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Practical Speculation Paperback – January 21, 2005


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Product Details

  • Paperback: 400 pages
  • Publisher: Wiley; 1 edition (January 21, 2005)
  • Language: English
  • ISBN-10: 0471677744
  • ISBN-13: 978-0471677741
  • Product Dimensions: 9.1 x 5.9 x 1.2 inches
  • Shipping Weight: 1.1 pounds (View shipping rates and policies)
  • Average Customer Review: 3.8 out of 5 stars  See all reviews (102 customer reviews)
  • Amazon Best Sellers Rank: #354,613 in Books (See Top 100 in Books)

Editorial Reviews

Review

". . . the best trading book of the young millenium. . . offers more trading 'truth' than a dozen typical market books combined. It's in a league of it's own." (Active Trader magazine)

At last, some modest proof of what some of us have long suspected - beware of lords on boards. Authors Victor Niederhoffer and Laurel Kenner* studied the relationship between stock returns and the number of board members with titles in the 50 largest companies by market value in the FTSE 100. Over a five year period, the more titles on the board, the worse the performance of the shares.
Niederhoffer and Kenner even invented a valuation indicator, the earnings/lords ratio, dividing the earnings per share by the number of titles in the boardroom. At the time they did the study, Powergen, with just one lord, looked the most attractive stock on this basis.
The finding raises the obvious question of causality. As the authors write: "Was it the lords who caused the lackluster performance or the lackluster performance that prompted the companies to use lords as window-dressing?"
That comment, however, suggests a possible American misunderstanding of the British honors system. The presence of titles on UK boards does not simply indicate the lingering influence of the ancient British aristocracy. Charities may still want to recruit Lord Ponsonby-Snodgrass just to make the notepaper look respectable; boards of FTSE 100 companies don't really need to do so.
Instead, the preponderance of titles shows the tendency for the honours system to reward people for business success. Rise to the top of a FTSE 100 company and you can be pretty sure a gong is heading your way, especially if you have the foresight to make some political donations.
The "lords on boards" effect may thus be merely another indication of the old rule of "reversion to the mean". Executives get awarded titles when profits are strong and the share price is rising, not in the aftermath of profit warnings and failed acquisitions. Since all companies eventually suffer some sort of bad news, the disasters are more likely to occur after the honours are awarded. When the queen brings the sword down on an executive's shoulder, the blade of Damocles may not be far behind it. *Practical Speculation, published by John Wiley & Sons (The Financial Times, June 4, 2003)

"...At last, some modest proof of what some of us have long suspected - beware of lords on boards..." (Financial Times, 3 June 2003)

"...will enable the investor to make independent decisions about their investments with confidence..." (Portfolio International, June 2003)

"...shows how far pension fund figures are out of line with long -term share market expectation..." (Liverpool Daily Post, 6 August 2003)

"Niederhoffer and Kenner dispense pearls of wisdom for both the seasoned professional and the novice about investing and much more. Though you may not agree with all that they write – I can’t imagine anyone would – they will compel you to think and very often, cause you to smile." --Mark P. Kritzman

I consider Victor Neiderhoffer's highly entertaining Practical Speculation to be a modern classic. In Practical Speculation, Neiderhoffer explores a wide range of fascinating topics ranging from the wisdom of value investing to the implications of a company slapping its name on a shiny new stadium. - Street.com --This text refers to an out of print or unavailable edition of this title.

Review

"Niederhoffer and Kenner dispense pearls of wisdom for both the seasoned professional and the novice about investing and much more. Though you may not agree with all that they write – I can’t imagine anyone would – they will compel you to think and very often, cause you to smile."--Mark P. Kritzman --This text refers to an out of print or unavailable edition of this title.

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Customer Reviews

This is one of the best trading/investing books that I have read in many years.
James S. Moen
Every money making assertion the authors make is backed up by solid statistics and thorough testing.
Phil McDonnell
You might think he learned some humility from his mistakes, but just the opposite.
Q

Most Helpful Customer Reviews

129 of 139 people found the following review helpful By A Customer on July 16, 2003
Format: Hardcover
This is literally the cost of the wisdom in this book.
Mr.Niederhoffer is back after his fund with $120 million under management,rated the best for 12 consecutive years,lost big and was forced to close in 97.
He`s back explaining what went wrong and how to avoid the mistakes he himself committed before learning (the expensive way)what not to do.
It`s hard for a small fish like myself who lost his small stake (relatively speaking) few times in his years of ignorance to recommend this book since,I consider it a hidden treasure no one has the right to benefit from in this cut throat business without paying at least the tuition fee I and my fellow traders paid switching from one losing system to the next.
This said,Do you accept the gift?
This book is the closest thing to a free lunch on wall street.
The best investment ideas are found in the most unlikely places.
Isn`t Practical speculation,a book written by a hedge fund manager who lost everything and mortgaged his house, an unlikely place to find great investment ideas? Well,think again.
Victor Niederhoffer is imho the world`s best trader.
Now,here`s the man`s REAL TIME track record that you can verify for yourself:
In March 2003,Niederhoffer was THE ONLY bullish trader I know of.
He published his opinion in a very insightful column on MSN -why the market should go up 19%? - while the Prechters,Abelsons and the other trend followers of the world were talking about a 10 year bear mkt and a crash that only Mr.Prechter can help us conquer.
Mr.Niederhoffer`s prediction was not contingent on any break of a trendline or a moving average crossover or a resistance level breakout like most technicians tell you to save face in case their prediction goes astray as it usually does.
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56 of 63 people found the following review helpful By A Customer on April 2, 2003
Format: Hardcover
Practical Speculation is one of the two best books on trading/investing on the market, the other book is The Education of a Speculator.
The Education of a Speculator, was largely an autobiography, in which Niederhoffer shared some of his life experiences and lessons, that helped him become one of the greatest traders in history. Most successful traders will tell you that it is the best book on the subject of investing ever written.
The new book Practical Speculation, teaches you how Victor does his research, walks you through a few examples, and explains why the the research churned out by brokerage firms, and Stock Market Commentators is flawed, and will only loose money for you. Victor alerts you to the pitfalls that most average investors fall in to, and shows how the scientific method can be used to illuminate the path.
This book is well written, entertaining, and filled with great ideas, that you wont find elsewhere. Victor's two books are probabaly the only two books any investor need read. I have read most of the popular books on investing and trading, and Victors books are so far ahead of the rest it is unbelieveable.
I have only just finished reading this book, but I know I will go back to it many times, as it is difficult to absorb all the great ideas in one reading.
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75 of 86 people found the following review helpful By Russell D Sears on June 27, 2003
Format: Hardcover
Perhaps the best book ever written for someone trying to establish their own views and beliefs on the markets. If you note the list of people reviewing this book, it is like a who's who of ground breaking work on the markets. Jon Markman, Yale Hircsh, Dr. Steenbab all are on the cutting edge of practical market writing. If you write this off as the authors simply being a "Wall Street insider" you are mistaken. Further, if you let the high accolades of Victor Niederhoffer's brilliance, intimidate you from buying the book., you couldn't be more wrong. If you are just beginning your studies of the market, or if you are a "tried and true wall street insider", there are many lessons to learn.
I am far removed from Wall Street, and Indiana boy just beginning my "investment career", without a business degree from a esteemed college. Yet found this book inspiring and full of wonderful suggestions on how to approach the markets.
My best sentence summary of this book: "It leads you to personal responsibility for your investments".
You learn of Victor's own dramatic poignant personal acceptance of such responsibility. From his meteoric rise to top of the hedge fund world to his fall, in 1997, only to reinvent himself to make a return. Few have had a more spectacular fall from grace. He admits mistakes and clearly exposes an easy target for his critics. However, I found this most endearing. He gladly accepts the criticism of others more enlightened, to teach his mentors a few lessons. He explains how to avoid being blinded by success, if you are fortunate enough to achieve it.
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38 of 42 people found the following review helpful By A Customer on June 27, 2003
Format: Hardcover
I am an economist from the New York area. Long-term investment in the stock market has been quite profitable for most, but attempts to augment those returns by active speculation is not as easy and has cost many far more than they had hoped to gain. As Prof. Milton Friedman has observed, what we assume to be true that is false is far more dangerous than not knowing and knowing that one does not know. Part of the problem is that they are many myths and unproven widely held assumptions that can lead the speculator astray. Even a good number of professionals fall prey to such misconceptions. Victor Niederhoffer and Laurel Kenner's excellent collaboration exposures many of these fallacies and then goes on to show how an aspiring speculator should go about testing and thinking about how to make money. While they provide some useful ideas, cautioning to be aware of ever changing cycles, what they really provide is a way of going about the process and do so in a way that an investor with just the basic understandings of the market can probably follow easily. Victor has no need to write this book. Although he is quite frank in discussing his own investment debacle in 1997, he has been able to recover from that event. His many years of investing have given him experience and understanding of markets that few can match. While providing useful advice, he is not giving away any magic formulas or secrets. I have personally known him for a good number of years and believe him to be a most honorable and generous man. He has gained much from the relatively free economic system of this country and in the spirit of Benjamin Franklin is willing to share some insights with others so that they too can be enriched by this land of liberty and its ordinary people that he so loves.Read more ›
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