Objective research and reviews to aid investing decisions
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Here is a listing of past blog entries that review books and web sites of interest to investors and traders (with many suggested by readers):
Evaluating Investing/Trading Advisory Services ...this compilation of suggestions and questions can help investors/traders assess the credibility of returns claimed by advisory services.
The Profit from the Peak Portfolio ...Profit from the Peak offers a range of stock recommendations to exploit a long-term energy shortage, but historical data suggest that a portfolio constructed from these stocks may be quite volatile with some big hits and big misses.
Some Notes on Predictably Irrational ...investors/traders are often, though not hopelessly, irrational and mostly unaware of their irrationality. Rationality is very hard work.
Is ValueEngine's Stock Market Mispricing Summary Predictive? ...evidence from a small sample does not support a belief that ValueEngine's market overview statistics meaningfully predict near-term behavior of the broad stock market.
Some Notes on The Halo Effect ...measures of sentiment may tell good stories, but they appear to lack predictive power. Simplified frameworks for explaining the past are probably less useful for prediction than dispassionate statistical analyses.
A Simple Test of Sy Harding's "Seasonal Timing Strategy" ...Sy Harding's "Seasonal Timing Strategy" is unimpressive when tested against available data for SPY.
Testing the "Short Term Stock Selector" Designed by Robert Hesler ...trading fees, trader capital constraints and inclusion of open positions may substantially reduce or eliminate "Short Term Stock Selector" profitability as summarized by the offeror.
Testing the Palisades Research Daily Stock Market Forecasts ...testing indicates that the daily recommended positions from Palisades Research have no power to predict next-day stock market returns.
Testing the AlphaKing Trading Indicator ...testing indicates that the AlphaKing Trading Indicator may have some value for timing the Nasdaq Composite index, but the duration of the live data sample is much too short for reliable inference.
Testing the COTs Timer Trading System ...testing indicates that the COTs Timer trading system for the S&P 500 index as presently specified exhibited strong performance during 1996-2002, but not over the last five years.
A Rough Test of the Concept Underlying the BMW Method ...limited tests indicate that a strategy based solely on historical price data that seeks to exploit (avoid) periods of likely above-normal (below-normal) price growth has some merit. However, evidence does not support a belief that such a strategy can reliably outperform a buy-and-hold approach over long periods.
Review of Between the Hedges Net Portfolio Position ...evidence from simple tests does not support a belief that the Between the Hedges net portfolio position anticipates the short-term trend of the broad U.S. stock market.
Review of Tony Caldaro's "Objective Elliott Wave" Outlooks ...evidence does not support a belief that the "Objective Elliot Wave" method successfully times the broad U.S. stock market. The method appears more to react to past returns than to predict future returns.
Robert Taylor's Peculiar Definitions of Up and Down ...Robert Taylor's accuracy rate probably derives not from forecasting ability but from defining targets that are very hard to miss. The accuracy rate seems high only if one ignores the peculiar way he defines trends.
The Mojena Market Timing Model ...the Mojena Market Timing model clearly outperforms a buy-and-hold approach during 1990-2007 based on risk-adjusted returns, but not raw returns, before taxes. Evidence does not support use of long-side leverage and short-selling to exploit its signals.
Review of IntelligentValue's Retracement-Value Portfolio ...the extraordinary performance claimed by IntelligentValue for the Retracement-Value portfolio is likely due to a combination of early good luck and a favorable assumption about trade prices. Investors/traders considering such active trading services should carefully evaluate their trading costs/frictions.
Review of Mark Leibovit's VRTrader.com "Track Record" ...traders employing frequent trading strategies such as that offered by VRTrader.com must achieve low trading friction and be prepared for frequent losses and high return volatility among individual trades. Specifically for VRTrader.com, they may also want to ignore short trade recommendations.
Review of Befriend the Trend Trading's Trend Trades ...the apparent outperformance of the The Trend Trade Letter may disappear after correcting for trading frictions, market conditions and data errors.
The Black Swan: The Impact of the Highly Improbable (Chapter-by-Chapter Review) ...this book is a generally accessible challenge to the widespread use of Gaussian statistics as tools of prediction in socioeconomics (encompassing investing). With strong emphasis on intractable uncertainty, it is necessarily parsimonious and vague regarding advice to investors.
The Little Book That Makes You Rich: A Proven Market-Beating Formula for Growth Investing (Chapter-by-Chapter Review) ...the book is a clear and concise summary of Louis Navellier's systematic approach to constructing and maintaining a timely growth stock portfolio intended to outperform in all market conditions. The book is written such that individual investors of average sophistication can easily understand it.
The Decision Moose Asset Allocation Framework ...the Decision Moose asset allocation framework may offer investors a way to beat buying and holding broad U.S. equity indexes by occasionally trading to the "hottest hand" from a broad set of asset classes.
Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals (Chapter-by-Chapter Review) Taken in parts, this book offers sound methods for analysis. Taken as an integrating whole, it offers insightful context for evaluating a broad range of financial analyses/claims presented by others. Here is a chapter-by-chapter review of some of the insights in this book...
Expert Political Judgment: How Good Is It? How Can We Know? (Chapter-by-Chapter Review) Making the very small leap that these insights apply also to experts in economics and financial markets, we offer here a chapter-by-chapter review of the insights in this book...
Probability Theory, The Logic of Science: A Few Notes ...economies and financial markets are very complex but fundamentally predictable, not intrinsically random.
Reinventing The Bazaar, A Natural History of Markets: A Few Notes Economic growth requires not only that markets be extensive but also that they be well designed.
My Life as a Quant, Reflections on Physics and Finance: A Review The more I look at the conflict between markets and theories, the more that limitations of models in the financial and human world become apparent...
When Stock Market Models Crash ...despite his model's crash, Professor Sornette is still trying. We wonder whether he is being serially Fooled by Randomness.
Fooled by Randomness: A Review ...noise generally swamps signal (true outperformance or underperformance) in financial markets, and in life generally.
Damodaran Online: Some Serious Education Professor Damodaran covers the pluses and minuses of all these investment styles…
An Out-of-Sample Test of O'Shaughnessy's Cornerstone Strategies ...past outperformance is no guarantee of future outperformance. Data mining may tease out unrepeatable anomalies. Structural market changes may reduce the value of old data. Ask for current, out-of-sample test results.
Detecting Wisdom in a Crowded Market ...situations involving herded traders and/or a small number of shareholders are good candidates for producing mispriced stocks.
Focus Investment in Foreign Markets? ...Mr. Bennett would recommend focusing long-term, non-U.S. investments in Australia, Britain, Canada, Ireland, New Zealand and perhaps South Africa and India.
Triumph of the Optimists (Chapter-by-Chapter Review) ..."if you read one investment book, this should be it."
