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
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
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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