Customer Reviews

The ABC of Stock Speculation

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The original Dow Theory articles by Charles Dow combine an odd mix of topics: cutting losses; letting profits run; averaging down, buying "value" on the dips; and market manipulation.

Dow frankly states that "the markets are always more or less manipulated." But then later he admits... "...people in Wall Street...do not know what the market will do with any regularity..."

He advocates averaging down a few times, which is odd, considering what he wholeheartedly endorses several times...

Dow mentions cutting losses short and letting profits run more than any other single idea. It appears in almost every article.

On bear markets... "There will be a sifting of the better from the worse, visible enough at a distance, but not conspicuous at any particular stage in the process." Sounds like the "narrow advance" of today...the pinnacle market?...

One of the articles involves a description of discretionary accounts (managed accounts) that makes the swindling operators of them sound like the guys who are running LTCM (see WSJ 5-20-99, page C-1). They take your money and tell you it wasn't their fault when the market kills them. The only (possible) difference is that many of the swindlers of earlier this century never actually invested the money they received. They just took it and ran.

An interesting read. Buy a copy of S.A. Nelson's The ABC of Stock Speculation. That's where I read these articles.

This was a good, fun and practical read. It amazes me that so many things that were true in the early 1900s still apply today. The principles in this book will help you be a better investor or trader.