This book is a foil to those financial gurus who eschew top down investing. As it says on the cover this is “The Investor’s Guide to Profiting from Market-Moving Events”. Peter Navarro embraces the big picture macrowaves and he has some heavy hitters in support. The book leads off with the following quote from the legendary Jim Rogers and I’d be surprised if George Soros is not mentioned.
“Money supply, government deficits, trade deficits, inflation figures, the financial markets, and government policy. I look all those things for the U.S. and key foreign countries as well. It is one big, three dimensional puzzle…” Jim Rogers
That is in essence what this book is about. The inputs required and steps to develop a macro investing thesis. If you prefer sticking to bottom up investing and don’t care to know how other market participants are playing the game then don’t bother reading this book. I think everyone else will find something of interest.
Part 1 contained some interesting background material on economics and I’m sure much more. Part 2 covered the nuts and bolts of microwave investing. Part 3 put microwave investing in to practice.
One of the cornerstones of my investment philosophy is
capital is scarce while opportunities are bountiful.
Therefore, it should come as no surprise that Chapter 8 Ten Rules to Protect Your Capital caught my attention.
The following rules are controversial and a quick search will uncover numerous retorts to each rule. Whether you agree with or find these rules applicable to you will depend on your investment style. However, every investor would be wise to consider these rules and write down their thoughts on each.
The Macrowave Investor’s Money Management Rules
Efficient Trading
Cut your losses
Set intelligent stop losses
Let your profits run
Never, ever, let a big winner become a loser
Never average down on a loser
Conquer the urge to overtrade - don’t churn your own portfolio
Efficient Ordering
Never use a market order before the opening bell or with a new IPO
Use market orders to capture the price movement in a trending market
Use limit orders to capture the spread in a trading range market
Never chase a stock
Minimize Trading Costs
Think round-trip on your commissions - not one way
Choose the right broker - read the fine print
Raining in Brazil has plenty to offer, even to investors like me who find the details in economic reports more than a bit boring. The following graph of the business and stock cycles is one of what looked like many “keeping it simple” ideas to apply.
Looking at this graph, what stage of the business and stock cycles do you think we’re in? Will thinking about this graph change your current investment focus?
Most Friday’s I drop my daughter at dance class, head to one of Melbourne’s best cafés and have a latte while I wait for Borders to open at 10. I then have around 20 minutes to choose and scan an investment book. While I am normally a slow reader I can skim a book in 20 minutes and pick out a few lessons which resonate with me.
Today my book of choose was Way of the Turtle, by one of the original turtles, Curtis Faith.
Almost every page I scanned contained a gem. From the introduction where Faith said he has learnt something from almost everyone he has every interacted with to his thoughts on edge and his simple clear rules. Continue reading →
I finished reading Soros on Soros a couple weeks back. I enjoyed the book, though I admit to get bored towards the end and skipping pages.
”One should own stocks when they have successfully paused a difficult test, but one should avoid them during the test.” p50
If I had understood that timely advice prior to my recent investments in the financial sector I would be better off today. Fortunately, I had employed a dollar cost averaging or time based investment strategy. To remove fear and greed from the equation I planned to invest equal amounts over a ten month period in financial sector companies. I had stopped the averaging prior to reading Soros, as I realised that despite being a possible great opportunity, financials were not in my wheelhouse.
Soros wanted to write more than a finance investing book and succeeded in doing so. Whether that means the book is a success is a subjective matter and for me the answer is no. I immensely enjoyed the first third of the book and found much to think about. The rest of the book was of less interest and at times a struggle.
Other passages with resonance:
“To others, being wrong is a source of shame; to me, recognizing my mistakes is a source of pride. Once we realize that imperfect understanding is the human condition, there is no shame in being wrong, only in failing to correct our mistakes.
That our understanding of the world in which we live is inherently imperfect. There is always a discrepancy between the participant’s views and expectations and the actual state of affairs.
and my personal wealth had grown to roughly $25 million, I determined after some reflection that I had enough money. After a great deal of thinking, I came to the conclusion that what really mattered to me was the concept of an open society.
the main difference between me and other people who have amassed this kind of money is that I am primarily interested in ideas, and I don’t have much personal use for money. But I hate to think what would have happened if I hadn’t made money: My ideas would not have gotten much play.”
I was struck by the similarities between Soros and myself. I enjoyed the insights into his mind and the timeless investing wisdom he shares in an accessible interview style. It is good to know that those of us with passion for ideas and a disinterest in details can succeed in the financial marketplace.
This book is a foil to those financial gurus who eschew top down investing. As it says on the cover this is “The Investor’s Guide to Profiting from Market-Moving Events”. Peter Navarro embraces the big picture macrowaves and he has some heavy hitters in support. The book leads off with the following quote from the legendary Jim Rogers and I’d be surprised if George Soros is not mentioned.
