Trading the Sharemarket – The ASX Way

Trading the Sharemarket assumes the reader has prior knowledge of shares, and is written for those investors who wish to be more active in the sharemarket.

The primary message in the book is that active participants should design and follow a plan. Having a plan is the key. Trading the Sharemarket takes readers through a number of different strategies they can use to design their own plan, ranging from fundamental analysis to technical analysis.

The section on fundamental analysis begins with a thorough explanation of the key building blocks – financial ratios. The book then explores the various fundamental strategies a share investor could adopt for finding long-term share investments. Beginning with Value Investing, the book explains clearly what is involved. On page 72, you’ll even learn one of the simplest and most effective Value Investing approaches there is – Michael O’Higgins’ ‘Dogs of the Dow’. Don’t be misled by its name. It is a good approach that merely directs an investor to consider out of favour ‘blue chip’ shares, which will hopefully come back into favour. Following Value Investing, the reader is introduced to GARP Investing – Growth At a Reasonable Price – where investors aim to find growth shares that are selling at a low, or ‘value’ price. Income Investing strategies and Ethical Investing are also discussed in detail. The book then finishes with a discussion on Market-Neutral Investing for the more curious investor.

For those interested in technical analysis, there is a brief (but good) section on mechanical trading which shares a simple (yet effective) system for generating entry and exit signals.

What I particularly liked about the book, apart from its well written and easily understood style, was its insight into how world-renowned investors pick their shares. I’m a big believer in following those who can, and this book shares their techniques. My tip is to jump to page 133 and read how professionals (Peter Lynch, William O’Neil, David Dreman, Martin Zweig and Benjamin Graham among others) invest. It will give you a little orientation before you read the complete section on fundamental analysis. I haven’t come across another book with so many good ideas on how to sensibly select long-term share investments.

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.

Tuesday, December 9th, 2008 Trading books reviews

1 Comment to Trading the Sharemarket – The ASX Way

  1. nice review ..

    2. gonika on December 9th, 2008

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