Recommended Books on Investing

These are books we would personally recommend:

 Market Wizards by Jack Schwager [link to Traders Press Bookstore]

A runaway best-seller and one of the most fascinating books ever written about Wall Street. It contains interviews with 17 legendary traders who reveal that they too once struggled like the rest of us mortals to keep their heads above water. (458 pgs)

What sets these traders apart? Most people think that winning in the markets has something to do with finding the secret formula. The truth is that any common denominator among the traders I interviewed had more to do with attitude that approach. Some of the traders use fundamental analysis exclusively, others employee only technical analysis, and still others combine the two. Some traders operate on a time horizon measured in hours or even minutes, while others typically implement positions that they intend to hold for months or even years. Although the trading methodologies varied widely, the forthcoming interviews reveal certain important commonalties in trading attitudes and principles.

Trading provides one of the last great frontiers of opportunities in our economy. It is one of the very few ways in which an individual can start with a relatively small bankroll and actually become a multimillionaire. Of course only a handful of individuals (such as those interviewed here) succeed in turning this feat, but at least the opportunity exists.

TABLE OF CONTENTS

Part 1: Michael Marcus, Bruce Kovner, Richard Dennis, Paul Tudor Jones, Gary Bielfeldt, Ed Seykota, and Larry Hite
Part 2: Michael Steinhardt, William O'Neil, David Ryan, Marty Schwartz
Part 3: James B. Rogers Jr., Mark Weinstein
Part 4: Bryan Gelber, Tom Boldwin, and Tony Saliba
Part 5: Dr. Van K Tharp

The Profit Magic of Stock Transaction Timing by J.M. Hurst [link to StockCharts.com Bookstore]

``Profit Magic'' is back!

For many years I had heard that the work of J.M. Hurst was of great value to technical analysts, especially those interested in the cyclical analysis of stock price movements. Upon looking into what composed the body of his work, I learned that most of it was unavailable to traders and investors. Hurst's primary work, The Profit Magic of Stock Transaction Timing had gone out of print. I had hear rumors that Hurst had also authored a lengthy trading course on cycles, but it, too, was long out of print. Having been involved in technical analysis and trading for many years myself, I felt that it would be a valuable contribution to the field of technical analysis to assure that the work of Hurst was kept alive for present and future generations of traders and analysts. I decided to make a special project of resuscitating his research in its various forms.

My first step was to negotiate with Prentice-Hall for the rights to reprint Profit Magic as a Traders Press publication. This done, I next set about to locate a copy of the Hurst course. . .

After reprinting Profit Magic and The Hurst Cycles Course, Hurst advised me that in 1974 he had authored a book which gave an overview and summary of the main points of the course. . . The course itself is quite lengthy and will prove exceedingly valuable to those willing to devote the necessary time and effort to studying and mastering the principles of trading it teaches.

Cyclic Analysis: A Dynamic Approach to Technical Analysis [link to Traders Press Bookstore] is the overview of The Hurst Cycles Course and if purchased prior to the course, the price of this booklet can be deducted from the price of the complete course.

About the Author:

J.M. Hurst is a legend to knowledgeable individuals interested and involved in the study of cyclical price movement in the financial markets. By training and background an aerospace engineer, he was the first true pioneer in the computerized research into the nature of stock price action, devoting many years and over 20,000 computer hours to this study. His conclusions were first documented in his groundbreaking classic, The Profit Magic of Stock Transaction Timing.

The work of Hurst inspired cycles analysts who came later, and represents the most important factor behind the work later done by such cycles luminaries as Peter Eliades, Jim Tillman, Walter Bressert, and Brian Millard. Indeed, Peter Eliades says that sometimes a single moment changes all the ones that follow, ``For me it was the discovery of Hursts's book. It was responsible for changing my life.''

It is a little known fact that Hurst authored not just his book which introduced his ideas and summarized his research, but that he also produced a comprehensive training course which teaches the student how to apply his principles to actual trading and investing. This course, available exclusively through Traders Press, has proven valuable to those select few who have availed themselves of the guidance it offers on how to put the principles discovered by Hurst into actual practice.

This booklet gives an overview and summary of the main points of Hursts's cycles course. The reader who wishes to progress further and to take full advantage of the work done by Hurst is encouraged to consider acquiring his full training course, J. M Hurst Cycles Trading and Training Course [link to Traders Press Bookstore].

http://www.traderspressbookstore.com/welcome/detail.html?item=375&associate=BobCarve [link to Traders Press Bookstore] As Nicholas Darvas put it in his classic stock market best-seller ``How I Made $2,000,000 in the Stock Market,'' [link to Traders Press Bookstore]

``Before a dancer leaps into the air he goes into a crouch to set himself for the spring. I found it was the same with stocks. They usually did not suddenly shoot up from 50 to 70. In other words, I considered that a stock in upward trend that reacted to 45 after reaching 50 was like a dancer crouching, ready for the spring-up.

``Later when I had more experience I also learned that this 45 position in a stock after a 50 high point has another important benefit. It shakes out the weak and frightened stockholders who mistake this reaction for a drop, and enables the stock to advance more rapidly.

``I came to see that when a stock was on a definite upward trend there was a feeling of proportion about its advance. If it was on its way, rising from, let us say, 50 to 70 but occasionally dropping back, that was all part of the right rhythm.''

It was from this insight that Darvas developed a theory involving buying stocks on breakouts from ``boxes.'' It was a very simple theory. And that was its strength, as in the KISS principle (``Keep It Simple, Stupid!''). Anything which is overly-complex is subject to mistakes, overriding, rationalization. By developing a very simple theory which explained stock action, Darvas was able to make a profit of $2,000,000 in the stock market, despite the fact that he rarely, if ever, was able to watch the market intraday. His trades were often done by cabling his broker from remote parts of the world (he was a professional dancer, which explains the analogy above). In fact, when he was able to watch the market intraday, he ended up losing money!

``How I Made $2,000,000 in the Stock Market'' [link to Traders Press Bookstore] was originally recommended to us by Ray Jacobs, a private investor who himself followed Darvas' principles, and who made $7,500,000 in the stock market. It's a classic book on the stock market that no serious investor should be without. Now, that doesn't mean Darvas' ``system'' will work for everyone. The book is good for inspiration: many systems of investing in stocks can make profits - there are probably as many systems which make money as ones which don't, in fact.

Just one of the important lessons to be learned from the book is that short term trading, even by a very successful investor, rarely is profitable. Instead, investing with the intermediate- to long-term trend is the way to go.

Remember, over 90% of all small, short term, speculators lose more than 50% of their accounts within their first year of trading and then give up trading as a hobby. At the same time, long term investors garner excellent returns over time due to their long term investment horizon.

Those long term investors have recognized reality: the long term trend is up in stocks and if they aren't invested in the market, they're likely to miss out on potential profits. That's why they've reached the ``Point of Recognition'' and aren't looking back. This is something Jesse Livermore wrote about in Reminiscenses of a Stock Operator [link to Traders Press Bookstore] when he described a lesson he learned from an experienced, and very successful, investor (``Old Turkey''):

The big money is made by ``the sitting--not the thinking.'' Once a position is taken the hardest thing to do is to be patient and wait for the move to play out. The temptation is strong to take fast profits or cover your trade solely out of fear of losing the profit on a correction. This error has cost millions of speculators millions of dollars.... It is the big swing that makes the big money for you.
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