Investing with the Trend: A Rules-Based Approach to Money Management
$21.37
Investing with the Trend provides an abundance of evidence for adapting a rules-based approach to investing by offering something most avoid, and that is to answer the “why” one would do it this way. This book explains the need to try to participate in the good markets and avoid the bad markets, with cash being considered an asset class. The book is in three primary sections and tries to leave no stone unturned in offering almost 40 years of experience in the markets.
Introduction:
Part I – The focus is on much of the misinformation in modern finance, the inappropriate use of Gaussian statistics, the faulty assumptions with Modern Portfolio Theory, and a host of other examples. The author attempts to explain each and offer justification for his often strong opinions.
Part II – After a lead chapter on the merits of technical analysis, the author offers detailed research into trend analysis, showing how to identify if a market is trending or not and how to measure it. Further research involves the concept of Drawdown, which the author adamantly states is a better measure of investor risk than the oft used and terribly wrong use of volatility as determined by standard deviation.
Part III – This is where he puts it all together and shows the reader all of the steps and details on how to create a rules-based trend following investment strategy. A solid disciplined strategy consists of three parts, a measure of what the market is actually doing, a set of rules and guidelines to tell you how to invest based upon that measurement, and the discipline to follow the strategy
The goals for this book are numerous, Understand . . .:
- How markets work and how they have worked in the past.
- The host of misinformation that exists in finance and investments.
- The tools of modern finance and their shortcomings.
- That as a human being, you have horrible natural investment tendencies.
- What risk really is.
- That markets trend and why.
- That there are techniques to managing money that reduce risk consistently and offer hope for long-term success.
Contents:
- Fictions Told to Investors
- Flaws in Modern Financial Theory
- Misuse of Statistics and Other Controversial Practices
- The Illusion of Forecasting
- The Enemy in the Mirror
- Market Facts: Bull and Bear Markets
- Market Facts: Valuations, Returns, and Distributions
- Why Technical Analysis?
- Market Trend Analysis
- Drawdown Analysis
- Popular Indicators and Their Uses
- Measuring the Market
- Security Ranking, Selection, Rules, and Guidelines
- Putting It All Together: The “Dancing with the Trend” Model
- Putting Trend-Following to Work
Investing with the Trend: A Rules-based Approach to Money Management By Gregory L. Morris
| Author(s) | |
|---|---|
| Pages | 494 |
| Format | |
| Publication Year | 2014 |
12 reviews for Investing with the Trend: A Rules-Based Approach to Money Management
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Gracelynn York (verified owner) –
I’ve been involved in trading and investing for over fifty years and have read hundreds of books on virtually every aspect of trading, with special emphasis on those dealing with various aspects of technical analysis. It is my belief that the most valuable reading material available to any serious investor is that written by one who “walks the walk”, and especially one with an outstanding track record. Author Greg Morris is involved in management of a substantial asset base and for years has had a track record par excellence. This book is his masterpiece and it makes available to the individual investor the most valuable of all commodities, the vicarious knowledge distilled from his extensive study and first hand experience in producing superior investment results. This book should be front and center in your trading library. Its publication is like manna from heaven for the serious investor.
Raiden Barrett (verified owner) –
From a trading book, I usually want a few things: evidence that the author is a practitioner, that he has actually managed risk in the markets, rather than just sharing some theoretical musings on markets; some concrete trading ideas that, ideally, will make me question some of the things that I think about markets–ideas that can be readily applied to trading; and directions for digging deeper. So, the ideal book respects reality, gives tools that can be used fairly quickly (depending, of course, on your trading style and the matching of the book’s content to your style), and some things for much deeper thought.
Greg has provided all of these in this excellent book. It’s no exaggeration to say that this is one of the best trading books I have read in quite a few years, and it is a book I will keep coming back to in the future.
A truly excellent book. Buy it and read it twice.
Nylah Lindsey (verified owner) –
little too technical for me…i’m a pretty simple guy…the author clearly knows his stuff though and i’m sure forgets more than i know…
Emanuel Cisneros (verified owner) –
Greg’s experience and knowledge is invaluable to consider when attempting to navigate your way through turbulent financial markets. His newest book contains a wealth of information that blends macro analysis, technical approaches and best practices for disciplined money management. I’d recommend chipping away at it a couple chapters at a time and referring back as necessary because each section offers valuable insight that should at the very least be considered. His follow up chapter from his previous book on Market Breadth analysis is one of my favorites. I also like the simplicity of combining signals through a binary approach for multiple indicator interpretation.
Nora Cummings (verified owner) –
Not a book that you will sit down and read from cover to cover but a good reference for various strategies and how they work. If you are an experienced investor, then this book will be very beneficial. If you are a novice or average investor, then you will probably get bored with the technicalities.
Leandro Robinson (verified owner) –
informative
Belen Galindo (verified owner) –
Great book on explaining the importance of breadth on market movements and eventual slow downs. Still reading and cannot get enough!
Mohamed Reyna (verified owner) –
Really two great books in one. The first part is an unbiased and compelling review of investing theory that debunks many of the investing myths we have grown up with. It also emphasizes the common sense strategies that really work. Unlike many investment books, the material isn’t just opinion, it is backed up with an incredible amount of facts and market data.
The second part of the book details how to incorporate trend following into your investment decisions. Again, the theory is well supported with data, and highlighted by Greg’s years of experience in the business. His dry sense of humor also come through in the writing, providing a nice counterpoint to the science he is conveying.
If you are thinking that there is a better way to be invested in equities without the exposure of buy and hold, this book is a must read. Whether or not you manage your investments directly or work with a broker, the book will help you make better decisions and diversify your approach to protecting your assets.
Salvatore Cummings (verified owner) –
Greg Morris has taken a wealth of information about Trend investing and touched on each with their strengths and methods. He guides you through the process of analyzing all of the different indicators and why they work. I would recommend this book to anyone who is interested in Trend analysis and specifically Breadth methods for broad market investing. Well written and inclusive!
Janelle Santana (verified owner) –
What I liked about “Investing With the Trend” is its coverage of risk. Risk is sometimes confused with volatility as measured by standard deviation. For someone nearing retirement, drawdowns due to bear markets can have a major impact on their savings and income, particularly if it comes at the beginning of retirement. Mr. Morris makes the point that a better definition of risk is “the avoidance of loss” and an even better one is the “failure to meet financial objectives”. There are too many investing books that over-simplify investing by making comparisons over the past hundred years or using very selected time periods and data.
While I recommend “Investing with the Trend” to serious, data driven investors, there is useful advice for everyone as shown in the following quote.
“Keep it Simple. A model built on sound principles will probably survive the tumult of the markets much longer and much better than an overly complex model. Complexity tends to fail, and unfortunately, usually at the worst time… It seems that too often investors associate complexity with viability. That is not correct.”
In a financial article that I wrote, I summarized Mr. Morris’ view on volatility as:
1) Risk and uncertainty are not the same thing
2) Non-systematic risk is the basis of Capital Asset Pricing Model and can be diversified.
3) Systematic risk is known as draw down and loss of capital.
4) The Efficient Frontier is based on returns compared to volatility (Standard Deviation)
5) The Efficient Frontier over the past 50 years or more often shows that the 60% stock to 40% bond ratio is optimum, but…
Where I like the strategy of “Investing with the Trend” is in looking at specific time periods instead of long term trends. In today’s markets, high valuations will result in lower returns and more volatility over the next decade(s). Other risks are high margin debt, high deficits and debt, among others. For these, I like to manage risk advocated by “Investing with the Trend”. For me, this includes conservative allocations and diversification across many asset classes using a bucket approach. I have built trend following into my investment systems which mostly are based on mutual funds and exchange traded funds. There are free and low cost sources of risk and trend measurements available to individual investors including Mutual Fund Observer, Morningstar, Portfolio Visualizer, Seeking Alpha, and your investment company.
One final quote is on the importance of having a system which helps overcome our behavioral tendencies:
“Remember, experts cannot predict the market any better than anyone else, but they can offer a systematic approach to investing… Outside objectivity is also a benefit as the advisor can slow you down on your dash to follow the herd, and cause you to stick to your plan… Wanting to act rational because you know you should, and doing so, are often far apart.”
There are many comparisons that show that actively managed funds cannot outperform passive funds. This is based on absolute returns. Martin, Sortino, and Sharpe Ratios are methods to measure the return for the risk taken. In this regard, actively managed funds serve a purpose to manage risk. “Investing with the Trend” was very influential in setting up my strategy and system.
Jayson Joseph (verified owner) –
Greg is a master of technical analysis. I first read Edwards McGee’s classic book in 1973. My interest in TA was firmly established. In the ensuing 50 years, I’ve been a stockbroker, branch manager, portfolio manager, and now a retired armchair trader. The first half of Greg’s book is exceptional. He breaks down what he calls fiction told to investors. All still being told today, but just not true. As much as I enjoyed the first part of the book, the transition into trend analysis was even more exciting. But alas there great general concepts are not followed by actionable details. Still an excellent read, but could be even better if Greg were to expand on specific measures for weight of the evidence analysis.
Kendall Dennis (verified owner) –
This book goes into great detail in its analysis on financial trends. That’s the good news. It does kind of overdo it’s proofs and analysis – and I mean overdo!! It is a great book.