Anthony Gallea | William Patalon
1 Worth the time and the price
Nowadays many people so easily refer themselves as contrarians as if the title will easily make them winners in the investment game. Of course, common sense, though not really common, tells us something otherwise.
In this book, many historical examples had been quoted about how those genuine contrarians bought on panic and sold on eurphoria, and it's only when the market consensus was at its extreme that the contrarian play would pay. It makes no sense just to think that you are playing opposite to the crowd whilst you simply belong to one of them.
In this respect, the authors had put forth a contrarian system for investors to follow, rules based on value/fundamental investing but with solid technical elements of when to enter a market and when to stop profit/loss. So called real life stories and testimonials to support the authors' theories and propositions are abundant everywhere. Psychology behind a trend is vividly elaborated.
I think that the book is a good leisure reading for veterans and a good starter for beginners. Definitely you wont get bored. The lovely pigs on the front cover do tell something about how the authors would like it to be.
p.s. The foreword by Jim Rogers, reprinted from an article In Rogers' own book Investment Biker, and also many of those adages in the beginning of every chapter, are excellent.
"Dont fight forces; use them."
"The easiest job I have ever tackled in this world is that of making money. It is, in fact, almost as easy as losing it. Almost, but not quite."
2 Good presentation of a trading system
I bought this book as a counterpoint to my interest in momentum investing in high technology stocks. The criteria they set for picking "loser" stocks that can be "saved" restrict contrary picks to a few investments, but the investments are worthwhile additions to a portfolio of momentum stocks. Their criteria for stop-loss trades is also worthwhile to either contrarian or momentum investment picks.
3 Good presentation of a trading system
I bought this book as a counterpoint to my interest in momentum investing in high technology stocks. The criteria they set for picking "loser" stocks that can be "saved" restrict contrary picks to a few investments, but the investments are worthwhile additions to a portfolio of momentum stocks. Their criteria for stop-loss trades is also worthwhile to either contrarian or momentum investment picks.
4 Good in places, weak in others
The research support for the authors strategy is weak but the book is worth buying for the wisdom it contains on risk, insiders, and investor psychology. Inexperienced investors could find themselves stranded when implementing the books' often subjective sell criteria.
One of the authors admit to having to give up part of his occupation to write the book, and it shows. Is this book really a value investing book in disguise? Take out one rule about stocks being down 50% and you are left with a book on insiders and low P/E investing.
There is an absense of any testing of the final recommended set of rules. A clue as to why is when the authors admit that in September 1996 only a handful of stocks met their recommended strategy criteria.
Where is the authors own performance following thier criteria?
The research cited in the book is only on each core component of their strategy criteria but not on the combination. Little research is provided on their risk management rules or a combination thereof. Therefore claiming the whole is supported by the research is a giant leap.
This lack of research leaves many questions unanswered. How did their strategy do with gold stocks, or steel stocks, which have been contrarian plays for years? What would have happened to their strategy in this raging growth stock bull market?
The authors too often fit example of their strategy by making exceptions to their rules by using subjective analysis and hindsight: such as "when the company's prospects are clearly improving, when the stock price seems to be climbing a 'wall of worry.'"
Too often the authors use the words "often", "can". which are useless as rules or criteria. And too often the authors contradict themselves.
However the good sections on risk, investor psychology make it worthwhile reading.
5 Good in places, weak in others
The research support for the authors strategy is weak but the book is worth buying for the wisdom it contains on risk, insiders, and investor psychology. Inexperienced investors could find themselves stranded when implementing the books' often subjective sell criteria.
One of the authors admit to having to give up part of their occupations to write the book, it shows. Is this book really a value investing book in disguise? Take out one rule about stocks being down 50% and you are left with a book on insiders and low P/E investing.
There is an absense of any testing of the final recommended set of rules. A clue as to why is when the authors admit that in September 1996 only a handful of stocks met their recommended strategy criteria.
Where is the authors own performance following thier criteria?
The research cited in the book is only on each core components of their purchase criteria but not on the combination, or risk management rules or acombination thereof, and therfore claiming the whole is suported by the research is a giant leap.
This lack of research leaves many questions unanswered. How did their strategy do with gold stocks, or steel stocks, which have been contrarian plays for years? What would have happened to their strategy in this raging growth stock bull market?
The authors too often fir example of their strategy by making exceptions to their rules by using subjective analysis and hindsight: such as "when the company's prospects are clearly improving, when the stock price seems to be climbing a 'wall of worry.'"
Too often the authors use the words "often", "can". which are useless as rules or criteria. Too often the authors contradict themselves.
However the good sections on risk, investor psychology make it worthwhile reading.
6 Simple guidelines remove emotional errors of stock trading
This book is an excellent work on exercising rational techniques for investing in the stock market with a long view of returns. Not intended to be a "speculators" guide, the authors describe specifically what indicators prompt an investor to buy and sell, actions that will be contrary to prevailing market sentiment, but validated by the results of several long-term studies on the success of these indicators in the market. The book doesn't pretend to be fool-proof in its methodology, offering sound advice on how to protect against losses, save profits, and distribute risk in one's portfolio. All this adds to the credibility of the authors and raises the reader's confidence in the thoroughness of their approach to stock market investing.
7 Excellent primer for stock market beginners
I recommend that all people who wish to invest in common stocks read this book first. I suggest this book to all my clients.
8 A great read for investors of all types.
An easy-to-read book. No matter what your level of expertise in the stock market, the investor will get extremely useful information from this excellent work. Appears to be extremely well-researched and thoroughly covers the contrarian approach to buying stocks. Particularly worth reading during this time of extreme volatility are the passages on past market manias, which give some neat histories of investing bubbles and remind us how the masses can sometimes get carried away. The well-structured rules provide a framework that can only help any investor embrace the contrarian approach. The breezy, conversational writing makes this a really fun read which is well worth the time for anyone who is a student of the stock market. An A-plus.
9 Excellent primer in contrarian investing
This thoughtful, logical book progresses smoothly through the fundamentals and into the more advanced concepts. Completely practical, and very timely given the current market conditions.
