This is a classic book, first published in 1973. The 9th edition just came out this year. Every investor, whether you believe in market efficiency or not, should read this book at least once. This book does a very good job reconciling between market efficiency and perceived inefficiencies such as bubbles at different times. The author believes in a weak form of efficient market theory. Simply put, the market may not be perfectly efficient at all times, but it's efficient enough to make it very difficult and costly trying to beat it. In the end, an investor is better off holding a market index fund that invests in everything under the sun. It's not worth the cost and effort trying to find the undervalued stocks or high-growth mutual funds.
The book begins with two basic stock valuation models -- Firm Foundations and Castles in the Air. It goes on with a review of bubbles and manias throughout history, from more ancient history -- tulip craze in the Netherlands, the South Sea bubble in England, the 1929 Great Crash in the U.S. -- to the stock market anomalies from the 1960s, 1970s, all the way to the late 1990s dot com bubble. The book then introduces two basic camps of stock valuation analysis: Technical Analysis and Fundamental Analysis. It shows how both Technical Analysis and Fundamental Analysis fail to identify outstanding investment opportunities more than what an efficient market already provides. Not that you can't make money with Technical Analysis and/or Fundamental Analysis, but you can't make more money than what you already can with investing in a market index fund.
The chapter on behavioral finance is new for the 9th edition. It reviews how investors often become their own worst enemy when it comes to investing. The book "Why Smart People Make Big Money Mistakes And How To Correct Them" (ISBN 0684859386) covers this area in more details.
The final section of this book is the practical part. It gives practical advice on insurance, tax deferred accounts, saving for college, different vehicles for cash reserves, bonds, real estate, and stock mutual funds. Finally the book lists specific portfolio and fund recommendations for people in different stages of their lives.
Overall, this is a great book, a must read for every investor. It is however a little long and it requires some patience because it explains everything in details. If you want to cut to the chase and prefer a cookbook approach, I recommend the shorter book "The Random Walk Guide to Investing" (ISBN 039332639X) by the same author. The basic premise is the same in both books. The shorter "The Random Walk Guide to Investing" condenses everything into 3 basic points and 10 rules. It is about 200 pages long. The full book "A Random Walk Down Wall Street" is over 400 pages.
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Overcoming the Five Dysfunctions of a Team by Patrick M. Lencioni
The author has backed up his book "The Five of a Team" with a valuable field bookthat helps in clearly understanding the dynamics underlying team work. The critical importance of , , Commitment, Accountability and Results inbuilding a teamis presented through a fascinating model focusing on dysfunctions of the said . The fluid style of narration through experiential cases, simple in depth analysis of the positives as well as the negatives and the alternatives available forrejuvenating these elements in the team provide an easy conceptual support to professionals engaged in organization development.
Trust and Trustworthiness, critical elements for effective team work, is normally notgiven the desired priority by most and line managers. The book opens our eyes through apt of unsuccessful leaders who do not care for trust in thier organizations. Based on these examples, insight is provided on how one can build trust and the what one needs to understand to establish sustenance.Alternatives that could take the team to the right direction have been provided with simple yet convincing illustrations and tools.
Conflicthas been addressed through a positive perception that there is something known as good conflict and this has a deep connect with Trust. The bold methods for conflict resolution through proactive engagement of teams in healthy debatesis extremely positive in looking at ways of nurturing a team. Similarly, the elements of Commitment, Accountabilty and Results have been clearly amplifiedwith a strong message that all these elementshave their own identity as well as a strong linkage with each other, reinforcing the pyramid model used to depict the five dysfunctions of a team.
For facilitators, the selfless way with which the author has sought to share the exercises is an example of how open sharing helps in convincing people and building trust.The concept of Team building and team workprocesseshas been presented in a manner that is practical and achievable.
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Is it possible to obtain wealth from trading options?
Answer 1:
Theoretically yes.
However MOST people accumulate wealth by investing. Trading options or forex is speculating, not investing. In other words, it is gambling. You can be well skilled and educated and still lose your behind very,very quickly.
Such trading is at the top of the risk charts, so yes, potential returns can be impressive but they come with a very sharp potential for a complete loss.
When you invest in stocks, bonds or mutual funds, you still have a risk of loss, but the odds of a total loss are slim, and you usually have time to get out before suffering a huge loss (unless you are also speculating with high volatility stocks).
Investing is not speculating. Investing combines an educated guess (no one really can guarantee a profit) with a moderation of risk. A lot of research shows that most investors do not do better by taking on higher than average risks. In other words, slower and steady wins the race.
As to tax issues. There are no benefits to short-term trading of any security. In fact all profits are taxed at your highest marginal rate. This is one more reason why trading rarely results in huge profits. By the time you subtract ticket charges and taxes you have to have a really big profit for you to end up with a better after tax return.
There are conservative strategies for options when combined with stocks you own. These strategies can add income to your portfolio without being significantly speculative.
People build genuine wealth by staying out of debt, by spending less than they earn, and by investing the difference wisely. If you start this as young as possible and routinely increase the amount you are saving and investing, you will build significant wealth.
However, just as with playing in Vegas, speculating is gambling and while a few walk away long term winners, it is ONLY a few that do win. In the short term, anyone can have a measure of luck, but in the long run, it is pretty rare.
The traders that survive on options and forex are big boys, with big wells of cash and years of training (and losing) behind them. They survive as much off the thrill as the wins.
But understand this, any wealthy trader is never playing with his full pot. He still has most of his assets in more secure investments. In fact, studies have shown that those that take the biggest risks with some of their money, have most their money in ultra-conservative investments. This is how they balance the high risk choices they make.
But if you're still determined, start reading, take a class and paper trade (trading simulation) for several months so you can establish techniques and indicators that work for you. Until you have both skill and discipline, you might as well just take a lighter to your money.
What is your answer?
Free Trading Ebooks:
Books shared here are for reference only. After download, you should delete it from your PC after 24 hours. If you like the books, please purchase the original copy.
101 Option Trading Secrets
Japanese Candlestick Charting Techniques - Steve Nison
Beyond Candlesticks - Steve Nison 
The Candlestick Course - Steve Nison
Trading for a Living - Elder , Alexander
Get your free online trading education here.
Here are the list of upcoming options ebooks going to be online in this blog. If you want to copy ealier, please post your comment here.
Have you ever wonder why 95% of new traders failed in making money through trading in any financial instruments despite they are many advanced charting software in the market and the online brokerage fees are low.
As you can see, the problem is not a result of what the market has done nor the types of products or services the traders are using. The main issue here is all about the trader himself/herself and nothing else.
For any new traders who want to start their own trading business, below are five main areas that they would have to work on.
1. Know yourself
First thing first, knowing yourself is the most important aspect of trading. As mentioned in Most Important Thing, getting to know yourself will save you from unnecessary fear and stress.
2. Mindset
Very often, people jumped into trading after attending some seminars or workshops, thinking that it is a get-rich-quick scheme. Well, in reality, it is far from that.
Just like any other businesses, you have to treat trading as a business regardless whether you are doing it full-time or part-time. This means a business plan is needed as well as lots of hard work in order to make it a success.
3. Trading Plan
By and large, trading plan is the most important aspect of actual real money trading.
In any trading plan, the following items have to be documented clearly prior to using the plan.
- Objectives : How much you want to make
- Instrument : Stocks, Futures, Options or combination
- Time frame : Day Trade, Swing Trade, Position Trade
- Setup : Chart type, Indicators, Patterns
- Entry : Breakout, Pullback, Strike price
- Exit : Initial cut-loss, Trailing stop, Target
- Risk Control : Scale in, Scale out, Rollover
- Money Management : Capital allocation, Sizing
Any trading plan should be on going and constantly evolving to meet your goals. Of course, things will have to be developed over time as you gain more knowledge experience.
4. Discipline
Does knowing yourself well, getting the right mindset and having a detailed trading plan guarantee success in trading. Well, the answer is almost a ‘YES’ if the trader has the discipline to follow the plan faithfully regardless of any situations or conditions.
However, if the trader does not has the discipline, for example, to cut loss where he/she has to, then there is no point having a complete trading plan but never gets to follow the rules stated in it.
So, always remember this : “Plan your trade and trade your plan”.
Failure to do so means the trader is planning to fail!
5. Perseverance
In trading and investing, no one has ever won 100% of the time. In fact, for new traders, they were always a time in the beginning where he/she felt dishearted by the number of lossing trades and the amount of money lost in trading.
From that point onwards, three scenarios could happen. In the first scenario, the trader quit immediately thinking that trading is a scam or felt that trading is not suitable for him/her. In the second scenario, the trader continues to learn and put in more effort to improve his/her trading. However, as time passed and not much improvement are seen, this trader too gave up and quit.
In the last scenario, the trader continue to do whatever it takes and treat every failure as a valuable feedback. With all the hardwork and perseverance, the trader continue to fine tune his/her mindset, plan and methods until the day where vast improvement and success is seen.
Finally, I would want to end this section with a quote from Albert Einstein:
The definition of insanity is doing the same thing over and over and expecting different results.
