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By Donald on 06-29-09
Fundamental market analysis for beginners
If I remember correctly, it was Warren Buffet who said that there are very few stock tips that you get that are still valid five years later. In other words, most stock tips have a very short life. I liked Warren Buffets insight to buy railroad companies (April, 2007) as oil prices was going up. It shows forward thinking. In the book, Reminiscences of a Stock Operator, the main character says that prices in the stock market reflect what is expected to happen six to nine months in the future.
Unlike Warren, Louis appears to be driving ahead by using the rear view mirror. All of the types of data available on a companys balance sheet are usually presented to stockholders two to six weeks after the financial period ends. It is historical performance. The ability to extrapolate historical performance into the future is more art than science. Consider the stock market slide in 2009. Many companies quickly announced lay offs. The expenses associated with lay offs will not show up in a companys financial reports until weeks later.
The author uses one years worth of data, processes it, and then assigns a letter grade to around 5,000 stocks. There is no cost to see the letter grade assigned to the stock of your choice on the authors web site. For a fee, you can subscribe to a service that will give you stock tips. See some of the negative reviews on Amazon.com.
One of the goals of a trading system is to take emotion out of the trading process. In other words, you depend on the model to make the buy/sell decision. However, you will find that over time, the markets adjust and the model will need to be re-aligned.
Models have their problems. See Age of Turbulence for problems with economic models and Ed Seykota web site to make your own.
2 of 2 people found this review helpful
By CTOESITE on 11-25-08
Good Overview of the Authors trading style
Overall the audio book was well done. Good investing practices were discussed in an easy to understand manner. But towards the end the book becomes a sales pitch for the authors Website
1 of 1 people found this review helpful