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Readers reviews of INVESTING: THE LAST LIBERAL ART
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I find myself in a contradictory position with this book. On the one hand I fully agree with his core idea that trading and investing bring together a wide range of disciplines. The best traders are not narrowly focused on finance and lessons, and conclusion from one area of study are successfully adapted and applied to another.


On the other hand, Hagstrom is a victim of the very narrow thinking that he castigates. He is unable to see beyond the fundamental security analysis approach to understanding the market. This leads him to untenable statements that the 1987 market crash caught investment professionals by surprise. He claims that nothing in economic theory could predict or even describe these events. The events of 1987 did not catch those who used charting and technical analysis tools.


Hagstrom is unable to stretch his world view of the markets enough to even mention charting or technical analysis and yet this is the area where the multi-disciplinary approach has taken the strongest foothold. Behavioral finance, crowd psychology, non-rational investment decisions and other behaviors were first exposed and explored using these tools.


The fundamental security analysis approach drawn from Graham and Buffet, assumes there is a correct fundamental value – a ghost price – towards which market activity always gravitates. This is a type of strange attractor discussed in chaos theory yet Glick doesn’t rate a mention.


Despite this, the book is an interesting read. It is a starting point because it leaves so many areas incompletely explored. His ideas do not reach fulfillment and ultimately his borrowed idea of a lattice is not tied together particularly well. It remains a flimsy construction whereas this type of inter-disciplinary thinking is the essential structure underpinning good trading and investing. The book provides a good starting point for understanding how each of these areas can be combined. The Renaissance man with a good grasp of many subjects finds the most appropriate employment and challenges in the world of modern markets.

 

 

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