Customer Reviews

Rule the Freakin' Markets: How to Profit in Any Market, Bull or Bear

5 star:		(54)
4 star:		(12)
3 star:		(14)
2 star:		(6)
1 star:		(18)

 

 

The author's claim he turned $33,000 into 7 million in 15 months is extraordinarily unlikely, and extraordinary claims require extraordinary proof. However, you will not find any trade confirmations or affidavits from accountants in his book. In fact, he does not even detail one single trade he has ever made. One might wonder why someone who is supposedly so proficient at trading needs to write books, run a trading website, hawk videos, infomercials, etc. His book also contains numerous errors that make me wonder if he has ever traded at all. For example, he doesn't appear to understand the details of the new SEC day-trading rules, particularly the increased margin available under these rules to intraday traders. He states that Datek (now merged with Ameritrade) is not a direct-access broker (false). In fact, Datek at one time owned a chunk of the Island ECN, the ECN used almost exclusively by all sophisticated traders.

If the author did manage to achieve the gains he claims, it would have been during the very end of the biggest bull market in history, a speculative bubble that will probably never repeat itself in our lifetimes. Many of the "trends" which are the basis of his trading strategy no longer exist. For example, IPO and stock-split plays. In this current market, how many IPOs or stock splits have you heard of recently? Although the book discusses many solid trading rules such as always using stops on every trade, these rules can be found in a thousand other books on trading.

The most important part of trading, the mental and psychological barriers that need to be overcome in order to be successful are really not discussed at all, or are simply assumed. Ultimately, the book is irresponsible because it does not ever disclose how difficult it is to succeed at trading. For example, Massachusetts regulators seized the records of one day-trading firm in the late '90s. They found that the firm had 68 traders, and 67 of them were losing money. This works out to be close to the typical failure rate of 97% for individuals who attempt to trade for a living. Do I think the author is one of the 3% who made it? Nope. It's much easier to write books on how to trade than to actually do it.

I like the guy. I enjoy watching his infomercials, and the book is entertaining. His writing style is refreshingly down-to-earth, humorous, and somewhat motivational.

I want to point out that this is NOT a book on daytrading, it is on swing-trading. The only mention of any intraday trading is "fading the morning gaps" which is only passingly mentioned in the book, not even really described. Years ago I saw on his infomercial where he was asked if his material was about daytrading and his reply was a firm "No! Too risky!" Judging by the column in Kiplingers a couple months ago it would seem he has changed that stance, as that writer had participated in his service that advises fading the morning gaps.

For years he has sung his mantra of "Trend trading." It's a branding thing he is doing, inventing the term and associating it with himself. Good marketing, no doubt. But he uses the term "Trend" in a different way than everybody else in the trading world. To him it means the trend of a certain perceived catalyst that is expected to move a stock's price rather than the actual price movement of the stock. For example, stocks that are expected to have a positive earnings announcement have a "trend" of upward movement the weeks prior to the announcement.

The first issue I have with the book is a minor one and has been pointed out by other reviewers: The "trends" he speaks of just don't work. Maybe they did at one time, as David Nassar has written about trading earnings whisper numbers in the past as well. But they don't work now. Let's review:

*FADING THE MORNING GAPS - As an active daytrader I heavily advise against this. If you are going to trade the opening minutes on volatile issues you are going to get seriously chopped up. This is pure gambling and you will take some large losses. Now, if you wait 15 minutes or so until they break the opening range, you might have something. In fact I do this myself. But I have found by experience that the stronger trade is always in the direction of the morning gap, not against it. In fact some of the best trade setups are those that start to fade the gap, find support or resistance into the gap a ways, and then move back in the direction of the gap. Some of those run the rest of the day directionally.

*EARNINGS ANNOUNCEMENTS - during the bull market when Waxie turned $30,000 into $2 million I'm sure this worked great. Upcoming earnings announcements these days have little or no affect on a stock's direction in the weeks before the announcement. This is debatable, and I can't prove it, but nobody can prove otherwise either. Looks pretty random to me.

*STOCK SPLITS - same deal, upcoming splits do not cause a stock to run up unless the market itself is running up. No help here.

*IPO PLAYS - good luck with these. Lockup periods, insiders allowed to sell dates, etc., the early days of IPO trading are highly speculative and I have seen no evidence that anything that happens with them acts as a tradable catalyst.

*SECTOR SYMPATHY PLAYS ON NEWS - OK this actually works, but absolutely no information is given on how to go about finding and trading them. And what time-frames to trade them in is not even touched upon. It's an empty concept.

My bigger problem with the book is that it completely lacks substance. In the author's rebuttle below he states that "...if the rules are followed you WILL make money." That's great news! It sure would have been nice if any of these rules were included in the book. There are none. I guess we are supposed to buy the $5,000 package to get the rules?

So it's really basic stuff with no real details. A better title for the book would be "Trading with Dick and Jane." Hey, maybe I'll write that one!

[...]

Use this book to avoid making mistakes typical of so many investors.I enjoyed the exercises on how to trade, when to short stocks and why.The author shows that it doesn't matter what the market does, you can still make money if you know what to do. This book shows you the how.I also recommend Red Light, Green Light as a excellent study and how to read the markets and play market trends that are predictible.

I CHALLENGE ANYONE TO DEVELOP A PROFITABLE TRADING STRATEGY FROM THIS BOOK ALONE. YOU CAN'T. Parness' story is real and compelling, and he believes that it could be yours, too. You could go from $30,000 to $7 million in 18 months, like he did. But you won't with his book because he doesn't tell you how. He plants ideas in our heads, then leaves us hanging on the details of implementation. I SUSPECT THIS BOOK IS MOSTLY AN ADVERTISEMENT FOR HIS WEBSITE AND THE SERVICES HE SELLS ON IT.

This book has a lot of great ideas about how to take advantage of short-term trends in individual stocks. Parness talks about how to use news, expected earnings, stock splits, etc., to capitalize on predictable behavior in stocks. His examples are tantalizing, though he only uses made-up, idealized examples. But he doesn't tell you rules for determining if a stock that is going to split is actually going to rise in price. He tells you how to take advantage of price pullbacks for better entry prices, but he doesn't tell you how to tell if a pullback is a pullback or a reversal.

This writing might be most irresponsible when it comes to talking about options. Options are powerful tools, but a person can lose his shirt, mostly because of the loss of time value in the option. People who get excited about the idea of options and begin trading without really studying and learning the discipline that goes into options trading are fodder for the experts.

That all said, the book is an entertaining read. He does throw out some good ideas. Just be sure to follow them up by reading other experts.

The bottom line is that if you want to take these ideas and run, you would be best advised to do a lot of paper trading to flesh out a detailed and disciplined system. Otherwise, you risk approaching the market as a gambler rather than an intelligent risk-taker--even Parness admits the latter is better.

The author tells how he was down to $33,000 after taking a beating in the markets and then turned that around to make over $7.7 Million in the next 18 months. This is a great book on the psychology of trading and advice that many could have benefitted from circa March 2000.Anyone who thinks the author was lucky or that anyone who made money during the last bull market was lucky, ask any Compaq or Lucent shareholder how they felt as their stocks tanked during the biggest bull market in history.This is a great book and a must read for any serious investor. I also recommend Wall Street Money Machine #3 and Retire Young, Retire Rich.

The general information in this book is excellent. But if the reader is yearning to learn how to trade - if the reader wants to learn just how he can 'rule the freakin' markets - then he must look elsewhere.

This book is an easy and pleasant read. It tells Parness' story and how he made a success of trading. But if you want to learn how to copy his success, you won't find the answers here. Foe example, his rules on how to enter and exit a trade are so vague, they are of little practical value.

This is the first negative review I've ever wriitten, and I'm sad to do it.

While nothing is impossible, I find the author's claim of turning $33,000 into 7 million in 15 months hard to believe. Do the Freakin' Math!!!! He would have to average over $23,000 profit every day. Let's do some more math. The book came out in March 2002, more than 15 months ago. According to him, he turned $33,000 into 7 million, a return of over 21200%. So, if his techniques and philosophy were valid, he should be able to get another 21200% from then until now. He should have about $1.48 billion dollars. And, by 2005, he should have over $314 billion dollars. Unless his technique and investment philosophy are bogus... Or he had the wildest, luckiest winning streak ever... like short selling $7 million dollars of Enron... I would believe it a lot more if he could include copies signed audited statements from his accountant or broker somewhere in his book or on his website. There is nothing really all that new in this book except a bunch of investment cliches. Oh yeah, and lose the New York accent and attitude if you want people to take you seriously.

The book itself reads very simply and I think that was Parness' whole notion behind the way in which he wrote it. What the author is attempting to emphasize is how to limit your downside and how to avoid falling victim to your 'inner knucklehead' as he calls it.
Parness doesn't attempt to teach you the T/A points necessary for some of the trend plays which if he had, may have made the book a little too complex for the first time reader. I think what he was trying to do was expose all levels of investors from the amateur to the professional to his philosophy which can be summed up into two main points: purchase with limit orders and ALWAYS use stops. This may seem ridiculously obvious but its very often the case that emotion over-rides logic in many regards and that is what he tries to emphasize.
After reading the book, I completely altered my trading strategy. I am not going to say that I am making huge returns yet (its only been a few months) but I am MAKING RETURNS which considering the market state that is occurring as of right now, that is something in itself.
One thing to add: take Parness' advice and find a good broker especially if you plan on options trading. Standard online brokers are useless for this method and you need realtime quoting and some keen discipline.

I'm looking at the wall in my office. It has 2 shelves on it that are 10 foot long. Both shelves are packed end to end with investment books and tapes and videos. There are several popular computerized trading program instruction booklets mixed in to boot. I have read them all and tried to use most of them for something or other. I've got stock books, mutual fund books, commodity books, trading books and investment books. If you are like me you probably have something similar. I have been in the investment/trading thing ever since the crash in 1987 when under someones advice I got out of the market at the top. I saw a lot of people get creamed there, including some friends. Then I heard small stories of people making some fortunes from that crash. That really sparked my interest in trading. I mean where DID all that money go? Someone had to take it. It just didn't disappear. Someone did take it! I thought that if they could do it so could I. So ever since, I have been reading and studying. So out of all those books and things, I can look at only a few where I got some solid advice that I can make money with. I am going to add this book to the short list of keepers. The piece of information I mean exactly is what to do during the first 1/2 hour of the day. Most traders tell you to avoid the first hour or so and I have listened. I have also seen it demonstrated in real time data. Now Waxie had a way of explaining it like no one else. He put everyones advice plus his own wisdom and explained it like no one else ever did. The open is a dangerous place to trade, but Waxie straightened it out for me like no one else ever did. He actually made it a place to make money, which I never expected. I guess I am hard headed and need it hammered in. I think that is what Waxie calls "your inner knuckelhead". So I can say in truth that if I had gotten something this useful knocked into my knuckelhead from all those other books I would be pretty wealthy. So like I say this is a keeper the other 90% only hint at subtle things that are not as useful. I hope it helps you too.
bob

Consider the word "infomercial." What does this mean to you? Do you think of Don Lapre, who allegedly made millions from mysterious "tiny classified ads" and subsequently filed for bankruptcy (his claims apparently were as greasy as his spiky hair)? Miss Cleo, the "faka from Jamaica" who couldn't foresee an FTC indictment in her future? Or the granddaddy of them all, Ron Popeil, who brought the world hair in an aerosol can (enough said)? Have you, or anyone you know, ever purchased a product or service from an infomercial and had it live up to the claims made in that half hour on the air at three AM on your local UHF channel? If not, why would you seek advice from someone who promises to show you how to "rule the freakin' markets" via an infomercial?

Think of all the financial "gurus" who have taken to the early morning airwaves in recent years, promising riches with their "guaranteed" or "can't fail" systems for buying stocks, real estate, commodities or what have you. Where are they now? Wade Cook's company is a penny stock, Tom Vu is reportedly selling Prepaid Legal plans, Carleton Sheets no longer speculates in real estate (preferring to make his money in the lucrative infomercial market) and William J. McCorkle is in jail. Do you see the pattern? If so, you should have enough intelligence not to subscribe to Michael Parness' pseudo investment "advice;" instead, read "Security Analysis" by Benjamin Graham and David Dodd, Graham's "The Intelligent Investor," Philip Fisher's "Common Stocks And Uncommon Profits," "The Warren Buffett Way" by Robert Hagstrom or similar texts that will teach you how to invest, rather than gamble.

And if you don't see the pattern...well, I'm sure that no one will be able to tell that your hair came from an aerosol can.