20 of 21 people found the following review helpful:
2.0 out of 5 stars
Longing for the good old days, May 29, 2005
This review is from: The New Laws of the Stock Market Jungle: An Insider's Guide to Successful Investing in a Changing World (Hardcover)
I didn't warm to this book. The author seems to lament the 'good old days' when individuals were forced to relay their orders through brokers. This offered brokers a wonderful insight on the directions markets would take since they had first hand information about the next day's trading session, from the best and worst traders. A broker can make a lot of money with that.
Alas, these days are gone. People now use electrical order placement systems and brokers are just as clueless as the retail traders. Pity. Of course, few of us had this inside track and I'm not sure we need to lament its passing.
The musings described above make up the bulk of the book. Here is a summary of the changes. Each of these topics is given chapter long treatment.:
Intraday volatility:
New rule: Intraday share price volatility is on the rise.
Old rule: In the past, wide intraday share price swings were less common, and when they did occur they were often associated with unexpected geopolitical or economic developments.
Trading like commodities:
New rule: Stocks are increasingly being bought and sold like commodities.
Old rule: In the past, institutions generally bought and sold stocks based on traditional methods of investment analysis, often with a longer-term perspective in mind.
Approaches and attitudes:
New rule: Investing and reason frequently give way to speculation and emotion.
Old rule: In the past, institutional buying and selling was primarily driven by logic and measured analysis (although emotions have always influenced investor behavior).
Information and communications.
New rule: More information and faster communications often have unexpected consequences.
Old rule: In the past, information tended to circulate around the marketplace in a slower and more orderly fashion, and the telephone was the primary means of communication.
Derivatives:
New rule: Derivatives are exerting a growing influence on share prices.
Old rule: In the past, the action in the derivatives market was generally secondary to what took place in the underlying cash markets (except on certain occasions, such as Triple Witching Fridays).
Seasonality and cycles.
New rule: Many seasonal and cyclical patterns are becoming less predictable.
Old rule: In the past, many seasonal and cyclical patterns were less widely known and were not affected by today's rapidly changing market forces.
Form and fantasy.
New rule: Substance and reality increasingly give way to form and fantasy.
Old rule: In the past, data produced and distributed by companies, analysts, government agencies, and others was less subject to error, distortion, and manipulation.
Market Indicators:
New rule: Many traditional market indicators are becoming less reliable.
Old rule: In the past, many market indicators were less widely known and were not affected by today's rapidly changing market forces.
Global factors:
New rule: Global factors and foreign investors are exerting a growing influence on share prices.
Old rule: In the past, American investors and domestic concerns were much more relevant to the direction of U.S. share prices than overseas influences.
The book is also sprinkled with 'action plans'. Here are few:
"...when a stock abruptly breaks out of a clearly defined trading range on relatively heavy volume, creating visual "gaps" on a daily bar chart, this is often a sign that a dramatic change in the outlook has taken place."
"When volatility begins to intensify after share prices have fallen for an extended period of time, it often indicates that a downtrend is nearing an end, at least in the short run."
None of this interests me a great deal. Upon reflection, the title suggests a much better book, something along the lines of 'Post 2003 changes in securities trading rules, and how to use them for competitive advantage'. This book would investigate the surreal world of Sarbanes-Oxley, how securities are added/subtracted from the Russell 2000, etc.
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14 of 16 people found the following review helpful:
5.0 out of 5 stars
Essential Reading for Serious Investors, July 26, 2004
This review is from: The New Laws of the Stock Market Jungle: An Insider's Guide to Successful Investing in a Changing World (Hardcover)
This book gives serious investors the sorts of gritty, first-hand insights we have been looking for (but can't seem to find in too many other places).
I am impressed with the way the author has taken a series of seemingly unrelated developments (e.g., falling commission costs, the growth of the Internet, electronic trading, the rise of hedge fund investing) and analyzed how they fit together in a broad sense, as well as the impact they are having on the day-to-day action.
Best of all, the author offers terrific advice throughout the book that clearly reflects the wisdom of someone who has learned (the hard way?) what it takes to make money in the stock market.
In my opinion, New Laws of the Stock Market Jungle is well worth the investment.
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