Investment-management

In 200 questions you will learn a lot about yourself, your motives, and most of all your personality. This is where Dr.Elder's background shine. In order to conquer the markets you must conquer yourself.

After being involved with futures trading for 11 years and writing several books on the subject I still find books like Dr.Elder's inspirational and mentally clarifying.

The much advertised "new distinctive investment approach", the so called "Generalized Sharpe Rule" is a rather naive treatment on classical risk/return analysis. However, the lack of mathematical rigour is well compensated with good references.

In the fourth chapter, for instance, after making a hopelessly simplistic but somewhat credible case against buying title insurance when buying a house, he forgets to include the vital fact that the seller pays for title insurance in almost all cases. Later in the book he gets lost in his own story about budweiser without making any point at all.

Like so many books about finance, this book has two flaws. It does not have enough content to warrant a full book, even a skinny one like this. When it does start to wade into deeper water, one senses the heavy hand of an editorial assistant, too weak in the comprehension of numbers, trimming and constricting the story to the point that the reader can't find the significance of its message.

While the book definitely imparts important information every trader or investor should know, the advice is very simplistic. For example, chapter one explains that we should "buy low and sell high" or that we must be emotionally prepared for losses and gains. One rule he gives could be dangerous if incorrectly applied, and this involves selling too early. The author says that selling too early does not cause you a loss, after all. However, this could be hazardous to a trend following system which depends on a few large gainers. If those few large gainers are sold early, they will never develop into large gainers and offset the many losses. In short, and as other trading experts have noted, one CAN broke taking profits early because this may avoid the big gainers - unless your system is one which is more dependent on the frequency of winners than the size of those winners (e.g. a day trading system).

The text is very introductory and should be for the introductory trader.

He teaches technical analysis and he doesn't stay clear of fundamental analysis although he stresses the technical side of things.

It is his view that all the information is in the price. It is.

But he goes on to teach that in spite of the price being the ONLY thing that matters in knowing where to place your investment money, he also explains that every stock does exactly what it's supposed to do... just not exactly WHEN it's supposed to do it. Therefore, your plan has GOT to make room for contingencies. I appreciate how he stresses stop losses. I know of many (poor) investors who heard the lie, "Don't place stops or the specialists will take you out!"

If you're brand new to the market, I'd get a VERY intro book on investing first, and then I'd read/devour this text. It's not an advanced book but if you've never bought or sold a stock, it will confuse you. You don't need much experience though to make this work for you.

Well, i've read books on money management that go too far on systems and techniques that aren't that easy to grasp or implement. This book by Mr. Deel goes a long way on showing you ways to complement your trading system with just a few rules that will keep you alive for many losing trades in a row, if such a tragic situation ever occur. So, don't waste too much time on making a buying decision. This book is for you. If you're into mathematics, this one will leave you wanting. If you just want a simple and effective way to complement a trading system so that you'll be right there for that next trade with enough tradind capital, than this is it.

If you trade futures only, look elsewhere...

Two previous reviews that suggest Marrison is too basic or merely repeats other authors are, in my humble opinion, dishonest. Marrison is a sophisticated book for sophisticated readers who are new to risk management. This includes MBA students taking courses on the capital markets or risk management. It also includes professionals working in their first risk management position. Marrison did not invent VaR or ALM, but authors of other books did not invent these concepts either. An author's task is to describe established concepts in a manner that is accessible to and useful for his audience. In this respect, Marrison's book is a dramatic step forward. His choice of topics, organization and writing are superb.

One of those previous reviews recommended that you read books by certain other authors instead of Marrison. Of those books, the only one that Marrison competes with is Jorion's Value-at-Risk. Marrison is an order of magnitude better than that book. The other books cover unrelated topics or are more advanced treatises on specific topics. You might graduate to such books from Marrison, but they are not alternatives to Marrison.

Finally, you can't beat the price on this book. Marrison simultaneously offers a bargain AND one of the best books available on risk management.

...but that picture on the front cover should have been replaced...yuck!

This was genergally the reaction of any industry participant I spoke to, independently of whether they were clients, students or collegues of mine both from the Energy community or from academia. Therefore, with this feedback, I would strongly encourage my collegues to read Peter Fusaro's new book "Energy Derivatives: Trading Emerging Markets" which he edited with Jeremy Wilcox and was published in October of this year. In this book Peter Fusaro and his team of energy professionals take the reader deeper into the secondary markets (energy derivatives, etc.) which have emerged as a result of the deregulation process of the Energy Industry and, most importantly, the book explains how to use these markets to manage energy risk. Further, in chapter 3, 4, 5 and 6 the reader is introduced to the concept of interdependency among energy markets and other related markets. These include weather and weather derivatives, emission trading and bandwidth - the most recently emerging market converging with Power to become the backbone of the new global economy. This is the first book to address the complex topic of convergence of power and the rapidly growing bandwidth market. For this reason alone this book becomes a must for everyone who is interested in becoming a part of the evolving energy market.

What Sherden doesn't do is tell us why people continue to believe predictions, and why billions of dollars continue to be spent based on predictions that aren't any better than throwing darts. But that's a good topic for another book.

This book is absolutely required reading for anyone who wonders whether stock analysts or economists really know what the future holds. The answer is simple: they don't.

He doesn't attempt to get too theoretical as to why prediction is hard. He just looks at the evidence and finds that it is so. None of the predictions that regularly fill newspapers, business books, government economic forecasts, stock-market guides are demonstrably better than tossing a coin. This is a crucially important message as the consequences of believing a duff forecast are enormous. Better to recognise the uncertainty and plan to be flexible.

I'm surprised at the negative comments from reviewers who wanted some analytical framework to deal with all this. This smacks of those who respond to uncertainty by demanding a more precise forecast. The first step for most people is to recognise how worthless forecasting is.

I work with businesses relying on forecasts and I've found Sherden's book invaluable at shifting their thinking. I don't expect Sherden to provide solutions; thats my job.

The only flaw in the book is that Sherden does not differentiate enough between the predictable and the unpredictable components of the future. There is some good thinking on this in the literature on scenario planning (but Sherden's fundamental thesis stands: most important things are not inherently predictable).