Posted June 02, 2021
By Alan Knuckman
Brush Up on Your Trading Knowledge With These Classics
You can always find time to learn and become a better trader.
As a trader, analyst, commentator, and ex-floor guy, aspiring market pros will sometimes come to me to ask for recommendations on the best books to read.
But I assume that most folks don't care about fly fishing stories that transport me to quiet streams in the Upper Peninsula. They're looking for investing insight. So instead of fishing fiction, I usually share a collection of reading material from my old, unofficial Trading Floor Book Club.
The first book on the list is the classic Reminiscences of a Stock Operator, first published in 1923 chronicling the famed Jesse Livermore. The quotes in this classic have held the test of time, like this one:There is one side to the stock market; and it is not the bull side or bear side, but the right side.
Jack Schwager's Market Wizards is also a must read to get a glimpse into the mindset of the best of the best in the business.
Here are 4 other favorites from the trading floor:
1) Rotten Heart of Europe: The Dirty War for Europe's Money by Bernard Connolly. A prominent European economist was fired for honest evaluation of one currency. Amazing foresight into potential economic and social problems ahead in the EU.
2) David and Goliath by Malcolm Gladwell. The author challenges how we think about obstacles and disadvantages.
3) The Quest for Alpha: The Holy Grail of Investing by Larry E. Swedroe. The debate between passive investing and stock picking with market timing techniques.
4) Investment Mistakes Even Smart Investors Make and How to Avoid Them by Larry E. Swedroe and RC Balaban. How to avoid being your worst enemy and how to win by not losing.
That's plenty of titles to get you started on your own reading journey. Good luck!
Keep it In the Money,
Trading Tip of The Day: Don’t Get Too Nostalgic
Name all the stocks that were listed on the Dow back in 1960.
Trick question, you can't do it and neither can I...
Investors tend to lose sight of the fact that major averages are actively managed. Every few years, new and better companies are selected to replace the laggards so the averages better represent the best stocks on the market.
As a trader, you shouldn't get too nostalgic about the stocks that posted unbelievable runs higher over the past decade. Instead, be on the lookout for the next potential market-leader you can add to your portfolio
This lesson especially rings true in the short term as well… Just because certain stocks were rocketing higher a few months ago, doesn’t mean that trend is going to continue.
So whether you’re investing for the long or short term, be sure to stay on top of things so you can follow the market if you need to.
— Greg Guenthner