Trading Software and Books Reviews

New Markets, New Strategies

New Markets, New Strategies, by Jason Trennert, the chief investment strategist for the International Strategy & Investing Group, provides an insider’s view on how investors should view and approach the markets following the 2000 bear market and 9/11. According to Jason, times have changed and a new approach is required – hence the name of his book.

In a well-written, easy-to-read book, Jason generally builds the case for why a value-based approach to investing will deliver superior returns in the future. The book begins with a chapter on why dividends (which the investment public ignored during the 1990s) and yield measurement will make a comeback. Along with dividends other traditional valuation methods are discussed. They include the Price/Earning (P/E) ratio; the Fed Model (which compares the yield on government bonds to the yield on shares as measured by the inverse P/E ratio); and the Rule of 20 (which suggests the summation of inflation and the sharemarket’s P/E ratio should equal its long-term average of 20). Jason discusses the impact of terrorism. His discussion includes the importance of keeping an eye on oil prices as a leading indicator and why investments in defence stocks, including investments in companies helping to rebuild Iraq, should deliver good returns. Chapter 4 is devoted to encouraging investors to consider using ‘corporate governance’ as a screen for selecting shares since research shows well behaved corporate citizens perform well in the markets.

Jason continues with a look at contrarian investing and how it works. Beginning with a historical perspective, Jason offers a quick look at Lord Keynes and then gives the reader a good insight into the importance of sentiment and how it can be measured. He gives good coverage to opinion-based indicators, market-based indicators and how the media’s enthusiasm plays its part. Jason firmly believes a contrarian approach, combined with value investing, will offer investors the safest and most rewarding experience in future years.

This article was originally published in the Sep/Oct 07 issue of YourTradingEdge magazine (www.YTEmagazine.com). All rights reserved. © Copyright 2009, MarketSource International Pty Ltd.

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