Contrarian Investing: Buy and Sell When Others Won't and Make Money Doing It

Rating:
Summary: Good presentation of a trading system
Review: I bought this book as a counterpoint to my interest in momentum investing in high technology stocks. The criteria they set for picking "loser" stocks that can be "saved" restrict contrary picks to a few investments, but the investments are worthwhile additions to a portfolio of momentum stocks. Their criteria for stop-loss trades is also worthwhile to either contrarian or momentum investment picks.

Rating:
Summary: Good presentation of a trading system
Review: I bought this book as a counterpoint to my interest in momentum investing in high technology stocks. The criteria they set for picking "loser" stocks that can be "saved" restrict contrary picks to a few investments, but the investments are worthwhile additions to a portfolio of momentum stocks. Their criteria for stop-loss trades is also worthwhile to either contrarian or momentum investment picks.

Rating:
Summary: Worth the time and the price
Review: Nowadays many people so easily refer themselves as contrarians as if the title will easily make them winners in the investment game. Of course, common sense, though not really common, tells us something otherwise.

In this book, many historical examples had been quoted about how those genuine contrarians buy on panic and sell on eurphoria, and it's only when the market consensus is at its extreme that the contrarian play will pay. It makes no sense just to think that you are playing opposite to the crowd whilst you simply belong to one of them.

In this respect, the authors had put forth a contrarian system for investors to follow, rules based on value/fundamental investing but with solid techncial elements of when to enter a market and when to stop profit/loss. So called real life stories and testimonials to support the authors' theories and propositions are abundant everywhere. Psychology behind a trend is vividly elaborated.

I think that the book is a good leisure reading for veterans and is a good starter for beginners. Definitely you wont get bored. The lovely pigs on the front cover do tell something about how the authors would like it to be.

p.s. The foreword by Jim Rogers, reprinted from an article In Rogers' own book Investment Biker, and also many of those adages in the beginning of every chapter, are excellent.

"Dont fight forces; use them."
"The easiest job I have ever tackled in this world is that of making money. It is, in fact, almost as easy as losing it. Almost, but not quite."

Rating:
Summary: Good in places, weak in others
Review: The research support for the authors strategy is weak but the book is worth buying for the wisdom it contains on risk, insiders, and investor psychology. Inexperienced investors could find themselves stranded when implementing the books' often subjective sell criteria.

One of the authors admit to having to give up part of his occupation to write the book, and it shows. Is this book really a value investing book in disguise? Take out one rule about stocks being down 50% and you are left with a book on insiders and low P/E investing.

There is an absense of any testing of the final recommended set of rules. A clue as to why is when the authors admit that in September 1996 only a handful of stocks met their recommended strategy criteria.

Where is the authors own performance following thier criteria?

The research cited in the book is only on each core component of their strategy criteria but not on the combination. Little research is provided on their risk management rules or a combination thereof. Therefore claiming the whole is supported by the research is a giant leap.

This lack of research leaves many questions unanswered. How did their strategy do with gold stocks, or steel stocks, which have been contrarian plays for years? What would have happened to their strategy in this raging growth stock bull market?

The authors too often fit example of their strategy by making exceptions to their rules by using subjective analysis and hindsight: such as "when the company's prospects are clearly improving, when the stock price seems to be climbing a 'wall of worry.'"

Too often the authors use the words "often", "can". which are useless as rules or criteria. And too often the authors contradict themselves.

However the good sections on risk, investor psychology make it worthwhile reading.

Rating:
Summary: Good in places, weak in others
Review: The research support for the authors strategy is weak but the book is worth buying for the wisdom it contains on risk, insiders, and investor psychology. Inexperienced investors could find themselves stranded when implementing the books' often subjective sell criteria.

One of the authors admit to having to give up part of their occupations to write the book, it shows. Is this book really a value investing book in disguise? Take out one rule about stocks being down 50% and you are left with a book on insiders and low P/E investing.

There is an absense of any testing of the final recommended set of rules. A clue as to why is when the authors admit that in September 1996 only a handful of stocks met their recommended strategy criteria.

Where is the authors own performance following thier criteria?

The research cited in the book is only on each core components of their purchase criteria but not on the combination, or risk management rules or acombination thereof, and therfore claiming the whole is suported by the research is a giant leap.

This lack of research leaves many questions unanswered. How did their strategy do with gold stocks, or steel stocks, which have been contrarian plays for years? What would have happened to their strategy in this raging growth stock bull market?

The authors too often fir example of their strategy by making exceptions to their rules by using subjective analysis and hindsight: such as "when the company's prospects are clearly improving, when the stock price seems to be climbing a 'wall of worry.'"

Too often the authors use the words "often", "can". which are useless as rules or criteria. Too often the authors contradict themselves.

However the good sections on risk, investor psychology make it worthwhile reading.