Trader Eyals Top Ten Trading Books

Recommended reading

Reading Less, Practicing More & Getting Experience

"The Kirk Report:

Q:  I am a relatively new trader with an voracious appetite for learning and getting better. I also work full-time so trading is very much a part-time endeavor.

For the past six months I have been spending approximately two hours per day (roughly 12 hours per week as I take off Sundays) toward my trading. In your opinion, how should I properly allocate my time between reading & learning (recommended books, links & reports you share, etc.) versus actual practicing (time spent on simulated trading) to gain the skills I require as quickly as possible? At the moment I'm dividing my time between both (1 hour practice & 1 hour learning) and while I'm making good progress as my results in my simulated trading are steady showing improvement, I would like to know your thoughts and whether you have any recommended "rules of thumb" to share.

A:  I have a number of thoughts to share about this topic and I'm really glad you asked. It is a topic I spend a tremendous time and energy covering within the mentorship group as I know this is of key importance.

First, I must start by congratulating you on a number of things including the fact that you devote as much time and effort as you do, that you understand the difference between learning and practicing to acquire trading skills, and that you're using simulated practice trading at this stage of your learning curve. I can't say enough about how very good this approach will be for you during your early-formative years. So, great job!

Second, it is my opinion that practicing is an crucial part of the learning. You can spend hours reading books and blogs but if you're not doing the things that require you to trade well and often through concentrated skill and practice, then you will not be spending your time effectively.

I find that most who read the website tend to spend far too much time reading more than they do practicing and real skill-development. In fact, I would say that you are unusual in this regard as you've decided upon adopting a split approach between both practice and study. Most of those who have joined the mentorship group tend to devote far too much time in reading and only a minor amount of time in concentrated and consistent practice.

However, since you are seeing steady and consistent improvement now, I would not recommend altering your approach one little bit. What you are doing seems to be working and that means you need to continue until that begins to change. Sooner or later there will be a time where your progress starts to slow down and you'll see a period when you think you are moving backwards again. It will be at that same point that you may consider bumping up the time you devote to practice more than study after identifying any issues that may be hurting your performance.

Ideally, through practice simulated trading you'll begin to figure out which areas you'll need to concentrate you study upon. This will help you concentrate your study time and allow for you to practice more and more. This will obviously require you to keep close and accurate trading records and stats not to mention in-depth study of prior practice trades to identify any issues that may be present in your strategy. Once you identify issues you think are present that's more than half the battle.

Bottom line - practice and study should not be mutually exclusive of one another but used very much the same way you are doing right now. For most, that means spending far more time in practice than study and reading than the other way around. Most of the problems relating to time management I see among members is that they spend far too much time reading and not enough time practicing."

Continued...

You Don’t Need to be a PhD or an Investment Professional To Learn To Invest

“Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.” – Warren Buffett

President Obama, Chancellor Merkel: Gaddafi must resign now

"DAILY MAIL

'Gaddafi MUST leave the country now': Obama calls on Libyan leader to step down for the first time since violence broke out

The President voiced his opinions to German Chancellor Angela 

Merkel in a telephone conversation today

UN Security Council currently debating an arms embargo and financial sanctions on the Libyan leader

Obama administration freezes all Libyan assets in the U.S. held by Colonel Gaddafi

U.S. embassy in Libya suspended as remaining staff airlifted out

Libya's UN ambassador, Abdurrahman Shalgham, turns against Gaddafi as he pleads with the U.N to 'please help Libya'"

Continued...

Eliot Spitzer: Wall Street's fallen angel

"THE GUARDIAN

The downfall of ex-New York governor Eliot Spitzer in 2008 was spectacular. But while the "Luv Guv" became a laughing stock, have we lost the one man with the experience and tenacity to take on the financial giants?

Eliot Spitzer still looks like a man who has everything. He wears a sharp suit and munches hungrily on coffee and croissants in a plush Fifth Avenue office just a few blocks from Manhattan's Central Park. And why not? Here is a 51-year-old man with huge wealth and a loving family. He is worth millions through his work for his father's real-estate empire yet also co-hosts a high-profile chat show on CNN, where he dissects the day's news. No wonder Spitzer appears happy as he chats about morning jogs, dinners at the Four Seasons and weekends away upstate.

But looks can be deceiving. For Americans don't judge Eliot Spitzer by what he now has, but by what he once was and – most importantly of all – what he might have been. Spitzer is the archetypal fallen angel: a once great hope of American liberalism laid low by the tawdriest of sex scandals.

Long before there was Barack Obama there was Spitzer. While Obama toiled unknown in Illinois, the Bronx-born Spitzer won himself a national reputation as the "Sheriff of Wall Street". He was New York's tough-talking attorney-general, who fought banking corruption, enforced environment law and won rights for low-paid workers. He used that fame to enter politics and in 2006 became governor of New York: a perfect springboard for the White House. Before America fell in love with its first black president, people wondered if it was willing to embrace its first Jewish one. Spitzer could have made history.

Instead he left office in disgrace three years ago amid a flood of tabloid headlines that recounted salacious details from his repeated use of a high-end escort service. Spitzer was dubbed the "Luv Guv" and forced into a political wilderness. Rarely in American politics was a fall from grace so spectacular, so complete and so clearly down to a self-inflicted human flaw. Spitzer's current position has to be measured against that sordid history.

Except that might not be the complete picture. A compelling new documentary re-examines exactly what happened to Spitzer. Filmed by Oscar-winning director Alex Gibney, who shot Enron: The Smartest Guys in the Room and is now making a film about Julian Assange, the movie puts the Spitzer saga under a microscopic glare. But the picture that emerges is not the same one that was reported so gleefully by the press with its tales of $4,300-a-night assignations, sex with socks on and the painful evisceration of a carefully constructed public image. Instead, it weaves the story of Spitzer's personal failings into a much greater and more important narrative, one ignored by much of the media at the time.

Gibney's Client 9 – named after the moniker given to Spitzer in the police investigation of the Emperors Club VIP prostitution ring – investigates the powerful financial, business and political interests who benefitted from his fall. It exposes the plotting and subterfuge behind the scenes by those that Spitzer had targeted: the big banks and insurance companies engaged in fraud, the corrupt Republicans, the dubious political dirty-tricks operatives."

Continued...

Also see:

Client 9 The Movie

Main Tripolis military airbase defects to opposition

Great news:

THE GUARDIAN:

2.49pm: Earlier we heard reports that the Mitiga airbase had defected to anti-Gaddafi supporters. Martin Chulov tweets to confirm:

@martinchulov The Mitiga air base is confirmed to have fallen in Tripoli. #Libya. #Ghaddafi. Planes that strafed citizens took off from here.

Ian Black, the Guardian's Middle East editor, gives some context as to how much of a blow this could be for Gaddafi and his supporters:

If Mitiga air base near Tripoli is confirmed as having gone over to the Libyan popular uprising it would be a serious blow for the regime close to the heart of the capital. The military base is adjacent to a civilian airport used for domestic and some short-haul international flights.

Ongoing Updates...

Gaddafi's Final Days

"As armies of rebels close in on Tripoli, Muammar Gaddafi has called on thousands of mercenaries and loyalist troops to help defend the capital.

Plus, shocking Twitter images of the protests from Libya's streets.

Libyan leader Muammar Gaddafi called on thousands of mercenaries Wednesday to help defend his nation’s capital, Tripoli, while nearby cities fell from his iron grip. Not trusting his own army, Gaddafi has for years amassed an irregular force—largely made up of fighters from Chad, Sudan, and Niger, in a group called the Pan Islamic Brigade—headed by his sons and known to be ruthless and loyal. Witnesses said the force has been gaining strength in Tripoli, while cities as close as 100 miles away fell to protesters. Meanwhile, rebels gained control of Misrata and Zwara, and an unconfirmed Facebook video showed anti-government protesters raising the pre-Gaddafi flag in Zawiya, 30 miles west of Tripoli."

Continued...

Are the markets overbought and overvalued?

"BOSTON (MarketWatch) — Buying opportunity? To some, that’s what the recent turmoil in the world and in the equity markets, including this week’s declines in the Dow industrials, means. To others, however, it’s further evidence of the need to go light on stocks.

At least that’s the opinion of Christopher R. Pavese, a chartered financial analyst and chief investment officer of Broyhill Asset Management.

“I’ve been scratching my head for weeks wondering why the equity market has been completely ignoring (the turmoil in the Middle East),” said Pavese, who is also the president of the CFA North Carolina Society. “And I don’t think that a 1.4% correction in the U.S. stock market represents a buying opportunity especially since the market is trading at more than 24 times normalized earnings.”

In fact, current conditions — both from valuation and historical perspectives — represent more a selling opportunity than anything else, according to Pavese, who just wrote a blog entry on the subject.

In an interview, he said current market is reminiscent of two other times in history when we’ve had “Monster Rallies,” where the markets doubled in short period of time and then fell.

“Unnervingly, there have been only two other times when the market has rallied so sharply over this time period,” Pavese wrote in his blog. “Neither of them occurred during raging bull markets. In fact, both of them (one 1934 and the other in 1937) occurred during the secular bear market of 1929 to 1942. Over this period, normalized valuations, as measured by cyclically adjusted price to earnings ratio or CAPE, fell from a peak of 32.6 to a trough of 5.6. While there were occasionally powerful rallies throughout this cycle, investors were well served waiting for lower valuations and/or extreme oversold conditions before dipping their toes in the water.” (CAPE is a measure that takes into account inflation.)"

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Gaddafis' hidden billions: Dubai banks, plush London pads and Italian water

"Libya's oil wealth has been siphoned out of the country by a powerful elite – including Gaddafi and his nine children

The Gaddafi family could have billions of dollars of funds hidden in secret bank accounts in Dubai, south-east Asia and the Persian Gulf, much of it likely to have come from Libya's vast oil revenues, according to analysis by leading Middle East experts.

Professor Tim Niblock, a specialist in Middle Eastern politics at the University of Exeter, has identified a gap of several billion dollars a year between the amount Libya makes from its oil reserves and government spending – a shortfall he expects has contributed greatly to the wealth ofMuammar Gaddafi and his nine children."

Continued...

How nuts is Gaddafi: Wikileaks has the answer

"How crazy is hopefully-soon-to-be-deposed Libyan dictatorMuammar Qaddafi? Why don't we check Wikileaks to find out? (Spoiler alert: He is pretty crazy.)

Wikileaks, the secrets-sharing website that began to release a huge cache of classified diplomatic cables last year, has several messages about Qaddafi and Libya. As, we guess, some kind of retrospective of corruption, despotism and derangement, both The New York Times and ABC Newscombed through the state department's Qaddafi-related cables, trying to flesh out our picture of Qaddafi's regime. And, wow! It's pretty awful. Obviously, there is some charmingly flamboyant eccentricity, as in this now-classic cable:"

Continued...

Qaddafi's Most Bizarre Moments in a Bizarre Speech

"Col. Muammar Qaddafi's defiant, discursive speech today has left international observers dumbfounded. As the broadcast aired across the globe, professional translators at CNN and Al Jazeera stumbled and stuttered as the Libyan dictator jumped from subject to subject. The most important takeaway is that he's not leaving and will use deadly force against Libyans who foment dissent. But a quick summary like that doesn't do justice to the bizarre one-liners he delivered in his hour-plus-long diatribe. Here are some of our favorite moments (dutifully transcribed by NPR's Andy Carvin)." 

Continued...

Venture Capital: It's not a Bubble, it's a Pyramid Scheme

"Mark Cuban knows a thing or two about bubbles, having profited handsomely from an earlier Internet boom. But ask him if we’re seeing Bubble 2.0 and he’ll give you a different theory.

“It’s almost the 2011 version of a private equity chain letter,” says Cuban, who sold Broadcast.com to Yahoo in 1999 for $5.7 billion and went on to buy the the NBA’s Dallas Mavericks.

“Remember the old chain letter, where you put up some money, then you got other people to put up some money, and you gave it to the people who were in the deal before you? That’s what’s happening today,” says Cuban. “The early [VCs] are getting the new [VCs] to invest enough money at high enough valuations that they get most, if not all of their money back. Then the next round [sees] someone else invest more money at a higher valuation, returning cash to the last two rounds of investors. By the time you get to the last [VC] standing, those last few rounds hope they can get a return from the public markets. That may be very tough. But the only players really on the hook are the guys from the last rounds. Just like in a chain letter.”"

Continued...

Buffett Says Pricing Power More Important Than Good Management

"Warren Buffett, the billionaire chief executive officer of Berkshire Hathaway Inc., said he rates businesses on their ability to raise prices and sometimes doesn’t even consider the people in charge."

Continued...

Revolution in Arabia III: Libya embracing freedom

The Colonel is clearly not all quite there in the mental department...

Gaddafi lashes out in bizarre TV interview

Lawsuit claims hedge fund exec has "untouchable" management style

STAMFORD -- Former trader Jeffrey Kong claims his old boss Don Brownstein, founder of hedge fund Structured Portfolio Management, sometimes adopted the managerial style of movie land gangster complete with baseball bat.

Brownstein's $2 billion Stamford-based SPM LLC. is locked in a legal battle with Kong, each seeking to "recover" millions of dollars from the other claiming breach of contract. The two had worked together for 10 years until Kong resigned in May of 2010 and then took a job with a rival fund. And this week, Kong asked the court to stop SPM from distributing, profits, bonuses and equity distributions. Kong's counterclaim in the fight also became public, revealing some of his allegations against his former boss, a highly regarded former philosophy professor.

"Brownstein's management style was, at times questionable," Kong said in a court filing. "For example, as in the famous scene from the movie "The Untouchables," Brownstein would often walk around the crowded conference room table while slapping the palm of his hand with a baseball bat, stopping behind me while stating, `I'll kill you if you leave. The only way you can leave this firm is in a body bag.'"

China’s Oligarchs Tighten Grip, With Assist From Goldman

"BLOOMBERG:
To hear analysts talk, Industrial & Commercial Bank of China Ltd. is one sizzling stock. Of 43 recommendations on its Hong Kong shares, 88 percent advise “buy” or “outperform.” Not a “sell” in sight.

What does a share in China’s largest bank represent, though? Not ownership, let alone control. The government holds some 70 percent of Industrial & Commercial, and its executives obey Communist Party bosses, as Carl E. Walter and Fraser J.T. Howie show in their sobering book, “Red Capitalism.”

Set aside, for a moment, the vapid chatter about the Chinese “miracle.” Forget that clever clogs at Goldman Sachs Group Inc. invested in the bank before it went public.

Recall instead the $42 billion that investors poured into Industrial & Commercial and two other state banks in initial public offerings. What happened to that money? It cascaded right into the state’s coffers as dividends, the authors say. Call it free cash flow with Chinese characteristics.

...

The Western guise serves a purpose. It camouflages what the state sector really is: “a patronage system centered on the Party’s nomenklatura,” the authors explain.

The chairmen and chief executives of the national champions hold ministerial rank and are, in many cases, former ministry bosses. The country’s biggest banks, by contrast, are classified as vice-ministerial entities. Imagine the clout these executives wield over the banks.

“What would the chairman of China’s largest bank do if the chairman of PetroChina asked for a loan? He would say: ‘Thank you very much, how much and for how long.’”

All of which helps explain why new Chinese loans soared to a record $1.4 trillion in 2009 -- and why the banks then scrambled to raise more capital. The Party ordered the banks to lend more money to companies that, by this account, are in no hurry to repay.

That leaves the elite families and their retainers free to plunder China’s vast domestic markets for more profits. Who’s going to stop them?"

 

Gene Sharp, creator of playbook used for revolution

"NEW YORK TIMES

BOSTON — Halfway around the world from Tahrir Square in Cairo, an aging American intellectual shuffles about his cluttered brick row house in a working-class neighborhood here. His name is Gene Sharp. Stoop-shouldered and white-haired at 83, he grows orchids, has yet to master the Internet and hardly seems like a dangerous man.

But for the world’s despots, his ideas can be fatal.

Few Americans have heard of Mr. Sharp. But for decades, his practical writings on nonviolent revolution — most notably “From Dictatorship to Democracy,” a 93-page guide to toppling autocrats, available for download in 24 languages — have inspired dissidents around the world, including in Burma, Bosnia, Estonia and Zimbabwe, and now Tunisia and Egypt."

SAC Capital’s Cohen Opens Up

"Steven A. Cohen likes Green Mountain Coffee.

The founder of SAC Capital Advisers, the $12 billion hedge fund in Stamford, Conn., sat for a rare wide-ranging interview with Paul Tudor Jones, another hedge fund manager, where he discussed his favorite stocks and a whole lot more. The interview was part of a two-day conference at the Waldorf Astoria hotel in Midtown Manhattan sponsored by ISI, the Wall Street research firm.

The conference was closed to the media, but this DealBook dispatch is based on detailed reports from several people in the audience.

Other than complaining about his bad back, Mr. Cohen is said to have appeared at ease during the hourlong conversation before a packed crowd. Mr. Jones, who joked that he was playing the role of Charlie Rose, pressed Mr. Cohen on a variety of topics but did not — no surprise — ask questions about the government’s insider trading charges against two of his former traders."

All You Need to Know About Why Things Fell Apart

Michael Lewis, extrader, Bloomberg columnist and recent author of the bestselling "The Big Short" being sarcastic about causes behind the already forgotten financial crisis:

"A surprising number of my fellow citizens appear to be unaware of my service these past 18 months as a member of the Financial Crisis Inquiry Commission.

Thus it may come as news that I have declined to sign the report issued by the majority, or the dissent by the three- member minority, or even the dissent from their dissent, written by the now-immortal Peter J. Wallison. I hereby dissent from the dissent from the dissent. My dissent is different from all those other dissents, which is why I am dissenting."...

Goldman Sachs to Shut Global Macro Trading Desk

"Goldman Sachs Group Inc. is winding down its Global Macro Proprietary Trading desk, according to a person familiar with the matter. 

The trading desk, which made bets with Goldman's capital in foreign-exchange markets, interest-rate markets, stocks, commodities and other fixed-income markets, will close out its trades in coming days, said the person. "

John Paulson’s Interview With the Financial Crisis Inquiry Commission: The Signs Were There

For those walking around with their eyes wide open at least ;-)

"John Paulson, of the eponymous uber-hedge fund did an hour-long interview with the Financial Crisis Inquiry Commission. I listened to it (thanks to NYT Dealbook, although not sure where they got it from), and really, I got a kick out of it even though I think my carpal-tunnel is really flaring up now. Anyway, without further ado, here’s what the man behind the Greatest Trade Ever has to say about the Financial Crisis…When asked what he saw, when, and why he decided to get short, he said “First thing we noticed was that real estate market appeared very frothy, values rose very rapidly, which led me to believe real estate markets were over valued.” That’s pretty simple/straightforward, no? I think it’s pretty interesting that he said the 3 homes he’s bought were all out of foreclosure, and they’d increased in value 4-5x over a 2-3 year period through ~’2005. Apparently the impetus for the research that led to The Trade was literally staring him in the face every time he got home from work!

 When asked what he saw, when, and why he decided to get short, he said “First thing we noticed was that real estate market appeared very frothy, values rose very rapidly, which led me to believe real estate markets were over valued.” That’s pretty simple/straightforward, no? I think it’s pretty interesting that he said the 3 homes he’s bought were all out of foreclosure, and they’d increased in value 4-5x over a 2-3 year period through ~’2005. Apparently the impetus for the research that led to The Trade was literally staring him in the face every time he got home from work!

He explained his approach, and the way he put it makes me really think the guys who didn’t leave their trading desks & “never saw the bubble/crash coming” really had their heads buried in the sand deeper than I previously thought. As Paulson said, “Credit markets were very frothy, very little attention paid to risk, spreads were very low, we thought when those securities correct, it could present opportunities on short side.”"

Don't listen to buddies: Paulson’s Friends Pitied His Subprime Bet

"As one of the few winners from the financial crisis, John A. Paulson looks pretty smart. His hedge fund firm, Paulson and Company, netted $15 billion betting against the subprime mortgage market — and he continues to profit from his wager on gold.

But in audio recordings recently released by Financial Crisis Inquiry Commission, Mr. Paulson reveals just how much flack he got from professionals and peers, who in the early days of the turmoil derided his big bet as the misguided move of a “novice.”

“Most of them, when we did express our viewpoints, thought we were inexperienced novices in the mortgage market,” Mr. Paulson said in an interview with the commission in 2010. “We were very, very much in the minority. If I said a thousand-to-one, we were the one. Even friends of ours thought we were so wrong, they felt sorry for us.”"

Lamborghini to debut Aventador Supercar in Geneva Show

"Lamborghini SpA will unveil a flagship supercar costing more than $370,000 called the Aventador, its most powerful series production vehicle ever, at the Geneva Motor Show, a person with direct knowledge of the plans said.

The Aventador LP 700-4, which has a 700-horsepower V12 engine that surges to 100 kilometers (62 miles) per hour in 2.9 seconds, will premiere March 1, said the person, who asked not to be identified before the model is shown publicly.

The Aventador, which replaces the Volkswagen AG brand’s top-of-the-line Murcielago model, is already sold for the first year of production, the person said. Lamborghini, which competes withFiat SpA’s Ferrari, will decide over the next year whether to add a third model to its portfolio to complement the Aventador and Gallardo lines, the person said.

“People may be ripping order forms for the new Lamborghini out of salesmen’s hands,” said Christoph Stuermer, a Frankfurt- based analyst at IHS Automotive. “The timing seems right, it’s no longer deemed inappropriate to flaunt your wealth.”

Lamborghini is counting on the Aventador to help capitalize on a recovering market for luxury autos costing more than $200,000. Supercar sales in the U.S., the top market for the world’s most expensive cars, may surge 146 percent this year for vehicles costing from $200,000 to $400,000 after plunging 40 percent in 2010, according to IHS."

http://www.bloomberg.com/news/2011-02-13/lamborghini-said-to-plan-debut-of-370-000-aventador-supercar-in-geneva.html

Spy shots taken during winter testing that's normally done somewhere in Finland or Sweden.

Hey, it comes with four wheel drive and winter tires ;-) 

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www.escapethecity.org/

Trading: Lessons from 2010

Found this over at Kirkreport.com, good points to heed if you don't want to end up where most do when trading or investing, letting losers run while cutting winners short because they need to be "right" more than they want to make money:

"~ On Risk Management ~

• Trading management is just as important as stock selection.

• Think about the risk versus reward before taking any position.

• Capital protection is always the top priority.

• Cutting losses is the holy grail.

• Don’t play chicken using mental stops. Set hard stops and manage the risk.

• Avoid large losses always. Keep losers small and you can survive anything.

• No edge means no trade.

• Sitting on your hands can often be the best trade.

• Don’t participate in the market, just to participate. Make sure the conditions are favorable to your method of trading.

• Only losers add to losers.

• I used to be an all in and all out trader, but scaling methods have improved my performance.

• The trick is to get on board and stay on board until the trade fails.

• Limit the number of trades you make every day forces you to be choosy and place better stops.

• When you are up the most is when you are most likely to break your rules.

• When having trouble dealing with the market, reduce your position size and raise cash.

• Proper position sizing is key to risk management.

• Without taking risk, there is no reward.

~ On Strategy ~

• Keep it simple. Simple works.

• Trade what you see not what you think.

• Learn to think for yourself. Trust your gut.

• A good trading system must fit both my strengths and time limitations.

• Follow the price trends rather than the pundits.

• Less is more. Learn one “bread and butter” strategy and trade the hell out of it.

• Be calm, have a plan, and ride it out through the rough times.

• Trying to pick tops is a sucker’s game.

• You must fight the feeling that you have a good idea of which way the market is headed.

• When you become an expert of one basic simple trade, results can be truly outstanding.

• Let your setups come to you – do not chase. There will always be another day, another setup.

• Don’t overtrade. It is the sitting that makes the difference.

• Your analysis must involve multiple time periods.

• The more time spent at the keyboard, the luckier I get.

• Keep your universe of stocks to review small. Only work on a limited number of instruments until you have mastered your strategy.

• Continued:
• http://www.kirkreport.com/category/freereports/page/2/