If you’ve been following Mike Swanson for any length of time, if you’re a member of his WallStreetWindow community or have read any of his ebooks on the subject of trading, then not a lot in this book will come as a surprise to you. Having said that and being all of the above myself I found the book to be a good, quick read and I still took some fresh insights away from it.
The book is targeted to the novice and assumes no background knowledge about the stock market or trading. But don’t let that dissuade you if you do have experience trading because a lot of the material in this book covers the psychological aspect of trading. Despite an emerging trend in behavioral investing books, it’s the mental game that is still what tanks most would-be investors or traders.
The book basically steps you through the principles of what actually moves stock prices, the interplay between stock market trends and market psychology, types of traders and the basic anatomy of a stock, or any financial asset cycle. More seasoned readers will recognize that Swanson is a disciple of the Stan Weinstein school of thought: that stocks basically run in four phases: basing, bull run, topping, bear market decline, rinse – lather – repeat. Although over the years Swanson has added insight to this basic premise that Weinstein never bothered himself with (things like which sectors lead a bull market determine whether it’s a bear rally or a new bull).
He gives a good anecdotal chapter on the anatomy of “the stock promotion” business and a short overview of key fundamental metrics. What I find refreshing about Swanson’s approach is that he’s not an “either/or” dogmatic adherent to a school like technical analysis vs. fundamental analysis, or value investing vs. growth investing. Once he identifies a suitable sector candidate for his attention using basic technicals (a la the aforementioned Weinstein stage analysis), he takes the reader through using fundamental filters to further narrow that sector and identify the stocks that will likely lead it.
I think if you’re new to trading and you’re actually crazy enough to want to try it in this market, you should read this book. If you’ve heard about WallStreetWindow and were wondering if it’s right for you, you’ll know after reading this book. (We will be giving away signed copies of the book in a draw at the end of October for people whosubscribe to Wealth.net, and more at the end of November.)
If you really like it, you should consider joining Mike’s WallStreetWindow service. I’ve been a subscriber for years and I don’t even trade stocks. I just like reading his analysis of the overall market.
Those interested in further reading may be interested in going back to Stan Weinstein’s Secrets For Profiting in Bull and Bear Markets, which is really the book that kicked this school of trading thought off in the first place.