Customer Reviews

The Mind of the Market: Spiritual Lessons for the Active Investor

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Well worth the money! Iconoclastic, irreverent and at times cynical, the author pulls no punches. Not the typical rehash of other investment books and not a tout sheet, this book delves into the philosophical and psychological underpinnings of the market and forces the reader to examine his/her motivations for playing the game. From the perspectives gained through the author's extensive experience, his insightful observations and the reader's own self-analysis, a coherent individual investment philosophy emerges. The book is filled with wonderful quotations from disparate sources that are both thought-provoking and culturally enriching.

It took a spiritual concept from the East to put a moral and high-minded face on the stock market. F.J.Chu has brought his knowledge and practice of Zen and martial arts, along with a broad background in Western philosophy and psychology, to bear in this superb series of lessons.

Both professional and private investors, as well as wannabe market participants, can benefit from this book if they are open to a real learning experience that comes from a thoughtful, reflective and analytical reading.

The history of the U.S. stock market is made clear and understandable, even though the author says, "The history of the stock market is the history of forgetting." Chu is encouraging us not to forget. Outstanding writings such as Adam Smith's "The Wealth of Nations" which explains the invisible hand of allowing us to have fair prices on goods and services, and the works of John Maynard Keynes are put into perspective.

The author observes that the financial markets keep corporations and nations in line every single day by "marking them to market." Corporations' greatest taskmaster is the stock market - much more than regulators, managers and directors, and the market for their products and services.

Chu employs pithy epigrams and aphorisms from Albert Einstein, Warren Buffet, J.K. Gailbraith and others for every chapter title. They are all thought provoking and relevant. He also outlines prerequisites for beating the market. But don't expect a pat formula. The author's suggestions have more to do with patience, when not to be in the market, and avoiding weakness in one's emotional and mental state. There is an enlightening and detailed elaboration on each bull and bear market of the 20th century, with very helpful discourse on how one might look around the corner to the next major market movement. And hang on to your hat, he has some interesting thoughts.

"The most uncelebrated and misunderstood aspect of free market capitalism is its morality. Capitalism demands discipline,hard work and frugality. It preaches giving more to the system - via investment - than one takes out. It focuses the purpose and energies of a society toward productive enterprise. Finally, capitalism celebrates the wonderful diversity of individual talent and resolve. It reallocates capital to the daring; it rewards the industrious; but it punishes the indolent; and it humiliates those who cling defensively to the status quo." This is one of the more spiritual messages one could find in a book on the stock market.

"The Mind of the Market" says that "the markets rest on an intricate theory of sin that recognizes the human tendency towards depravity and evil but attempts to draw from it its creative potential. A marketplace of sinners is transformed by the virtue of reasoned self-interest into a vessel of moral productivity."

I agree, and hope that other readers can get beyond the noise and momentarily valued "how-to-beat-the-market" books and newsletters of the gurus du jour, on to a higher playing field of undersanding with Chu.

The author attacks the true catalyst of the market. This is not the usual "How To" book about the market, rather a refreshing and coherent look at the foundation of the market.

"The ability to accept unpleasant truths and, at the same time, respond decisively is the hallmark of a great investor." Chu tells us in Mind of the Market, his essay on the psychology of investments and the history of the markets. Chu - a money manager, civic leader and former Wall Street investment banker - advances some unusual, well-informed and intruiging idea. Unfortunately, he doesn't fully apply his own concepts.

Chu enlightens us with notions such as "living to accumulate more money suggests that we are somewhat empty and incomplete, dependent on some external activity or substance to give us meaning." Chu also advocates trading with Zen-like detachment from short-term consequences. AS a money manager, I can attest to his wisdom.

Yet Mind of the Market doesn't face the unpleasant and unprofitable truth about the unfettered free market. Chu contends the existing market gives participants an opportunity to "lift themselves off their knees and to walk out of the darkness towards the sunlight." Although he admits a "small minority" doesn't have access to self-advancement (a "flaw" of a market economy), other people simply "whine about their unequal status." After all, unequal status is the market's incentive for production.

Chu's celebration of the unfettered free market ignores the huge number of souls who don't have proper nutrition, let alone capital to invest. This "flaw" is no more inevitable than it is tolerable, for there is nothing in the concept of a market economy that requires that purchasing power and opportunity be highly concentrated rather than widely distributed. While I agree with Chu's claim that unequal status motivates people, the important question is how much inequality is enought to motivate people.

Poverty is not a popular concern these days, and raising questions about distribution of wealth won't help anyone's career on Wall Street or in politics. But unflinching intellectual honesty can raise one's spiritual standing. Chu could teach the world some important lessons if only he would rethink Wall Street's advice to let capital be capital. As Chu himself says, "Few individuals have the nerve to stand outside the crowd. Indeed, to go against the crowd successfully is the hallmark of greatness...[Capitalism] humiliates those who defensively cling to the status quo."

This book is not much about the psychology of the market. In fact most of the text is changes in corporate finance over the years, boom/bust periods as in "madness of crowds". Lots of market history. There is no investing method per se, as stated in one review. It can be summed up as: trade with the trend, cut you losses, don't bet too much on one stock, and money goes where it is treated best. The market psychology is the same thing in other books.

Because of the high praise this book recieved I was expecting some new insights or a different perspective on market psychology. Here it failed miserably. Pass on this one.