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Stock Market Stratagem

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Stock Market Stratagem

Loss Control and Portfolio Management Enhancement

Thomson Texere,

15 min read
10 take-aways
Text available

What's inside?

One contrarian says you can beat the big fund investors: forget fundamentals, just follow the trend.

Editorial Rating

6

Qualities

  • Applicable

Recommendation

Author Braden Glett is bold enough to take on not only efficient market theory and index funds, but also the investment approaches advocated by such luminaries as Peter Lynch, Warren Buffett, John Bogle and their ilk. Although Glett does not name these names, he finds plenty to disagree with in almost every popular or conventionally recommended investing strategy. That makes this book provocative and interesting. It’s always good to see conventional wisdom shaken. However, the author writes in a very difficult style, and his message hits various grammatical and logical road blocks due to a shaky editing job. With that caveat, getAbstract.com believes that investors and traders may want to check this short book, as long as they take the author’s recommendations as opinion - he offers little in the way of solid research to back his contentions, but he raises some potentially useful doubts.

Summary

Why What You Think You Know Is Probably WrongIn recent years, investors have gotten used to hearing some pretty shopworn advice. Financial planners, admittedly basing their advice on research by Nobel laureates and other solid scholarship, have recommended that individuals should not try to pick stocks. The argument against picking stocks is simple. Many studies indicate that stock price movements are random. This is the cornerstone of the "efficient market" theory, which says that the market is pretty good at processing all the available information about a stock. This means you’re probably not going to find information about a company that everyone else has ignored, although most stock picking approaches depend on investors noticing something about a company before the rest of the market discovers it. The idea behind most stock picking is that once you notice something positive about a company — strong management, good cash flow or a book value higher than its market value — you should buy the stock cheap, then wait for the rest of the market to notice what you noticed. At that point, the stock price should go up and you should sell. If the market is efficient, this won’t ...

About the Author

Braden Glett is the founder of Business Diagnosis & Improvement, a consulting firm specializing in general management and profitability improvement for manufacturing-based businesses.

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