The Nature of Risk (Fraser Publishing Library) (Contrary Opinion Library) (Paperback)

~ (Author)

Editorial Reviews

From Kirkus Reviews

A veteran Wall Streeter, Mamis argued for technical (as opposed to fundamental) analysis of stock prices in When to Sell (1977) and How to Buy (1982). In the charmingly existential text at hand, however, he goes well beyond his demandingly interpretive discipline to reflect on larger issues. To achieve success in either life or the market, Mamis points out, individuals must act before they know enough, meaning there are hazards involved. He observes, for instance, that investors who hesitate may catch only the last 20% of a bull move and thus assume a disproportionate share of risk. Among other problems, the author notes, those under pressure (i.e., at risk) often let emotion determine their responses. Since experience instills concern as well as confidence, he says, many people (having been coerced into socially acceptable behavior patterns since childhood) become paralyzed at critical junctures in their personal and financial lives. Taking as a given the premise that ``the market climbs a wall of worry,'' Mamis advises readers to trust their intuition (not instincts) whether trading equities, falling in love, or engaging in other more or less gainful pursuits. Incurring informed risks, he asserts, can prove a liberating proposition whose reward is not necessarily a payoff, but a balance. By this, Mamis means the satisfaction that accrues from playing a game (or role) to win, rather than not to lose, from start to finish. In addition to an abundance of Zen-like pronouncements (e.g., ``death is the extreme of risk''; ``like sex, money distorts our senses''), he offers a full measure of contrarian counsel on a wealth of subjects--from gold (a commodity Mamis cites as an impotent hedge during recent market breaks) through indexing (an investment approach that reduces responsibility without curbing risk) and diversification (a system ``designed to protect the dumb''). Thought-provoking perspectives on the market and life as tests that never end. -- Copyright ©1991, Kirkus Associates, LP. All rights reserved. --This text refers to an out of print or unavailable edition of this title.

Product Description

Sometimes the biggest risk of all is taking one, and the need to be sure you are making the right choice actually increases the risk. The market is not efficient and hedging doesn't work. To rely on charts to understand the market is Mamis' way. The author is an excellent market technician who offers sound financial guidance and insights into the prepared mind. He gets your thinking going with a comfortable investment philosphy that will often go against convention. There are enough anecdotes, war stories, and charts to make for sound advise. The path to market freedom is technique, and you don't have to be one of the best traders to succeed with experience. It seems to me that the entire 1990s have confirmed the ambiguities of market language and how to operate in such a world. You will know how to keep risk at bay which most of us find not to be an easy task. 241 pages.

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Product Details

• Paperback: 241 pages
• Publisher: Fraser Publishing Co.; 2nd edition (November 19, 1999)
• Language: English
• ISBN-10: 0870341324
• ISBN-13: 978-0870341328
• Product Dimensions: 8.2 x 5.3 x 0.6 inches
• Shipping Weight: 11.2 ounces (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars  See all reviews (13 customer reviews)
• Amazon.com Sales Rank: #148,043 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

21 of 21 people found the following review helpful:

5.0 out of 5 stars Still near the top of the list, January 10, 2004

By	dbphoenix (Phoenix, AZ United States) - See all my reviews

It's been four years since I first reviewed this book (see the next to the last, below), and I still consider it to be absolutely essential for anyone considering any sort of involvement in the financial markets. In fact, it's probably essential for anyone who is considering anything at all that entails more than minimum risk.

The amateurs miss the point. This is not about the best stochastic settings or how to massage the bid and the ask. This is about facing up to the very real risks inherent in the financial markets, including the very real risk of financial ruin. Amateurs don't see the risk; therefore, they don't bother to grapple with it. Instead, they would rather blow up and disappear. If one wants to last, he must come to terms with the nature of risk, his own tolerance for risk, an understanding of how to manage risk. Without that, he's doomed.

18 of 18 people found the following review helpful:

5.0 out of 5 stars Insightful, a pleasure to read, December 3, 1999

By A Customer

I read the first edition of Nature Of Risk many years ago while in college developing a thesis about markets, the media, and mass behavior. This book helped me to sharpen my thinking on those topics, but it also was a sheer delight to read and reflect upon. It gently guides readers to consider their own risk-acceptance (and denial) behaviors in the face of everyday events and circumstances (one of which just happens to be the financial markets). Nature Of Risk is *not* a book that will help you to "win in the markets." But it is a pleasure to read. There are very few writers - especially financial writers - of Mamis' caliber, precision, and throughfulness.

18 of 19 people found the following review helpful:

5.0 out of 5 stars An stellar analysis of the psychology of decision making, July 24, 2000

By	Adam F. Jewell (Pittsburgh, PA USA) - See all my reviews (REAL NAME)

Mr. Mamis steps beyond facts and figures used to analyze the stock market. He examines the psychology and consequences of waiting, learning, and gathering information about potential investment and life choices.

An informed decision would seem to be a sound one. It may very well be, yet in the context of the market, as information risk diminishes (more knowledge is gained about a particular investment), the price risk will increase (assuming positive news results in a rising stock price). Once an investment is deemed to be solid and secure, the existing information will already be reflected in the price of the equity and the potential for appreciation becomes much more limited (price risk increases). The art of balancing information risk and price risk is a central theme of the book, which is discussed, in intricate detail. Also discussed are methods of determining when price risk is likely to be at an absolute minimum -- all news surrounding a company is bad, and no matter how much more bad news comes out the price does not decline further. An interesting "head and shoulders" method of timing the market is presented as well.

Whether it's embarking on a new career, investing for a quick hit, or retirement, taking a new job, signing an agreement or contract, making a new purchase, or getting married, all of life's decisions involve the same basic tradeoff between information risk and anticipated benefits (price risk). The author discusses not only the stock market and investing, but presents mental models from various situations, which most anyone has experienced, and can relate to in some form.

If you are interested in learning about the psychology of the market, or simply exploring and seeking to better understand your own decision making process better, buy this book. It is truly a book about risk, and not one of the over-hyped books blathering on about the stock market