When the Market Moves, Will You Be Ready?

Rating:
Summary: great top-down investing book!
Review: In this book, the author takes a top-down approach to investing. He combined macro economic factors with fundamental/technical approach to the market. In many ways, this book reminds me of Martin Zweig's Winning on Wall Street, which in my eyes is one of the greatest investing books ever published. This book gave me a great number of possible ideas I can use to develop potential models from, and for that it is well worth the purchase price, even if none of them pan out.

Rating:
Summary: Easy to Understand Approach to Tracking Market?s Movements
Review: Professor Peter Navarro teaches at the University of California (Irvine) and has written an interesting workbook on the "macro-investing" method. It focuses on getting a handle on the big picture.

As a teacher, Navarro firmly believes that learning involves not only reading material, but also understanding it which can be assessed by using pertinent questions and exercises. That is why he places questions and exercises after each of his 20 chapters, and provides the answers in a separate 25-page section at the end of the book. This is an excellent reinforcement approach which more books should follow, especially those that are more dense.

Navarro puts forth his three key macro-investing rules:
1. buy strong stocks in strong sectors in markets
2. short weak stocks in weak sectors in declining markets
3. stay in cash in a trendless market

He warns investors that even buying the best stock in the wrong sector in a down market is suicide. According to Navarro, eighty percent of investors lost one-half of their money in the 2000-2002 bear market. Therefore, he urges investors to be on the lookout for macro-economic events, what he refers to as "macrowaves" that precede market action. These include such items as government reports on inflation, employment, growth, Fed policy changes, and large company earnings. He believes this news drives markets up and down.

In multiple chapters, Navarro explains the four steps of macrowave investing and the three key cycles (business, interest rate, and stock market) and which stock sectors would be best to invest in during each aspect of the cycles.

One chapter explains the yield curve and how to use it to understand the changes in stocks can bonds. He then reviews the basics in selecting strong and weak stocks, as well as the basics of fundamental and technical analysis in back-to-back chapters. Additional chapters are devoted to risk management, money management, trade management, and execution.

Overall, Navarro has delivered a solid primer on preparing yourself for trading the market's large moves. The logical step-by-step approach is easy to follow and will provide investors with a good understanding of the markets, and hopefully will result in better investment results.

Rating:
Summary: Easy to Understand Approach to Tracking Market¿s Movements
Review: Professor Peter Navarro teaches at the University of California (Irvine) and has written an interesting workbook on the "macro-investing" method. It focuses on getting a handle on the big picture.

As a teacher, Navarro firmly believes that learning involves not only reading material, but also understanding it which can be assessed by using pertinent questions and exercises. That is why he places questions and exercises after each of his 20 chapters, and provides the answers in a separate 25-page section at the end of the book. This is an excellent reinforcement approach which more books should follow, especially those that are more dense.

Navarro puts forth his three key macro-investing rules:
1.buy strong stocks in strong sectors in markets
2.short weak stocks in weak sectors in declining markets
3.stay in cash in a trendless market

He warns investors that even buying the best stock in the wrong sector in a down market is suicide. According to Navarro, eighty percent of investors lost one-half of their money in the 2000-2002 bear market. Therefore, he urges investors to be on the lookout for macro-economic events, what he refers to as "macrowaves" that precede market action. These include such items as government reports on inflation, employment, growth, Fed policy changes, and large company earnings. He believes this news drives markets up and down.

In multiple chapters, Navarro explains the four steps of macrowave investing and the three key cycles (business, interest rate, and stock market) and which stock sectors would be best to invest in during each aspect of the cycles.

One chapter explains the yield curve and how to use it to understand the changes in stocks can bonds. He then reviews the basics in selecting strong and weak stocks, as well as the basics of fundamental and technical analysis in back-to-back chapters. Additional chapters are devoted to risk management, money management, trade management, and execution.

Overall, Navarro has delivered a solid primer on preparing yourself for trading the market's large moves. The logical step-by-step approach is easy to follow and will provide investors with a good understanding of the markets, and hopefully will result in better investment results.

Rating:
Summary: A good book for investment novices
Review: Though the title of this book leads one to take it as the sequel to the author's first book "If it's raining in Brazil, buy Starbucks", it is quite different from it coz "if" is more like an "if then if then" excercise/reminder for relatively veteran investors, whilst this book is more like a beginner's guide to the author's concept of "Macrowave Investing", essence of which can be described by its three golden rules and four stages:-

R1. Buy strong stocks in strong sectors in an upward-trending market
R2. Short weak stocks in weak sectors in a downward-trending market
R3. Stay out of the market and in cash when there is no definable trend.

S1. Diagnose and prognose on corporate earnings news, flow of macroeconomic data, conduct of fiscal and monetary policy of govt, and exogenous shocks like wars and rain in Brazil, the so called four dynamic factors.
S2. Determine broad market and individual sector trends wrt business cycle, stock market cycle and interest rate cycle.
S3. Screen individual stock thru fundamental and technical analysis.
S4. Uses risk/money/trade management tools

The author said that this book is for all. As a professional trader, I believe that it is much more suitable for amateur long term stock investors who favors fundamental analysis. The coverage on S1 and S2 are brilliant, but not for S3 and S4. Serious investors should read some books else to compliment the inadequacies on TA and risk/money management.

In short, a good book. The Q&A and resource reference in the end of each chapter is very helpful. A value buy!

Rating:
Summary: Excellent book with some nice strategies
Review: Very well written, clear, and concise book on the market, emphasizing using both fundamental value and technical chart analysis to play the market. Perhaps the most important point made in the book is the author pointing out that one must pick strong stocks in strong sectors in order to be really successful. This tip might be worth the price of the book by itself, since 3 out of 4 stocks will ultimately follow the broad market anyway. (You can get that sector strength information from the Investor's Business Daily paper or the paid version of the website, but you'll have to pay the premium subscription price to get it).

One other extremely interesting section is where the author shows that buying stocks during the cold months and selling them during the warm months of the year can produce almost twice the gains of holding them throughout the year. This strategy tested out as valid in the American market going back several decades and incredibly was valid in the British market going back to 1694. The basic point is that holding stocks from October to April resulted in an average return of about 12%, whereas holding them throughout the year resulted in a performance of almost half that, because stocks often declined during the warmer months. Again, that little tidbit of advice might be worth the price of the book by itself, and is reminiscent of the strategy of buying the index and going long when the stock market crosses its 200-day moving average on the upside, and shorting it when it crosses the 200-day moving average on the downside, which has produced an average return of 17%. I've looked at dozens of simple and complex strategies but I hadn't heard of this sort of seasonal strategy before and was very interested to find that out, and may give it a try myself. So overall, a fine book on the market that should be useful to the beginning as well as more experienced investor and trader.