Rating: 
Summary: vaccine to ward off the mystics and the mumbo-jumbo
Review: Here we are in early 2003 after suffering from three straight down years in the US equity market indices. One would think that equity market participants, many saddled with portfolio losses exceeding 40%, would want to re-assess their approach to trading/investing in order to improve for the future. It is in the natural order of things that when the garden is in full bloom, like my flower garden this fine spring day of 2003 or the Nasdaq in the fall of 1999, that the system generates predators and parasites to feast on the public with their tools of mystical prediction, hype, and mumbo jumbo, as nature does have this tendency to relentlessly strive to reclaim its own excesses. But one would think that now, in the season of our market discontent after three years of down-down-down that people would begin to question the amount of mis-information provided to them on a daily basis regarding financial and speculative matters. Unfortunately I see no trend in that direction, and if anything, the predators have become even more cunning as the herd is thinned. Amazingly, despite all of this, Vic and Laurel have quietly, in their typical non-promotional way, have opened one side door to show those of us mere mortals who seek ways of improvement a way to do so - through the use of the scientific method applied to trading. If one was to summarize the theme of this book it would be to please form testable and falsifiable propositions dear reader before committing capital to ideas, and as Feynman was often quoted saying - "if a proposition can be tested then it should be tested". Therein lies the path to improvement no matter what form of analysis you employ or time horizon you trade. This book is a wonderful anti-dote to the mumbo jumbo mysticism and misinformation that pervades the financial media. Besides, the part on Abelson is alone worth the price of the book.
Rating:
Summary: a keeper, for it teaches selflessly
Review: As a novice seeking guidance on how to make investment decisions I was immediately attracted by the title "Practical Speculation" - seems like colliding concepts but this easy-to-read book makes it seem more like the nature of an understandable beast.In small, easy to read bites, one can digest and reflect on the information offered. The book is peppered with clues to the content of various sections by pictograms and pithy quotes. A beneficial collection of lessons, insights, and autobiographical experience is provided, opening a window into the unorthodox life and wisdom of a practical speculator. Perhaps most important to those of us who lost money in the past 3 years, Vic shares, with frankness, the ups and downs he has navigated through during his career. It is confidence-building to know that one may survive loss, pick oneself up and go forward without fear. The over-reaching value of the book lies in this and in the tools provided for the ordinary person (me) to wade through the river of information out there to evaluate for myself the words of the pundits at large and the numbers they throw about - and to cull out real value. Thanks to the book, I have better tools to test the theories, challenge the numbers and set up measurements that work for me. I loved the reference to "Invasion of the body snatchers"... I have the movie, and it scared me to pieces when I was young. I gifted it to 4 of my colleagues at work and to my chiropractor, and it is fast becoming a valued possession for me for ideas to test, data to collect and thoughts to ponder.
Rating:
Summary: The most scientific stock market book I have ever read
Review: Practical Speculation by Victor Niederhoffer and Laurel Kenner emphasizes true scientific testing as the only way to approach the market. Every money making assertion the authors make is backed up by solid statistics and thorough testing. Despite the emphasis on statistics and historical testing, each profit enhancing technique which the authors address is readily understandable by any novice. Truly a gem! The authors show what is wrong with PE ratios as a timing tool, how to use earnings reports and analysts expectations the right way. Certain technical analysis techniques are scientifically debunked. I would contrast this with other investment books which resort to a single mumbo jumbo chart example to "prove" that some technique works all the time. This book is a rarity among investment books because it backs its recommendations with solid statistical proof. This book is the largest single collection of proven performance enhancing techniques I have ever seen. In the Technical analysis area, the book analyzes the actual performance of trend following, head & shoulders, TRIN, candlestick chart patterns, profitability of daily and weekly price patterns and a fascinating study on the profitability of the previous year's best and worst performing stocks. The authors don't ignore Fundamentals either but turn their witty and fun magnifying glass loose on PE's, earnings predictions, analysts recommendations, Benjamin Graham and the profitability of value investing. Niederhoffer and Kenner also review how Zacks and the Value Line services have performed and show statistically how to use them to achieve superiors returns. Niederhoffer uses his University of Chicago PhD and UC Berkeley business Professor background to analyze how to look past the earnings and shows the value of dividends, stock buybacks EBITDA, high and low corporate tax payers and how to use inventory and accounts receivable to select profitable stocks. All in all Practical Speculation is a fun read, made more so by the spicy and undoubtedly controversial pot shots the authors take at such notables as Alan Abelson, Warren Buffet, Benjamin Graham, and Alan Greenspan. I highly recommend this book. Phil McDonnell
Rating:
Summary: Good book! Solid Ideas!
Review: ... In Practical Speculation, I once again found Mr. Niederhoffer's humourous attitude at play. He has a style that is both disarming and straight to the point, but can put the most esoteric of concepts in a light you never thought of. In this book he does just that by pointing out that the scientific method needs to be applied and should be applied to investing. And he does so in typical Niederhoffer fashion. He takes the time to deconstruct many of today's investing strongheld beliefs. He rips to shreds Benjamin Grahams value investing and technical analysis for starters. Whether you agree or disagree with his assessments it is important to hear multiple opinions before you formulate your own. Many of his ideas about trading along with Mr.Kenner have a of mathematical models attached to them and they force you to take out the slide rule quite often along with that old calculus book. I liked the book for what it is, two men's vision of what the market means to them. We should all be so lucky to be able to express that from time to time. Don't look to his methods as the holy grail of investing, just as he suggests you shouldn't look to others, and you will like this book too.
Rating: 
Summary: Excellent myth-buster and trading guide
Review: Vic/Laurel and I are different types of investors. Vic is essentially a trader. I'm essentially someone in search of a good business selling at a fair price. That difference aside, this book is one of the best financial books I've picked up in a long time. Not only does it bust the myth that "the trend is your friend," it also shows you how wrong it is to be consistently bearish, how mechanical and devoid of thought most CNBCish news is, how hubris signals downfalls and the truth behind Wall Street's earnings propaganda. It's got plenty of wonderful anecdotes, excellent recommendations for further reading, and advice real traders can use to make real money. I'll be using this book as a reference, even though (or perhaps, especially since) it raises serious challenges to my value-oriented investment style. I can't afford to ignore this book, and neither can you.
Rating:
Summary: Better for Novices
Review: My first review below was oriented towards the more sophisticated investor. Here I would like to address the book for novices. For novices this is a much better book than I perhaps led others to believe. The discussion of technical analysis is excellent and the discussion on REITS is outstanding. The only real problem is that this information is rather generally available but perhaps not in as entertaining a format. Overall the book is definitely worth reading for the novice investor as it debunks (again) many of the market myths. I have never subscribed to many of them myself but am well aware that many others do. The only real problem that I have with the book from the beginning investors point of view is the level of emotional maturity displayed by the authors ( they may have thought of it as humor unfortunately ), the ad hominum attacks on Benjamin Graham, and the rather sad analysis of value investing that fails to take into consideration that a wide range of value investing methods exist just as a wide range of growth investing methods exist. A false negative case for growth investing could be made using the exact same methods that Niederhoffer and Kenner used for value investing. The smart investor will realize that many different growth stock picking schemes exist. Many of them do not work just as many of the value stock picking schemes do not work. This little diversion of theirs into junking value investing will mislead many novices and in my view undoes much of the good of the book. One additonal limitation the novice reader should be made aware of is that the sections on physics analogies are drivel. But as I said before the book does have some really good discussions and the use of the scientific method is commendable.
Rating:
Summary: A Mandatory Prerequisite to Speculation
Review: This volume follows up on Niederhoffer's extremely insightful first book, "Education of a Speculator," by moving from preparation to practice. The authors have graduated from the academy and share their perceptions about real-world trading. The book is "practical" for speculation in two respects: (1) its contents were clearly derived from actual trading experience rather than based on "armchair reflections" so common in books about investing, and (2) the knowledge contained in it can be of tremendous practical use for those readers wishing to apply themselves to its application. As I read the book I had the feeling I was privileged to be inside a modern-day "Menlo Park Laboratory" devoted to the problem of how to invest successfully. Just as Edison's lab would take apart a problem, first testing and abandoning those approaches which did not yield satisfactory results, the authors devote the first half of their volume to examining and rejecting trading approaches which will not render consistent success. As Edison so famously remarked, "genius is 1% inspiration and 99% perspiration." The extraordinary amount of work which the authors have put into testing trading methodologies is apparent. For me, the second half of the book contains the greatest reward. For those investors who want to survive and thrive in the markets -- and are willing to put in the effort necessary to do so -- the approaches given therein are the proverbial "pot of gold" at the end of the rainbow. The methods tested which have shown the most consistent success are described, so that the reader can adapt them to his own needs and situation. I WISH someone had given me this information years ago, before I began investing. In sum, this book is not RECOMMENDED reading. For those who want to profit consistently as long-term investors, it is a MANDATORY PREREQUISITE.
Rating:
Summary: Best trading book of this century
Review: This book gives treasure maps, minefield maps, and road maps for the market. The treasure maps tell you how to make money by analyzing the balance sheet, (beware of inventory and accounts receivable), by buying the growth companies in the first and fourth quarter, by following after interest rates, by buying the biotech with the insider buying, by bargaining for a good price, by waiting after a bad year, by waiting until real estate is down.
The minefield maps tell you how to avoid the blowups from earnings propaganda, the heads and shoulders and all that, the low book value stuff, the short term mentality, the boastful companies, the propagandist who's always gloomy, the road maps show how to use scatter diagrams, return data from all countries, the value line, the conservation of energy, tennis, baseball and chess to provide a foundation for investing. It's all documented with dozens of original tables, also very funny, and scholarly. I think i've read every other book about investing, and this one is head and shoulders way above them. I read a review in active trader magazine that said this is the best trading book of this century, and that's an understatement.
Rating:
Summary: The Education of the Intelligent Investor
Review: Would anyone share information on how to become wealthy
quickly for the price of a book? Doubt it. Would someone
provide a framework for thinking about the market and
pathways for improving that framework? Yes, I believe
so. As a financial advisor, I have heard every reason under
the sun for buying a stock. Rarely has the idea been put
to any type of rational test. More often it is stale advice
from an investment rag, biased portfolio manager or friend
of a friend. More times than not; a pure gamble. Fortunately
for investors, Vic & Laurel have shared a way of thinking
that helps them put the odds more in their favor. If you
are an indvidual investor in search of financial recovery
in these uncertain times, consider this book your first
step towards the light. As for any wanna-be traders, please
read Chapter 8 in The Education of a Speculator and
then audit last year's trades. I promise it will
sobering.
Rating:
Summary: For ALL investors, not just "speculators!"
Review: As a novice investor who suddenly awoke one day to see her portfolio's value slashed in half, I have only recently realized the importance of investor's taking responsibility for their investment decisions (rather than leaving it up to their broker's, whose interests are obviously not fully aligned with their clients'). I wasn't sure what to expect when I ordered this book because I don't really think of myself as a "speculator," but I was intrigued by the positive reviews it received. Anyway, I'm just a beginner in the investing world but I learned a lot from this book. I admit I didn't always understand some of the statistical analyses, but that is the fault of my English degree, not the co-authors' explanations! The most important value I got was developing a more rigorous mindset about the kind of market and financial ideas (Kenner and Niederhoffer call them 'memes'), ubiquitously floated by the media, that I allow to influence my investing decisions. I also want to take issue with a couple of the stridently disparaging remarks of some of the "reviewers" below. I say "reviewers" because the term is too grand for several of the people posting reviews here: one would have thought that as a minimum they be required to read the book in question, and not just "browse through it at a bookstore." It is clear one of the reviewers apparently blames Niederhoffer for his own investment losses. The one "middling" review seemed thoughtful, and it is clear the reviewer did indeed, as he avers, read the book "very carefully." I disagree with his contention, however, that Kenner and Niederhoffer devote themselves to debunking myths that nobody takes seriously any more, like technical analysis. It's clear that this avid reader is not a viewer of any of the financial networks, who are forever trotting out technical analysts to explain why the market rallied because it "bounced off the lower Bollinger Band" or fell because some "trend line was broken." Clearly a lot of investors still need to be disabused of the many sadly-all-too-prevalent market myths, this reviewer included. Thank you Kenner and Niederhoffer for the wake-up call. I guess the real message of the book is that all investors are speculators, whether they realize it or not. This book is a primer on what it takes to be a smart one. Again, thank you.
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