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Thursday, June 28, 2007 5:02 PM

Bookmobile: Master Traders & Just what I said

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I recently finished reading two books, both of which I can recommend. The first is "Just What I Said" by Bloomberg columnist Caroline Baum and the second is "Master Traders" by Fari Hamzei of Hamzei Analytics.

I did not know what to expect from either book, but once started they were both hard to put down. The books are completely different in style and content and perhaps who they will appeal to. Let's take a look at each.

Just What I Said

"Just What I Said" will appeal to anyone who wants to learn how the real economy works, in easy to understand lessons cleverly disguised as light hearted articles. The book (broken out into 19 distinct recurring themes) is a collection of the best columns that she has written for Bloomberg over the past seven years, some 1300+ columns in total. The amazing thing is her columns are as pertinent today as when she originally wrote them.

There are so many misconceptions about the economy floating around that simply refuse to die probably because not enough people have read her book. Caroline tackles many of those misconceptions in a manner that anyone could understand. Her style varies from funny, to serious, to sarcastic and everything in between.

Articles in the book range from understanding the yield curve, voodoo economics, the tax code, the US dollar, the trade deficit, the Time Magazine cover curse, the minimum wage, whether or not falling oil prices are good for the economy, the seen and unseen, the political economy, and much more. In one article she compared Alan Greenspan to Alfred Hitchcock. In another article she compares birds at her backyard feeders to the economy. And she is as dedicated to a free market economy as I am.

My favorite chapters are the key myth busting chapters: "Myths Under the Microscope", "Still Nonsense After All These Years", and "Oil Things to Oil People".

Inquiring minds might be interested in how this book came to my attention. I have been reading her articles for many years (but had not yet read her book) when I made a post on my blog called Caroline Baum on Inflation. In that post I sided with her on the Fed's understanding of inflation, as well as reader reactions to her Bloomberg articles. I ended my blog with ...

Note to Caroline:
All we need now is to get you firmly in the Austrian camp.
Lunch with Paul Kasriel just may cure those lingering "monetarist blues" that you seem to have. Can I try and set that up for you?
I did not know if my joke about Kasriel would fly with her or not, or even if she would see it. But there are "spies" everywhere. The next day I received the following email from Caroline:
Mish, It was interesting you matched us up. Kasriel TAUGHT me economics but he wasn't an Austrian at the time. I have toyed with them, done some reading, but I have some issues with their analysis.
A week or two later she sent me an autographed copy of her book which I thoroughly enjoyed and you will too. If you are interested in learning about how the economy really works in easy to understand terms while simultaneously being entertained with humorous analogies, this book is for you.

Master Traders

"Master Traders" will appeal to anyone who wants to sharpen their trading skills with tricks, tips, and approaches to both widely used and new trading methods. The book organized into chapters has a goal of providing "Strategies for Superior Returns from Today's Top Traders".

There are four basic themes to the book as follows:
  1. Technical Analysis
  2. Fundamental Analysis
  3. Sentiment
  4. Trading Size
When Fari was approached by Wiley Publishing to write this book he was wondering what to fill it with. Instead he chose a different approach: asking 14 of the best traders, analysts, and/or hedge fund managers he knew to write the introduction and the book's 13 chapters.

Greg Collins writes in the introduction, "The focus of this book is on exposing practical methods with the hope you can find an idea or two to actually incorporate into your daily routine. It's the difference between watching a bass fishing tournament and learning how to catch dinner yourself".

Greg goes on to talk about self-awareness, humility, focus, risk management, experience, and instinct. All of those are important concepts and all of those can be found in the introduction alone.

Jeff deGraaf has a chapter on Playing with Fear and Arrogance. "Contrary to what 99% of the investment population thinks, trading is not about being right. Being right is easy. Trading is about being wrong; and navigating this inevitable occurrence distinguishes winners from the losers in the long run."

Phil Erlanger talks about Trading Seasonality.

Kevin Tuttle has a chapter on Evaluating Probabilities to improve Profitability.

Tim Ord talks about The Secret Science of Price and Volume.

Jon "Doctor J" Najarian, a 24-year veteran on the options market, including the floor of the CBOE talks about "A New Options Game". The game has changed so much that Dr. J sold his floor trading firm in October 2004 moving from being an options maker to an options taker in the process. The doctor has 5 tips for market takers and option players need to understand those tips to be successful traders in this space. This chapter is a must read for option traders.

Fari Hamzei has a chapter on The Secret Messages of Equity and Options Markets. His method involves using a dollar weighted put/call ratio.

Jeffrey Spotts talks about Making Sense of Market Moves: Using Technical and Fundamental Analysis Together.

David Miller discloses The Keys to Biotech Investing. This was one of the most interesting chapters for me. David Miller talks about the difficulty of fundamental research in the biotech sector and has developed 5 rules and 3 themes to help overcome those difficulties. I would consider this chapter a must read for biotech investors just as I would consider Doctor J's chapter a must read for options traders.

If someone can get one or two good trading ideas out of a book the book is usually worthwhile. Master Traders offers a bakers dozen of ideas to choose from and I heartily endorse it.

Final Thoughts

Many of the writers of the chapters in Master Traders have services or product offerings to sell. To me that does not detract from the ideas presented in the book. Good ideas are after all still good ideas, and one can take the ideas presented and run with most of them without subscribing to any services.

Furthermore, and in the interest of full disclosure, there is absolutely nothing to disclose. I do not benefit in any way should someone subscribe to any of those services. Nor do I endorse books or products just because I received an autographed copy.

I give two thumbs up to both books.

Mike Shedlock / Mish

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