Monday, April 30, 2007

"Reminiscences of a Stock Operator" by Edwin Lefevre


Reminiscences of a Stock Operator
by Edwin Lefevre

http://www.amazon.com/Reminiscences-Stock-Operator-Investment-Classics/dp/0471770884/ref=pd_bbs_sr_1/102-3340297-4786500?ie=UTF8&s=books&qid=1177976442&sr=8-1

Ok, so I continue to work through my traders' classics' library and this was the next. A lot of people would say it should be the first book on trading anyone should read. In a nutshell, it is the only lightly fictionalized account of legendary early-20th century trader Jesse Livermore. The author here refers to him as Larry Livingston and writes in the first person as if he were the trader himself. But the book was written after several weeks of interviews and more or less tells the life (or at least trader's life) story of Livermore. Originally serialized in The Saturday Evening Post back in the 20s, it was very quickly published as a book and has been considered a must-read classic ever since.

And for good reason. While Livermore was no trained psychologist, he essentially teaches all the key lessons of individual and group psychology that the successful trader needs to know. Understand hope, fear, greed, ignorance and knowledge and when and where they are important. Many of the specific tactics and tools of trading are now, almost a century later, quite outdated - but the psychological element endures. Livermore went through numerous booms and busts in his personal trading and was astute at recognizing and examining his own failures and understanding the risks he should and should not take. When he took justified risks and lost, he was ok with it as every trader should and had a plan for how to deal with it. When he took unjustified risks and hurt himself, he was able to do a post-mortem and examine why. He tried never to get angry at the market, but to examine how it was he made mistakes in the market. Key lessons for any trader in any age, and many more lessons are found throughout this book. If you want to be a trader, I join the legions of others who call this book a must read.

Thursday, April 19, 2007

"Market Wizards" by Jack D. Schwager


Market Wizards: Interviews With Top Traders
by Jack D. Schwager

http://www.amazon.com/Market-Wizards-Interviews-Top-Traders/dp/1592802974/ref=pd_bbs_sr_1/103-6640961-8433428?ie=UTF8&s=books&qid=1176989354&sr=8-1

A highly recommended read, 4 stars. I'm steadily trying to work my way through a library of traders' "classics", and Market Wizards comes highly recommended from many sources. Wizards was author Jack Schwager's project to find and interview some of the best traders in the world back in the 1980s to try and glean the factors that made them successful. He includes a broad swathe: floor traders who measure their trades in minutes or seconds, long-term traders who measure trades in years, commodities, equities, currencies, rates, and all sorts of combinations of the above and more.

As with Murphy's Technical Analysis, Wizards has been around for a long time. Despite the newer edition, it is the same book that was first published in the mid-80s and its age shows. That is a positive and a negative. A negative because yes, markets have definitely changed, many of the specific strategies and issues of the day are no longer relevant even if they remain a sometimes fascinating historical look-back. But a positive because once one sifts through the differences of the eras, certain key principles stand the test of time. That to me is the real value of the book: seeing how a broad variety of traders, with sometimes polar-opposite personalities and strategies, all managed to list many common elements of success. The need for intensive research and strategy testing, the discipline to stick with a plan and not second-guess, self-confidence, conquering the fear of losing, money management, risk control, and coming up with a style of trading that works for your own personality.

It has been said that trading is a less than zero sum game, that on net everyone loses. I don't doubt that is true. But Schwager's book shows that there are elements of success that can allow the disciplined trader to beat the odds consistently over time. There is no magic formula, and these elements are not easy and require incredible discipline. But you walk away from Wizards with the definite impression that these traders are no statistical anomaly, that they have indeed earned their success through right application of difficult principles. Not through one strategy or formula, but by learning how to apply these principles to their personalities and then work, work, work. Then, at the end of the day as trader Ed Seykota says in the book (paraphrasing here, perhaps not the exact quote): 'everybody gets what they want from the markets'. If you don't want to put in the work, then you ultimately find something more important than winning and you subconsciously want to lose. If on the other hand you want to put in the work, then winning is what you ultimately want and through work, perseverence, and intelligence, you can extract your wins from an ever-changing market.

Tuesday, April 10, 2007

"Technical Analysis" by John J. Murphy


Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications
by John J. Murphy


"The Bible" as many a trader refers to it. Murphy's "updated" version of the technical trading techniques classic is now a bit dated itself (often referring to the wonders of "CD-Rom" drives and the like), but nonetheless retains all its punch. Basically Murphy gives a comprehensive beginner's overview of pretty much all the main tools of technical trading: chart reading, trend following, oscillators, systems design concepts and the like. He doesn't always go into hyper-detail (despite the book's size, it is actually a pretty quick read with big text and lots of charts and illustrations) and you'll need to go elsewhere in some cases to see how a technical indicator is calculated/built or to get a comprehensive review of things like candlestick patterns. However you will absolutely get a thorough introduction and now how to look for deeper knowledge with the next book you hit.
The book also comes in handy as a good basic reference source. You don't need to read it cover to cover (though I did and certainly recommend it for those new to the topic), you can go straight to the relevant chapter and get a quick refresher on the key principles on any given tool or technique. A must-read for any trader or anyone who needs to understand basic trading principles.

Sunday, April 01, 2007

"America's Kingdom" by Robert Vitalis


America's Kingdom: Mythmaking on the Saudi Oil Frontier
by Robert Vitalis

http://www.amazon.com/Americas-Kingdom-Mythmaking-Frontier-Stanford/dp/0804754462/ref=pd_bbs_sr_1/103-6640961-8433428?ie=UTF8&s=books&qid=1175477671&sr=1-1

Highly, highly recommended reading. Despite the fact that I consider myself a well-informed individual on Saudi Arabia, I clearly was nowhere near as well-informed as I previously thought as this book completely changed my view of the kingdom and its relationship with the US. America’s Kingdom essentially covers the US-Saudi relationship up to the 1960s with a heavy emphasis on the role of Aramco (the Arabian-American Oil Company, nowadays the nationalized “Saudi Aramco”). Vitalis ruthlessly and efficiently tears down a long litany of myths: the notion of the magnanimity of the company, that its cultural standoffishness and segregation policies were the Saudis’ wishes, that King Faysal was a genuine reformer, that the kingdom was anything other than a US client or that the US ever treated as anything but. All these myths come tumbling down.

Instead Vitalis (seemingly oddly at first) starts with the opening of the American west and the industrialists who came in with their racist segregation policies against Native American and Latino workers. He spends a good deal of time focused on the Arizona copper mines, the racist policies there, and the hard core union busting of the companies who used the “company town” model not out of a motivation to provide well for their employees but to divide their employees on racial lines (white workers got the nice houses, Mexicans and Native Americans got treated like dirt, only the white workers got remembered in the official company histories) and to engage in union busting at all costs (subtle or violent as needed) so that they could maintain the lowest possible wages for the bulk of their non-white workers.

From there Vitalis shows how this racist labor model was exported by the oil industry around the world, finally landing in Saudi Arabia in the 1930s and onwards. Aramco implemented it while simultaneously building up a myth (which many of the company’s white workers truly believed themselves) that they were treating the Saudis well and helping their development. Meanwhile the Saudi workers rapidly recognized they were being treated like dirt (for example, Aramco was herding them into segregated trailers they labeled “buses” at the same time the Saudi workers were reading news about Rosa Parks helping to end bus segregation in the US south) and tried from a very early stage to voice their complaints and eventually to organize unions to fight for equal treatment and a genuine development model for the kingdom. Aramco fought back tooth and nail, labeling strike and labor leaders as Communists, Nasserists or other outside agitators - never admitting that the workers had a right to be angry that they lived in dirt-floor huts in 120 degree heat while the Americans had air conditioned southern California-style homes. Eerie echoes of the way any opposition to ruling classes in the Middle East today is instantly labeled “terrorism” or “al-Qaeda” so that Americans and corrupt dictators can ignore the very real and legitimate problems that opposition represents. Eventually Aramco and the Saudi royal family (who more than once leaned “dangerously” close to siding with the workers from an Aramco perspective, especially in the early days) found ways to work together to keep the royals fat and happy while the company minimized or delayed the inevitable demands for better pay, housing, training, and eventually nationalization.

If you don’t know who Abdallah Tariki or Abdul Aziz Ibn Muammar are, you will walk away from this book duly impressed by these men who along with a number of other Saudis Vitalis profiles gambled (and frequently lost) their lives and livelihoods trying to force the Americans into the 20th century. That’s right, Vitalis basically shows how it wasn’t the Americans pulling the Saudis into the modern world, but rather that the backwards old Jim Crow and “Seven Sisters” attitudes of the American oil companies were the ones who had to be pulled into the modern world by supposedly “12th century” Saudis. Along the way a compelling tale of relations between local workers and segregationist Americans in Dhahran, Egypt’s Nasser, the foundation of OPEC, American intelligence scheming, Aramco’s internal spy service, and many other tales is woven.

The book does have its flaws: Vitalis admits up front he couldn’t write everything and while he provides extensive endnotes and a bibliography, it is a relatively short book aimed at telling a compelling story and not a 1000-page-thick academic treatise. The loss is that oftentimes he provides repeated anecdotal evidence for points which is powerful and in my view believable, but lacks any broader empirical presentation of data. For example, he says Aramco always grudgingly and minimally provided programs for development of Saudi workers’ skills, and the fact that those workers repeatedly went on strike and protested for those programs is powerful evidence in itself, but it would have been nice (if he had it) to show a table or two of budgets for those programs and correlated the numbers with the worker action. A minor issue but one that irks given Vitalis’ excellent presentation of the racist injustices visited on Saudi workers by the Americans is his frequent dismissal of the Israeli issue. Yes, there was and is lots of anti-Jewish racism in the kingdom which Vitalis rightly points out where relevant. However, he also frequently makes what amount to academic snide remarks showing ignorance of the fact that the Israelis are fundamentally guilty of the same and worse types of racism. I expected better from him, but it is a very minor issue given it is in no way the focus of the book.

Anyhow, you have to read the book to get the juicy details. Do it, you will learn a great deal and you won’t be sorry.

"Palestine" by Joe Sacco


Posted by J

Palestine
by Joe Sacco

http://www.amazon.com/Palestine-Joe-Sacco/dp/156097432X/ref=pd_bbs_sr_2/103-6640961-8433428?ie=UTF8&s=books&qid=1175477629&sr=8-2

4.5 stars. It may be a comic book, but this one might well be the best book I know to introduce people to the Israeli-Palestinian conflict. Basically the author is a cartoonist who took a trip to Israel and the Palestinian territories in the early 90s just as the first Intifada was winding down. He spent a few months there, met as many people as he could, and recorded his experiences in comic book format.

The result is powerful. He doesn’t leave anything out from his experiences, positive or negative about the Palestinians or the Israelis, and the result is a really good way to understand the human dimension of what Palestinians go through and how callous Israelis are to that reality. And in a way that doesn't get bogged down in maps and history lessons. What you see is the routine brutality Israelis mete out on Palestinians every day which never makes the headlines, the way Palestinians have learned to live with it, the negative stereotypes Palestinians and Israelis have of each other, and bottom line the sheer misery with which Palestinians live under Israeli occupation while most Israelis simply couldn’t care less or else are actively engaged in creating the misery (though don't get me wrong, Sacco presents Israelis honestly and notes things like the Israeli soldier in Nablus who points out how nice the old town is while intoning he wishes he wasn't there as an occupying soldier, or the Israeli girls he meets at the end and enjoys hanging out and discussing his experiences with).

Two of the more poignant parts are a long description from one Palestinian of how the Israelis tortured him in jail (worked especially well in comic book format somehow) and at the end after wading through Palestinian misery for so long, Joe Sacco’s time spent hanging out with some cute Israeli girls who – while nice enough – show just how ignorant they are of how Palestinians are treated and how little they care. There's tons more. While I wouldn’t recommend “Palestine” as a genuine primer on the history (it’s not that at all), there is simply no substitute for understanding the human dimension and this is as good a book as I’ve ever come across to show that.

Oh, and it’s worth mentioning: Sacco clearly doesn’t have an axe to grind, he approaches the thing from a “pox on everyone’s houses, I’m just an outsider anyways” attitude, is not afraid to let Palestinians he meets know it when he thinks they’re saying disgusting or stupid things, and yet what he sees and shows is so overwhelmingly powerful, you can’t help but come away understanding the fundamental issue here: the abuse of power by the powerful (the Israelis) and the misery and desperation of the weak (the Palestinians). That is the core of the conflict, and showing it so effectively is what makes this comic book so good.