents and set-up, J.D. over at Get Rich Slowly has posted a review with that sort of detail. He thinks more of the book than I, though he’s admittedly only begun really looking at things from the individual stock (vs. index investing) perspective. He’s also interviewed one of the book’s authors recently.