Book Review - Reading Minds and Markets

I begin with the end: Reading Minds and Markets, by Jack Ablin (with Suzanne McGee), is worthy of your time and money; for it, unlike many investment books, captures especially ably the dynamic nature of the investment markets.

In sharing his story, Jack Ablin attempts a Warren Buffett-ish folksy manner, not altogether successfully. From his view "30,000 feet from the ground," he shares his insights regarding investing and investments. Rather than provide a simple list of investment rules, Jack takes his readers on a schematicized journey through his investment career; along the way, he subtly disabuses this or that methodology, fundamental, technical analysis, valuation, and Nassim Taleb's Black Swan included. What worked, what did not work, what methodologies he disposed of and why, and which methodologies he retains to this day.

Jack's investment methodology is atypical of most investment managers, due to its humility...

Your edge [as investor] lies, ironically, in your willingness to acknowledge that as an individual investor you're at a big disadvantage when it comes to unearthing not only the stock market's buried gems but even the most straightforward and solid investment strategy. Firms like Fidelity Investments... can well afford to pay six-digit salaries to each of their 150 or so in-house research analysts in the hope that each of them will find at least one brilliant idea amid the thousands of global businesses.

The passage above reminds me of Peter Lynch ("Buy all the stocks in a sector, if you like the sector." Etc.), which Jack confides one page later.

A few quibbles, despite this book's overall excellence. The author confuses:
• "May" for the correct might;
• "Like" for the correct such as;
• Subjunctive tense (or mood);
• The plural form of index (indices, not "indexes").

But those quibbles are just that, quibbles. More important is his confusion regarding the Super Bowl indicator. In fact, it is the dichotomy between the original NFL vs AFL, not the re-configured NFC vs AFC.

Jack admits he has little use for fundamental, valuation, or technical analysis. Why should he if he buys entire groups and sectors, even asset classes? It is beyond the scope of this review to defend any of these methods of analysis, but I always wondered why otherwise intelligent people recoil at the mere mention of technical analysis.

I believe I finally understand, though. While possibly smarter than anybody, he or she is not smarter than everybody; it as though they say, "I am intelligent, so I must stand apart from the crowd." I suspect it galls intelligent people that technical analysis places crowd behavior (which it measures and quantifies) to be superior to the insights and actions of an individual investor. The oddity for Jack Albin is that fully 80% of his primary methodology is technical analysis.

Despite this quirk, I end where I began: You will not regret your decision to buy and read Reading Minds and Markets. The book helps readers learn what they might not already know, and perhaps reasserts foundational principles and methodologies for more experienced investors.

Comments

[AuGod!:]

From the back cover of "Reading Minds and Markets"

"There is a way to outperform the overall market and at the same time, protect yourself from today's massive market risks. It's called "global macro investing," and here it is in a nutshell: understand the big picture, and learn when to shift money to different investments that are performing well."

As David Gordon, the authors and the rest of know, digging through the dross of over-hyped mainstream media to find a grain of value, is a herculean task in itself. (That is one reason I enjoy S.A. and its contributers.) I may be old fashioned and cranky but having said that, I am obliged to point out that the Jack Ablin (with Suzanne McGee) book, like most, is on the same path and only a few paces forward, from the old investment proverb "buy low and sell high".

The truths it contains are fairly obvious to those who are relatively informed and practical for those who are fleet of foot in the management of their mega-investments. Buying "low" a sector seems pretty efficient if that sector shows promise and getting out when it becomes overbought is sound risk management even though it may (might) not maximize yields in an absolute sense. One is unlikely to be first in line on any of that. Saying it is easy. It is in the doing that the problems can and almost certainly do arise. The devil is always in the details. But what do I know?! After all, I have never had more than a single round clip and any investment decision I make could be the end of me. My advice? From Harvey Penick's "Little Red Book" "Take Dead Aim". Now that will be $7000 please. Will that be cash, credit cards or personal check? I also offer a discount and will accept a gramm of gold bullion. Thank you.

Aug 22 02:20 PM

[kool:]

I bet sometimes technical of a stock is being shaped up by the fundmental of that company.... i believe when a stock's 50 day MA just crossed it's 200 day MA on the way up 1st time in 2 1/2 years says a lot about the improvement of its fundmental healthiness.

Look at this chart of Thermogenesis (KOOL).
finance.yahoo.com/echa...;range=1y;indicator=sm...

Aug 23 12:00 PM