Books 02 (Nov 08 - Nov 09)

Re: Books (Nov 08 - Jan 09)

Postby winston » Tue Dec 16, 2008 12:12 pm

------------------------------------------------------------
*** Book Review: Feel the Fear...and Do It Anyway - By Susan Jeffers, Ph.D. ***
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Are you afraid of making decisions... asking your boss for a raise... leaving an unfulfilling relationship... facing the future? Whatever your fear, here is your chance to push through it once and for all. In this enduring guide to self-empowerment, Dr. Susan Jeffers inspires us with dynamic techniques and profound concepts that have helped countless people grab hold of their fears and move forward with their lives. Inside you'll discover

* What we are afraid of, and why.
* How to move from victim to creator.
* The secret of making no-lose decisions.
* The vital 10-step process that helps you outtalk the negative chatterbox in your brain.
* How to create more meaning in your life.
* And so much more!

With insight and humor, Dr. Jeffers shows you how to become powerful in the face of your fears -- and enjoy the elation of living a creative, joyous, loving life.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: Books (Nov 08 - Jan 09)

Postby kennynah » Fri Dec 19, 2008 1:36 pm

Title : McMillan on Options
Author : Lawrence (Larry) G. McMillan


This is a rather advanced read on options and will require the reader to have a good grasp on fundamentals of options in order to be beneficial. McMillan has over 35 years of trading experiences; ranging from floor trader, arbitrageur, institutional trader...

Rather extensive coverage on index and futures options. quite necessary for anyone who trades these underlying. whilst there are options on stocks, this does not always behave in similar fashion to options on indexes and futures. the book shed some light on this issue and corresponding implications on traders.

overall, you need to have some fairly solid basic knowledge about futures, indexes and options to gain some useful insight from McMillan.
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Re: Books (Nov 08 - Jan 09)

Postby millionairemind » Sat Dec 20, 2008 11:09 am

Just got a few books shipped over from Amazon. Among them is Panic by Michael Lewis (author of Liar's Poker) and a couple of out of print books that is available on special order.

One of the books which I just finished is a short book written in 1930. It is a simple to read book, only 82pages thick but contains a load of information on human psychology and why 95% of the people lose money in the stock market over the long term or make little money.

WHY YOU WIN OR LOSE - THE PSYCHOLOGY OF SPECULATION by Fred Kelly

In it he talks about the four great enemies to stock market investment and speculation such as Greed, Vanity and The Will to Believe. He also discusses quite extensively on why our human brain is NOT WIRED to make BIG money in the market for the majority of the retail investors. If you are making alot of money this year, then you are in the minority lah.. so no need for you to read this book ;)

Vanity is the reason Y many ppe. will continue to hold on to their stocks as it moved from an initial bought price of $2 to $5 and then see it crashed all the way to $1 and suffer a 50% loss...

Whether you are losing or winning money in this market, whether you are a value investor, fundamental investor, trader or speculator, I recommend this book to have a better understand on the psychology behind the fragile human mind and hence hopefully do even better next time.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Books (Nov 08 - Jan 09)

Postby iam802 » Sat Dec 20, 2008 12:28 pm

This reminds me of the movie 'Lucky You' which I just watched last night on cable.

In the movie, it feature a talented poker player in Las Vegas. He can read the game clearly but is at times too 'hot-headed' to fold (keep his profits, side-step) and ended up losing all his money.

Losing his capital means he has to beg, borrow, steal and even bet (with friends on meaningless stuffs) to get some money so that he can be in the game again.

I always find similiarities between playing poker (or any form of gambling ; mahjong, big2 etc) to trading. We control 2/3 of the things we are dealt with (how to improve your skills, analysis and handle emotions). We cannot control the cards that are dealt with (the macro factors like financial crisis).


Note : Movie really doesn't touch much about gambling or trading. Rather, it is just using the setting and highlight how Drew Barrymore can 'charm' the gambler to a more sensible lifestyle.

Off-topic already. Ranting again.
1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

TA and Options stuffs on InvestIdeas:
The Ichimoku Thread | Option Strategies Thread | Japanese Candlesticks Thread
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Re: Books (Nov 08 - Jan 09)

Postby kennynah » Tue Dec 23, 2008 12:08 pm

Title : Ordinary People, Extraordinary Profits
Author : David S. Nassar


This is one common book that many investors/traders (I/T) would have at some time, added this into the reading list... it finally came into mine...hahaha...

Overall, it is a good summary of knowledge that all I/T must know.

My only humble critique is when the author consistently stems the concept of 1:2 or 1:3 risk/reward ratio without sufficient discussion on the probability of success of such trades. In essence, in this regard, the author is saying that if we risk $1 on a trade, we should aspire to at least have the potential profit of $1 (1:2) or $2 (1:3) or else, it may not be worthy of a trade.

But we all know that the probability of success of a 1:2 or 1:3 R/R ratio corresponds to a certain probability of success (in an efficient market); ie for 1:2 R/R ratio, the prob of success is usually about 50% and 1:3 R/R ratio, ~ 33% of success. Now, this is logical since one risks lesser to potentially make more, then the likelihood of making that potential profit must correspondingly be low... think of a lottery ticket...50cents for toto with the potential profit of >$300K....is the probability of success high? obviously very low but with a R/R ratio of a very high order.

so, whilst the intent of the author, is clearly to espouse the need to manage risks vis-a-vis reward, the less astute reader can easily be misled into entering low probability trades with the hope of a high potential return....which is clearly going to pauper any I/T in the long run.....

in addition, the author did not clearly explain how one derives R/R ratio and obviously not mention of probability of success calculation as well (if he did, it eluded me totally).

However, overall, it is a good book for both novices and the more "seasoned", serving as a return to "roots" of trading principals....

((and oh...i didnt particularly, appreciate the fact that there were intermittent reference to his business "MarketWise", just like William O'Neil have without fail advertized his IBD service))
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Re: Books (Nov 08 - Jan 09)

Postby la papillion » Tue Dec 23, 2008 9:41 pm

Indeed...William O'neil's book is part education part advertising for his IBD site :)
An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return - Benjamin Graham
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Re: Books (Nov 08 - Jan 09)

Postby la papillion » Tue Dec 23, 2008 9:44 pm

I happened to come across a copy of the famous book by Simon Sim - The Joseph Cycle (2004 edition) while browsing through the Singapore section of the national library. Much to my surprise, there are a lot of gems and treasures hidden among the singapore section, which I had always avoided till yesterday. There are old copies of company annual reports, industry and market analysis, accounting standards in singapore, local tax guide, local real estate reports and even those very old stock investment and company info for singapore context. You should go and take a look one day.

Anyway, Joseph cycle is actually a cycle that Simon Sim discovered. It bares resemblance to the biblical character Joseph, who being a slave, was made to oversee the entire Egpyt planning because he interpreted a dream by the ruling Pharoah satisfactorily. The interpretation is that for 7 years, there will be abundance, followed by another 7 years of scarcity. Simon Sim discovered that the market works pretty much on the same basis too.

Starting on 1959 where Singapore achieved independence, he counted in cycles of 14 years, with 7 years of bull and 7 years of bear runs. 1959 is regarded as the bottom by him. Here's a quick run through the years:

1959 - Cycle's bottom
1966 - Cycle's top
1973 - bottom
1980 - top
1987 - bottom
1994 - top
2001 - bottom
2008 - top
2015 - bottom
2022 - top


Here's the graphical representation overlaid on the STI chart that I did on excel. I would say that he is more and less correct on the mega trend of STI based on his 7 years of lean and 7 years of fat years.

http://3.bp.blogspot.com/_3qF-4FCPF1I/S ... 204508.gif
Image

I found a website (http://www.echartbook.com/straits_times_book_review.htm) where it was mentioned that he invested $400,000 into the market when last mentioned at 2004, which he will sell in 2007/2008. He would have made a handsome profit if he really invested in STI around 1300 in 2001 and ride the bull trend around 2007/2008 at the peak STI level of 3900 thereabouts. That's roughly 300% increment or about 16-17% compounded annually. This means that his $400,000 could become $1,200,000 - no mean feat.

Now if he is right about the Joseph cycle, then 2015 will be the bottom of the cycle. There should be some unexpected news that will change the bear phase back into the bull phase. He mentioned that the first 1 to 2 years of the bull phase (i.e. from 2015 to 2022), it will be a very quiet though the best time to buy.

A few thoughts comes immediately to mind:

1. If Simon Sim is right, then there will be more shakes in the market for another 7 years or so. This will really shake any bulls left, leaving the strongest behind. Will I be shaken out of it? People say that they are long term investors, but until the true test comes, it's all just empty talk and brave promises. Am I willing to hold for 14 years or so to ride the full potential of my investments?

2. I wonder what happened to the $400,000 investments that Simon Sim put into the market back in 2001-2004. Did he really managed to make a 300% returns by believing in his mega trend timing?

It's good to bare it all and answer the first question honestly.
An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return - Benjamin Graham
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Re: Books (Nov 08 - Jan 09)

Postby winston » Tue Dec 23, 2008 10:14 pm

I've not really seen a bear run for 7 years..

Hmmm... would the Nikkei fall be considered a bear run ? Or the Dot Com burst ?

Intuitively, business cycles could run 4 to 7 years and then follow by 1 to 3 years of down cycles. A 7 year down cycle would be quite bad but not impossible ..
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Re: Books (Nov 08 - Jan 09)

Postby millionairemind » Wed Dec 24, 2008 10:32 pm

Just going thro' this book The Wolf of Wall Street. Interesting book about this tell-all Jordan Belfort who was basically a stock scammer and how he swindled rich investors of millions of dollars as he brought worthless IPOs onto Wall Street during the 90s bull market.

His band of brokers, fresh out of school, lived the high life, drugs, sex, hookers, fast cars.. you name it, they have done it.

Expletives fire off like nobody's business in the book.

This book shows you what happens when very young men make millions in a year and all sense of morality and reality is lost. Perhaps our 2000 version would be the subprime fiasco.

Available at the NLB. Here is a summary from The Telegraph.

Hidden Content:
Jordan Belfort: Confessions of the Wolf of Wall Street
Tom Leonard
Last Updated: 4:33PM GMT 28 Feb 2008

Yachts, planes, women, drugs - stockbroker Jordan Belfort had it all and lost it all. Tom Leonard meets the man who taught the Mafia how to cheat - then wrote a book about it

Could there be a more compelling poster child for the dark side of modern capitalism than Jordan Belfort?

As a 31-year-old multimillionaire stockbroker, Belfort once landed his helicopter on his back lawn, flying with just one eye open because he was so stoned he had double vision. He sank his 167ft motor yacht, complete with seaplane and helicopter, after overruling the captain and taking it into a Mediterranean storm.

He organised a midget-throwing contest to entertain brokers on his trading floor.

And when he wasn't completely out of his head on drugs, or getting executive relief from prostitutes in the presidential suites of luxury hotels, the man nicknamed the Wolf of Wall Street was presiding over a firm that swindled investors out of $200 million in a shares fraud that landed him and his chief confederates in prison.

"I was a very smart kid, I was a great salesman and I was driven to make money," he says now. "Those were God-given assets. But I had some God-given detriments, mainly that I was emotionally immature, insecure and I had a predisposition to instant gratification.

"My role models were Michael Douglas's character, Gordon Gekko, in the movie Wall Street and Richard Gere from Pretty Woman. The best of everything - the presidential hotel suite, the Ferrari, the house on the beach, the gorgeous blonde, the expensive wine, the art auctions, the yacht - the ultimate Wall Street rich guy."

And then some. I can't recall Richard Gere's character falling asleep in a pile of cocaine big enough to use as a pillow, or even the venal Mr Gekko co-opting his wife's sweet old aunt to smuggle money out of the US.

Belfort managed both. He used his first Wall Street bonus to buy a white Ferrari because he'd seen Don Johnson drive one in Miami Vice and he once racked up a $700,000 hotel bill.

Now 45 and, he insists, a completely reformed and penitent man, Belfort lives in a modest three-bedroom house in Manhattan Beach, a relatively inexpensive part of Los Angeles.

Apart from the £9,000 Bulgari gold watch on his wrist and the painting in his bedroom of his old yacht, formerly owned by Coco Chanel, he says he has nothing left from the bad old days. Fifty per cent of everything he earns is going to the investors he defrauded. In five years, he has paid back $14 million of the $110 million he owes.

He is divorced from Nadine, a former beer commercial model, but they are friends and live near each other. They both look after their two children and Belfort describes himself as every inch the loving father and dutiful "soccer dad".

There are pictures of him with his children dotted around the sparsely furnished house. On the large, empty coffee table where once might have sat an upturned mirror for chopping cocaine, there now lies a DVD of the children's film The Goonies, and a porcelain figurine of Napoleon and Josephine.

It was, he tells me, a jokey gift from Nadine. He is 5ft 7in and some have suggested he suffers from a Napoleon complex - though he denies it.

Most men in Belfort's position might hesitate to rake up the past but the man who was so determined to make it on Wall Street is now determined to make it as a writer. He has written a bawdy romp about his rise and fall, which predictably has been snatched up by Hollywood.

Martin Scorsese, Leonardo DiCaprio and the writer of The Sopranos are all "optioned" to be involved. "DiCaprio will just have to get stoned, stumble around like a moron and drool," says Belfort, laughing.

He's not wrong. After wading through all 519 lurid pages of The Wolf of Wall Street, readers may find themselves agreeing with the former executive at LP Rothschild who - in the opening sentence of the book - informs a fresh-faced Belfort that he is "lower than pond scum".

A former meat salesman from Queens with a pronounced gift of the gab, Belfort - whose parents were accountants - was tailor-made to profit from the Wall Street bull market of the 1990s.

At Stratton Oakmont, his bucket shop stockbroker firm based not in Manhattan but suburban Lake Success on Long Island, a thousand hungry young brokers - many of them straight out of school - were simply handed a script written by Belfort and told to read it down the phone as they cold-called potential share buyers.

Belfort had a motto: "No one hangs up the phone until the customer buys or dies." A lot of customers might ultimately have preferred the latter, as Stratton was running what was known as a "pump and dump" scheme.

Its brokers would drive up the price of shares and then Belfort and his partners would sell the large chunks they owned, causing the share price to collapse and leaving Stratton's clients with heavy losses.

He claims that both his business dealings and his private life came off the rails because he kept pushing the boundaries of what he could get away with. "It was about becoming numb to what's right and wrong," he says.

"The first time I took a cash kickback, I was kind of nervous and it was just five or 10 thousand dollars. Before long I was getting millions of dollars and it seemed like it was OK. 'Everyone on Wall Street does that' was how I rationalised it."

In 1991, Forbes magazine described Belfort as a "kind of twisted Robin Hood who takes from the rich and gives to himself and his merry band of brokers". In reality, some of the investors were not rich and were ruined.

Belfort was earning $50 million a year, once reportedly making $12 million in three minutes. In the ultimate compliment, the Mafia were sending people to Stratton on "work placements" to learn how it was done.

A pioneer in promoting office bonding activities, Belfort thought it would improve morale if staff were encouraged to have sex with each other whenever they could, even under the desks. There were mid-afternoon "coffee breaks" with a troupe of hookers in the office car park. One office junior agreed to have her hair shaved off on the trading floor in return for $5,000 for a breast job.

And then there were the drugs. Most Strattonites indulged heavily in cocaine. Belfort's favourite tipple was Quaaludes, a recreational drug based on a prescription sedative so powerful it was banned in many countries.

On one occasion, Belfort ran out of "ludes" while staying in a £9,000-a-night suite at the Dorchester in London. Waking his secretary in New York at four in the morning, he had an emergency supply sent out on Concorde.

Belfort and his wife appeared to spend most of their married life swearing at each other. Whenever she rang him when he was away on business, he invariably had a call girl in the room - and even he sometimes realised that it looked bad.

That said, in a characteristically classy moment, he once made love to Nadine on a "mattress" of $3 million in $10,000 stacks of notes. But after he kicked her downstairs in front of their young daughter and then drove stoned into his garage door with the little girl unbuckled beside him, Nadine packed him off to drug rehab. Then she left him.

By then, he had other worries. In 1997, Stratton was kicked out of the National Association of Securities Dealers for defrauding customers and the firm was ordered to be liquidated. Belfort and his cronies loved to boast of being bound by a sort of omertà, the Mafia vow of silence. But the broker boys proved not nearly so tough when the FBI came knocking.

Belfort gave evidence against his colleagues and, after admitting charges of money-laundering and securities fraud in 1999, served only 22 months of a four-year sentence in 2004. Curiously, there is very little in the book on his decision to turn against his friends. Belfort says 90 per cent of those involved did the same, adding that he had to reach a deal because he could have got 30 years if it had gone to trial.

Prison proved fruitful. Encouraged by cellmates to write a book about his life, Belfort found inspiration in a prison library copy of Bonfire of the Vanities, Tom Wolfe's satire about a "Master of the Universe" Wall Street yuppie whose "childish sense of self entitlement" matched his own.

Leaving aside the financial crimes, the Belfort saga is above all a cautionary tale of what happens when immature young men become immensely rich. It has echoes of the stories surrounding the behaviour of Premiership footballers in Britain.

Except that in finance, the additional problem is the way the money is made, says Belfort. "You make all this money but there's nothing attached to it. You make your money buying and selling the ingenuity of other people."

There's an "emptiness" to that sort of money, he says. So the bankers and brokers try to fill the void with material possessions - and when that's not enough, with drugs. Belfort claims heavy drug-taking is "pervasive" on Wall Street.

"There's a lot of hedge fund managers that love Quaaludes. Once again, it's all about the insane money. High-powered Wall Street guys don't lose their jobs if they have a drug problem. As long as they're still making money it's considered not the end of the world."

Belfort says his drug addiction was to blame for some of his wilder behaviour at home, but he adds: "I wish I could say that about some of the financial fraud. I did that because I was just a frickin' crook. That's harder to rationalise."

The book has been billed as an act of atonement. However, if they skip a paragraph in the prologue in which Belfort says he is writing in the "voice playing in his head at the time", readers might think he is still rather pleased with what he did.

Critics have wondered whether he doesn't still relish his depravity, but Belfort insists he "despises" the man he once was. So how did he feel as he wrote it? "Sometimes I laughed, sometimes I cried. Sometimes I just shook my head and thought what a ----ing nut I was."

He is now writing a satire about the subprime mortgage disaster. For research, he has been talking to a top contact at Goldman Sachs on how traders "securitised these loans, how they essentially dressed up subprime packages to make them look good enough to buy as credit-worthy". It sounds rather like what went on at Stratton.

The subprime crisis is dragging down America's entire economy, but the fact that Belfort was able to become a mortgage broker even after admitting fraud and money-laundering charges speaks volumes about how carefully it was regulated.

And he wasn't alone. "Everyone who was being thrown out of the securities industry was becoming one," he says, his voice rising in disbelief. "Anyone could be a mortgage broker. Even me." After the drugs and the madness, a final sobering thought from Mr Wolf.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Books (Nov 08 - Jan 09)

Postby durio » Sun Dec 28, 2008 10:00 am

>> high life, drugs, sex, hookers, fast cars.
he must be damn LUCKY to be still alive.
Best of all, he's able to "gloat" over his past (mis)deeds in his book (and upcoming film?) and still made another big pile monies! :roll:
LIFE IS ABSURD - WE ARE FREE - BE MERRY ~ THE FREEDOM MANIFESTO
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