|
LOOK INSIDE
COVER COPY
REVIEWS
|
Smarter Investing in Any Economy: The Definitive Guide to Relative Strength Investing
$39.95
Michael Carr, author
ISBN #: 978-1934354056
One problem momentum investors face is knowing when to sell. Most investors in the 1990s set stop losses for each position they entered. They often followed rigid rules, such as selling if the price dropped more than 8 percent from the purchase price. This approach doesn’t factor in a key point: The market doesn’t care what an investor paid, and 8 percent below the purchase price may just be a normal retracement in the stock price. Routine price action shook many investors out of what should have been winning positions.
READ MORE
|
|
The Stock Market Philosopher: Insights of a Soviet-Born, New York-Bred Hedge Fund Trader
|
|
|
Trade the Patterns: The Revolutionary Way of Trading the CCI
|
|
|
The Secret Keys to Smart Investing: Simple Strategic Rules to Diversify and Maximize Your Investment
|
|
|
PRODUCT DETAILS
Hardcover, 204 pages
Publisher: W&A Publishing; 1st edition (May 1, 2008)
Product Dimensions: 9.1 x 6 x 0.8 inches
Approx. Shipping Weight: 1.1 pounds
ISBN-10: 1934354058
COVER COPY
This book is about letting the little guy do what the big guy has always done. Hedge funds, pension funds, and other institutions have always used relative strength investing to rack up big returns, yet the methodology has never been presented to the individual investor as a viable, easy-to-understand investment strategy, as it is in this book. Michael Carr, a personal investor with a longtime background in system design and analysis, has applied his professional expertise to investing. After running millions of relative strength calculations, Carr proves that relative strength investing works in any market climate. By strictly following his methodologies outlined in this book, you may more than double the returns of the S&P 500, with less risk. Carr shares his results, methodology, and step-by-step instructions here in this book.
READ MORE
Buying stock when it went up and selling when it started going down was the key to an early retirement. Unfortunately, there is no simple path to riches on Wall Street, and the dreams of many were lost, along with their nest eggs, in the Internet stock crash that followed the brief boom. Deep in despair, many took what they had left and turned to value managers to help them get rich slowly, believing that momentum investing was a fad. Yet, in the hands of prudent investors, momentum can be a powerful tool to profit from the markets.
Momentum investors also face the problem of knowing when to take profits in a winning position. One key to achieving long-term wealth in the investment community is to let winners run as long as possible. But, nothing goes up forever and when the stock starts going down, the investor is giving back hard gained profits. Selling a winner too early means the investor failed to fully profit from their correct stock selection; selling too late means they gave back too much in profits.
A final problem momentum investors face is what to do with their investment capital after they sell. Without a clear idea of what to buy next, they can end up chasing the latest stock tip or buying that great stock that was just mentioned by an analyst on television. Another risk is not reinvesting profits in a bull market. Sitting on cash in a bull market carries an opportunity cost, which can be just as damaging to an investor’s account as trading losses, since both lead to lower equity.
Relative strength (RS) allows investors to incorporate momentum investing into a complete investment strategy. RS makes it possible to develop clearly defined buy rules, establish criteria in advance for selling when the buy decision was wrong, and know how to handle winning trades. These strategies require the investor to develop a list of stocks from which to buy, eliminating the problem of what to buy next. Collectively, these processes take emotion out of investing and help to prevent the bane of most small investors, who buy tops and sell bottoms.
MARKETING & PUBLICITY
|
|
|
|
| "(Carr) sent me, the relative strength skeptic, back to the drawing board. That's the power of the book." |
| –Brenda Jubin, Ph.D., Reading the Markets |
| 08/26/2009 |
First Name: Brenda |
State: CT |
Rating: 5 |
Reading the Markets
Insights from Financial Literature
Brenda Jubin, Ph.D.
Originally posted Aug. 26, 2009 at http://readingthemarkets.blogspot.com/2009/08/carr-smarter-investing-in-any-economy.html
Relative strength investing is a popular strategy—buy high and sell higher or, as Livermore put it, “stocks are never too high for you to begin buying or too low to begin selling.” In Smarter Investing in Any Economy: The Definitive Guide to Relative Strength Investing (W&A Publishing, 2008), Michael J. Carr takes the reader on a journey from various relative strength calculations through backtesting to a comprehensive trading plan. I should confess up front that I’m ambivalent about relative strength investing, so the author was not preaching to the choir.
As its name implies, relative strength (RS) is a comparative measure. For instance, it can be used to rank the components of the S&P 500 in terms of performance over some fixed period of time. But it’s not a measure with a single formula; in this respect it differs from, say, the 20-day simple moving average of a stock’s price. There are, Carr claims, at least a dozen currently accepted methods of calculating RS—all incredibly simple mathematically and easy to define in popular trading software programs. For instance, he describes and provides the formulas for such RS techniques as normalized rate of change, ratio of prices, back- and front-weighted rate of change, price/moving average ratios, averaging different time periods, and momentum of RS. With basic charting software only junior high math is required.
In backtesting RS techniques Carr uses the 33 Fidelity Select Sector Funds; the test period is January 1, 1990 through December 31, 2007. He provides detailed results for long-only systems, the upshot being that every RS strategy outperformed buy and hold but that even the optimized strategy that traded only a single fund at a time with a pretty tight initial and trailing stop had a maximum drawdown of over 42%. That can be gut-wrenching for the average investor. So comes the Sir Galahad for every strategy with an edge—risk management. Carr’s suggestions aren’t original, but they help make RS a more tradable concept. He adds three key risk management ingredients to the final system—trading the equity curve, diversification, and volatility-based trailing stop losses. He also suggests some screens for fundamentals to improve the outcome.
And he sent me, the RS skeptic, back to the drawing board. That’s the power of the book. I’ve toyed with formulas defining relative strength breakouts compared to the moving average of a benchmark index. And for some perverse reason I then put them on the back burner. But Carr has convinced me to hone the strategy and follow it for a fraction of my portfolio. I may have an aversion to the greater fool theory, but done wisely there’s money to be made by going with the flow--as long as the flow doesn’t all of a sudden become a waterfall. If I’m richer next year than I am today, I will have this book in part to thank. |
|
|
|
|
|
|
|
Michael Carr has been trading for more than twenty years and is a chartered market technician. He began researching relative strength trading more than a decade ago. After retiring from the U.S. Air Force as a Lieutenant Colonel, he became a full-time relative strength investor. He is the editor of the Market Technicians Association (MTA) monthly newsletter, Technically Speaking, and associate editor of MTA’s scholarly publication, Journal of Technical Analysis. Carr also serves on the MTA Educational Foundation board of directors. His writing has appeared in SFO magazine, Futures, TRADERS, and Working Money.
|
|
|
|
Smarter Investing in Any Economy: The Definitive Guide to Relative Strength Investing
$39.95
Michael Carr, author
ISBN #: 978-1934354056
|
MARKETING & PUBLICITY
|
|
|
The Stock Market Philosopher: Insights of a Soviet-Born, New York-Bred Hedge Fund Trader
|
|
|
Trade the Patterns: The Revolutionary Way of Trading the CCI
|
|
|
The Secret Keys to Smart Investing: Simple Strategic Rules to Diversify and Maximize Your Investment
|
|
|
|
Smarter Investing in Any Economy: The Definitive Guide to Relative Strength Investing
$39.95
Michael Carr, author
ISBN #: 978-1934354056
|
MARKETING & PUBLICITY
- Reviews in national media outlets (secured by W&A Publishing)
- Authors interviewed on national business-talk radio programs and for national publications (arranged by W&A Publishing)
- Advertising campaign in international trade publication (arranged by W&A Publishing)
- U.S. book signings (assisted by W&A Publishing)
- Promotion of book on author's website and in author-written articles for nationally read publications (assisted, in part, by W&A Publishing)
- Direct mail to opt-in e-newsletter subscribers (coordinated by W&A Publishing)
- Webinars hosted by third-party companies (assisted by W&A Publishing)
|
|
|
|
|
|
|
|
|
In Go Long: New Options Strategies for Buy & Hold Investors,
MORE...
|
| |
|
These two fantastic books feature collections of the top online
MORE...
|
| |
|
Dow Theory is widely credited as the basis for modern technical
MORE...
|
|
|