The Nature of Risk

Rating:
Summary: Not useful if you have the 2 better ones
Review: Firstly, I have a lot of respect for Mamis, so this is NOT to run him or his writing style down.

In-fact, I have given his other books, When to Buy and How to Sell the Five Star ratings as they are very useful and well written.

However, after reading those, this book seems to repeat some of the points made in them and seems a little defensive about Technical Analysis. Avoid this one but positively buy the other two.

Rating:
Summary: Best book I have read on the psychology of trading!
Review: I was reluctant to buy this book based on the first reviews I read. However, I have been daytrading for four years now, and frequently go against the crowd. Perhaps it is this contrarian view that keeps me in this business. I manage a proprietary firm in Denver (Bright Trading) and recommend this to ALL the new traders as well as veterans of the craft. It is fresh, insightful and really gets to the meat of what makes one trader successful while another fails. A great companion to this book is Mark Douglas' book Trading In The Zone.

Rating:
Summary: Best book I have read on the psychology of trading!
Review: I was reluctant to buy this book based on the first reviews I read. However, I have been daytrading for four years now, and frequently go against the crowd. Perhaps it is this contrarian view that keeps me in this business. I manage a proprietary firm in Denver (Bright Trading) and recommend this to ALL the new traders as well as veterans of the craft. It is fresh, insightful and really gets to the meat of what makes one trader successful while another fails. A great companion to this book is Mark Douglas' book Trading In The Zone.

Rating:
Summary: Still near the top of the list
Review: It's been four years since I first reviewed this book (see the next to the last, below), and I still consider it to be absolutely essential for anyone considering any sort of involvement in the financial markets. In fact, it's probably essential for anyone who is considering anything at all that entails more than minimum risk.

The amateurs miss the point. This is not about the best stochastic settings or how to massage the bid and the ask. This is about facing up to the very real risks inherent in the financial markets, including the very real risk of financial ruin. Amateurs don't see the risk; therefore, they don't bother to grapple with it. Instead, they would rather blow up and disappear. If one wants to last, he must come to terms with the nature of risk, his own tolerance for risk, an understanding of how to manage risk. Without that, he's doomed.

Rating:
Summary: So-So
Review: Let me say rightaway that this is a profoundly brilliant book .Since the paleolithic age down to our personal computer era RISK has been the big bugaboo of all investors & speculators__ the dirtiest four letter word there ever was!Justin Mamis helps you view risk from an entirely different perspective : risk viewed as a CHOICE rather than a HAZARD.Risk can never be completely eliminated. However it can be analysed,understood and tamed to one's advantage.Mr.Mamis tells you how to go about dealing with risk in life as well as the market with wit and verve .Also included are very useful and practical insights on decoding the technical signals that emanate from that hysteric,schizophrenic beast : the market !Like all great books this one gives you new insights upon rereading ;a very competent exegesis of the art of technical analysis .

Rating:
Summary: An stellar analysis of the psychology of decision making
Review: Mr. Mamis steps beyond facts and figures used to analyze the stock market. He examines the psychology and consequences of waiting, learning, and gathering information about potential investment and life choices.

An informed decision would seem to be a sound one. It may very well be, yet in the context of the market, as information risk diminishes (more knowledge is gained about a particular investment), the price risk will increase (assuming positive news results in a rising stock price). Once an investment is deemed to be solid and secure, the existing information will already be reflected in the price of the equity and the potential for appreciation becomes much more limited (price risk increases). The art of balancing information risk and price risk is a central theme of the book, which is discussed, in intricate detail. Also discussed are methods of determining when price risk is likely to be at an absolute minimum -- all news surrounding a company is bad, and no matter how much more bad news comes out the price does not decline further. An interesting "head and shoulders" method of timing the market is presented as well.

Whether it's embarking on a new career, investing for a quick hit, or retirement, taking a new job, signing an agreement or contract, making a new purchase, or getting married, all of life's decisions involve the same basic tradeoff between information risk and anticipated benefits (price risk). The author discusses not only the stock market and investing, but presents mental models from various situations, which most anyone has experienced, and can relate to in some form.

If you are interested in learning about the psychology of the market, or simply exploring and seeking to better understand your own decision making process better, buy this book. It is truly a book about risk, and not one of the over-hyped books blathering on about the stock market

Rating:
Summary: Epiphany, anyone?
Review: The Nature of Risk is a seminal work for anyone who understands that self-knowledge is key for success in the financial markets, particularly at market extremes. Rather than babble about risk in general, Mamis takes this engine apart and examines its parts, among which are information risk and price risk. He explains that as one's tolerance for information risk increases (the need to know why the stock is doing whatever it's doing), one's price risk diminishes (one is better able to jump in and take advantage of whatever opportunities for picking up cheaper shares present themselves). On the other hand, if one has no tolerance for information risk and must know everything about a stock's movement, his price risk will be that much greater because the price will likely, by then, have risen to an over-extended level. Therefore, having identified these components of risk (time risk is another), one must then balance them out in order to approach the markets rationally and unemotionally.

An extremely important work, particularly for the investor who is plagued by doubt, confusion, and anxiety.