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Readers reviews of Investment Madness

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This book has potential, but unfortunately it fails to fill it. It never seems to go the extra yard, with the result that the observations do not rise above the ordinary.   The same subject areas have been covered in greater detail, with more insight, and with more real world application by other writers who are also traders.


The book is marred by theoretical reasoning that is not practical. For instance, the claim that annual company earnings have the same characteristics as a series of coin tosses is fundamentally wrong. Coin tosses are independent events, so the result of the next is not dependent on the last. Earnings reports are linked and dependent events because this years earnings are very much built on last years earnings. This relationship  affects the role of  traders and investors expectations.


The author accepts platitudes without question and serves them up as insights, or accepted wisdom. He writes that all small companies are high risk, and by implication large companies like Enron are low risk. Such comments fail to understand the nature of the market and the nature or risk. A better understanding of these market realities would then make his comments on the psychological impacts of investing much more relevant.


He comments that “When you focus moves from investing to trading, your wealth is harmed,”  (p 132) is a good summary of the limitations of this book.


Psychology plays a key role in enhancing or hindering your trading ability. This book provides some useful observations but it always seems to just miss the vital point. I am left feeling that perhaps there are a few paragraphs missing in each section which bring the comments together and provide real insight and application.


If you want to know more about this aspect of investment and trading behaviour you will find better books quite easily. Many of them are reviewed on these pages.



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