I’ve read a few more trading-related books in the last few weeks that I thought I’d share. For the most part, these are about traders and trading, rather than “how to beat the stock market” type books. I think, having mastered the basics of trading, these are the best kind to read. It’s more wisdom and less technique.
At some point I may make a post about what I think the best trading books I’ve read to date are.
First we have Trading with the Enemy: Seduction and Betrayal on Jim Cramer’s Wall Street, which I thought was a lot of fun to read. You get pretty much the same information, trading-wise, that you get from Jim Cramer’s Confessions of a Street Addict. In other words, they paid brokerages tons of commissions in return for getting the first call when new information goes out from the analysts. You also get a real flavor for the high-intensity environment of a hedge fund. I really think the two books are best when read as a pair, so you get the dual perspectives. Based on what I had heard about the book, I expected something much more negative, but it really just paints the same picture Cramer himself paints, but presents it in a harsher light.
Next, there’s Stock Market Wizards : Interviews with America’s Top Stock Traders. I haven’t read the other two “wizards” books, but have certainly heard of them. I picked this one up and was thrilled with it. We get interviews with traders that are still getting press today as the top traders of 2005, like Stephen Cohen. And, the paperback was updated around 2002 to get the traders’ perspectives on the stock market slump in 2000. It was fascinating, but one theme was clear: these traders are all confident, and all consistent even when losing. They are all doing spectacularly year after year with completely different strategies and methods, which just further reinforces that there are lots of ways to skin the market cat.
Sort of tangential to trading, I read Confessions of a Wall Street Analyst : A True Story of Inside Information and Corruption in the Stock Market. It was eye-opening, for me anyway. It outlines the author’s career as one of the top telecom analysts during the 90’s telecom boom, and points out how many conflicts of interest are inherent in the financial system between the analysts and the bankers.
These last two are ones I don’t recommend:
The book: Trend Following: How Great Traders Make Millions in Up or Down Markets didn’t impress me much. Its message amounts to: use a winning strategy consistently even during drawdowns. Maybe I missed something, or read it too fast, but it seemed to me that the focus was on mechanical trading, rather than following trends.
Lastly, we have Stock Trading Wizard : Advanced Short-Term Trading Strategies for Swing and Day Trading. I don’t know… this book might have been good in 1999, but today it read like it was a bit dated. I will say that it had some of the best-illustrated information on Level II quotes, but prices were still listed in fractions of a point, rather than in cents. I think for an introduction to swing and day trading, Short-Term Trading in the New Stock Market by Toni Turner is much better, up to date, and complete.