Customer Reviews

The Hedge Fund Edge: Maximum Profit/Minimum Risk Global Trend Trading Strategies (Wiley Trading)

5 star:		(13)
4 star:		(1)
3 star:		(1)
2 star:		(1)
1 star:		(3)

 

 

Boucher's "Hedge Fund Edge" is a tremendous gift for equity investor's, and is one of the absolute best stock and general financial market books I've ever read, and I've read well over 200 "investing" books in the past 8 years. Boucher, who manages the Midas Fund (Hedge Fund), rewards the reader with a tremendously hard won compendium of his knowledge and research into what drives equity prices around the globe. He begins by discussing bear market risks to your terminal wealth, and then takes the reader on a tour of Austrian economic liquidity cycle drivers. Boucher discusses the value of technical analysis in confirming the timing of fundamentally based trends, a very sound and useful approach. He promptly offers up 9 simple, yet elegant mechanical models for stock market timing, ranging from technical price and breadth based models, to those based on more indirect fundamental things like consumer sentiment gauges. He then reveals his own formula for calculating the high reward/risk times for non-United States equity investing, melding interest rate trends with stock relative strength trends... a real gift, and worth many times the book price by itself. There is a tremendous compendium of money management rules and techniques ... methods of controlling equity drawdown while allowing upside gains. Another gift. There is another tremendous section on US market individual equity investing. Boucher includes his own modified/improved version of William O'Neil's CANSLIM technique (I feel like Boucher's handling of the technical patterns for buying and selling is much superior to O'Neil's pioneering treatment... and again, worth many times the price of admission). He then covers portfolio construction, via alternative asset classes: various types of bonds and what types of market conditions favor their use, including two excellent bond market timing models; use of gold and silver with several timing models; REITS; use of arbitrage funds and global hedge funds in portfolio diversification, including specific fund recommendations for their various niche expertise! Throughout, Boucher's coverage of strict risk control is very refreshing and speaks of his real-world experience managing funds. This is the absolute BEST $50 education I've ever given myself, and I'm tremendously indebted to Mark Boucher for publishing so much of his work and experience in one book. I read it front-to-back in two days on what was supposed to be a vacation cruise... I couldn't put it down. Read it a second time on the same cruise. And a 3rd once home. Boucher graciously acknowledges his own influences (O'Neil, Zweig, Davis, Freeburg, Sullivan, Bank Credit Analyst), making for an instant listing of follow-up reads if you wish. He mentions his favorite sources of ongoing investment info as well. On a scale of 1 to 5, I give Boucher 6 stars, and if he writes another book, I'd buy it sight-unseen. Bravo.

first, in boucher's defense, other reviewers have misunderstood the term "hedge fund" to mean "market neutral." the term "hedge fund" simply means the ability to go short in a portfolio. in that regard, the title is not misleading at all. this book does outline several short strategies based on an understanding of the liquidity cycle.

however, boucher, for as much as he espouses the austrian economic method, has forgotten that one tenant of that methodology is a total diregard for econometric forecasting. the relationships he defines in this book would have had many people in trouble in the early 2000s because, as the austrians state, what happened (past economic relationships) in the past does not have to happen in the future (these once dependable relationships may break down - with your money on the line). current monetary policy has been ineffective, and therefore, so would any of boucher's systems that rely on monetary indicators. these indicators would have been screaming "buy" the equity markets, while the equity markets themselves would have been screaming "sell us...now!"

that being said, the primary reason not to buy this book is that some of the systems that boucher gives are insightful logically, but dubious in execution. while he may give you a system, he does not give you all you need. the reader assumes that he is giving valid systems, with all pertinent information. but, he leaves certain important points out. for example, on page 138, he says that you should buy stocks when up volume on the NYSE is greater than 77% of total volume and then he gives past buy and sell dates for the strategy. after much testing, i figured out that he is not using total volume on the NYSE, but rather total volume less unchanged volume. in other words, total volume is up volume, down volume and unchanged volume for all shares trading on the NYSE. boucher's "total volume" is just up volume plus down volume. this makes a huge difference.

also, any time he uses 30-year t-bond data, good luck to you trying to figure out what he's actually using. the fed has a constant maturity series that goes back to 1977. boucher can go back to 1943 for this data. hmmmmmm. i'm sure he's using something, but i have no idea what. so, what good is the system if you don't know what he's using as the "30 year treasury yield"? and, through no fault of boucher, the 30-year is not issued any more.

he also relies quite heavily on the dow jones 20 bond index. this series was discontinued. this is not boucher's fault, of course, but just another reason to steer clear of this book.

i will say that i learned quite a bit from this book, however. it was fun to read. my problem simply resides with the somewhat tricky way that some of his systems are given. hey, i don't expect the guy to give away a proprietary system, but if you give a system, step up to the plate and tell the reader you're going to leave out some things (he actually does do this when he relays someone else's strategy). i find his method a bit disingenuous.

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There is so much information in this book that it demands at least two readings. First, there is a wealth of material on trading. The chapter on technical analysis and reading the markets is solid and contains some good tips I've not found elsewhere. There is an entire chapter on containing risk, a large focus of which is money management--this information is worth the price of the book in itself.

Boucher also offers good material on selecting equities, evaluating other asset classes, and yes, hedge funds. However, the material on hedge funds does not take up a huge amount of space, and at first I wondered why he gave the book the title it has. I have since concluded that the title reflects his overall strategy, which is one of limiting risk by spreading ones' investments among many types of securities and asset classes, both onshore and offshore.

Aside from the above mentioned material, however, Boucher also has a couple of chapters on basic economics which I found to be invaluable background information for traders (like me) without business or economic degrees. His description of the liquidity cycle is brilliant. He explains the economic theory of Austrian alchemy, and shows how that model makes better sense than Keynesian economics. He has also provided data to convince me (a social liberal) that corporate taxes have a negative effect on a nations' citizenry.

This book requires dedication to get through certain sections, but it is well worth it. Its strength is its clear elucidation of trading information and techniques, supported by a foundation of economic theory and historical data, which enables the reader to understand the context in which s/he trades.

This book is, at its core, a book about risk management, and is probably the best book i've seen about reducing risk. A few investing books will get into things like position risk (stops, what not), some even touch on asset allocation. I have not seen any that take as global a position as Boucher takes, though.

There is a bit on technical analysis in the book as well, but that is not the focus of the book. Some of the TA techniques were interesting, although not new (relative strength, etc).

There is a lot of work on macro economics, and how the world economic system fits together, from an investor/trader's point of view.

Unlike many other books with a macro focus, the book does not lose its readers by forgetting to deal with the nitty gritty world of trading, and has devised a consise checklist of things to look for on both the long and short side. If I could give this book 10 stars, I would.

Well, as a professional trader in emerging market bonds, currencies, and partially equities who just went freelance to consult funds on my own, no other book could be so timely and handy. Actually as I always do, I browsed the book and the appendice, and thought this was one of those which were written in a used-car-salesman manner, and aims to induce you to buy some services which have a slim chance to give you decent returns, if any. However as I read on I realized this is one of the best investment books I've ever read, and I've read a lot of them! Boucher gives an integrated top-down approach to building a global portfolio, and he so interestingly puts together all the things that you think you know and is obvious, to come up with a rigorous investment approach. A must read, and it surely will be a classic.

Thank you, Thank you, Thank you Mark Boucher. This is a book that you definitely want to buy and take notes. I have 11 pages of notes from this book on 10 point type. Boucher covers tons of information and you certainly won't be able to digest everything in the first couple of readings. But if you have the desire to sit down and really follow what he has to say then you can really get your money's worth from this book.

Boucher goes into a lot of detail on the bond and equity market in the first part of the book and how they are related. Tells you when to start to buy real assets like real estate, gold, silver, etc... He covers tons of market timing models from bond prices and yields and government statistical releases. He also tells you how the FED distorts the economy and signs to watch how the markets react to the distortion. He goes into a very good explanation about the Austrian Liquidity Cycle and how capital gain taxes are killing the USA. He also explains why privatizing social security is such a good idea but overall tells why government should be far less intrusive than it currently is now.

Boucher then goes into his equity fuel criteria. It is rigorous process that he goes through to pick stocks. It is similar to CANSLIM but he adds several of his own screens to it including the 5/21 runaway characteristics which I have found to be extremely helpful.

He covers a lot more topics from when to buy gold, money management, how and why you should keep a journal etc....all in one book and it isn't just a shallow explanation either they are in depth.

Overall a very good book. 5 stars.

hedge fund manager knows, then this is the book for you. His vivid descriptions and his mastery of all things from the macroeconomic to daily bar chart is clearly evident in his material and his confident prose. I have a whole new understanding of how the economy functions from his explanation of the Austrian Money Cycle Model. Better yet, he has dialed down the essence of how to make the right intermediate-term trades work well regardless of market direction. Best of all, if I want to find out what he is thinking about the markets today, I can check out his column on tradingmarkets.com. This is a must-read for the trader who wants to do well.

Having sifted through mountains of investment books, I can honestly say that this far-reaching tome is the one I have enjoyed and learned from the most. Skip all other financial books, including the great classics, and run to pick it up. The philosophies and methods Boucher details are simple, comprehensible and will change the way you manage your trades and money. It could use some expansion and editing, but as it stands you cannot afford not to read it.

This book is not about investing in hedge funds. It does, however, teaches you how to invest like a hedge fund manager. This means you invest globally; you invest in variety of asset classes (equities, metals, bonds, VC, real estate, etc); you shift your investments depending on the market climate; and so on. Essentially, this is the "edge" Mr. Boucher was talking about. You, as an investor, are not encumbered to invest in any particular asset class, sector, country, or investment style as would other money managers do. This book gives you investment tools / models that you can use right away. Plus it also teaches you how to understand them so you can build your own tools as well, or at least be able to recognize when a tool stops working.

Mr. Boucher, THANK YOU for generously sharing your research and the ideas / techniques of other great innovators. Mr. "X" would have been very proud of you. Oh yeah, I like the "Coconut Price Index (CPI)" analogy - I almost died of laughing.

I must agree with reviewer Omar Wanza. There is nothing in this book about statistical arbitrage, which is probably the most effective strategy used by hedge fund managers. Nor does it really talk much about many of the other methods used very effectively by hedge funds.

While the book covers a wide variety of topics pertinent to investing, its central thesis is that knowing and understanding the liquidity cycles of individual countries is of paramount importance in developing a portfolio strategy. When he talks about the liquidity cycle, the author is bascially talking about the business cycle. Due to the rise of the global economy, however, the likelihood that different countries will continue to have differing liquidity cycles is becoming more remote. Also, because it is extremely difficult, in practice, to predict any liquidity cycle, it would seem to me that the information in this book is only of limited value for any investment strategy.

The basic problem with this book is that it was written in 1999, which was not only before global investing became less profitable as a hedge fund strategy, but prior to the current bear market in equities. Based upon various demographic considerations, the author, Mark Boucher, predicted that a bear market in equities would be likely in the year 2005. Some of Boucher's assumptions regarding the relationship of liqudity cycles to various asset classes seem to me to be in need of adjustment based upon the actual economic events that have transpired in the last few years.

In one of the later chapters, he recommends a number of hedge funds, but the book would have been far more valuable if, instead of recommending various hedge funds, he had actually outlined the many different effective methods used by hedge fund managers to manage their own portfolios.

Although there are many potentially helpful things in this book, the title seems to me to be misleading, and I'm not sure that all of the theoretical considerations in it would necessarily pan out in the crucible of current market conditions, whereas certain hedge fund strategies, which are not even mentioned in the book, would probably be far more promising for today's environment.