Far from Random: Using Investor Behavior and Trend Analysis to Forecast Market Movement
$25.86
In Far from Random, Richard Lehman uses behavior-based trend analysis to debunk Malkiel’s random walk theory. Lehman demonstrates that the market has discernible trends that are foreseeable. By learning to spot these trends, investors and traders can predict market movement to boost returns in anything from equities to 401(k) accounts.
Introduction:
Exploring the role of technical analysis, Far From Random pro-vides a logical and well-constructed approach to the market in general and to stocks in particular. First, the myth that a stock is “worth” something based on its fundamentals is debunked. There is no promise by the corporation to pay anything back to the stockholder as there is to the bondholder. In fact, a stock’s worth is much more likely to be the collective opinion of thousands or millions of investors.
Those opinions are often subject to emotion—from acmes of greed to nadirs of fear. A stock’s price will vary greatly based on those emotions. Far From Random debunks the myth of the efficient market hypothesis (the so-called random walk). Simply stated, that hypothesis is based on the notion that stock prices are governed by rational, knowledgeable (unemotional) people.
We know that isn’t true, at least at market extremes. Stocks fluctuate in ways that traditional finance cannot predict or explain. Human emotions—fear and greed—play huge roles in the pricing of stocks, and those emotions are nowhere to be seen in either fundamental analysis or the efficient market hypothesis.
Contents:
- The Time Has Come
- Fundamentally Flawed
- Subjective Value
- Random and Efficient Markets
- Market Timing
- New Thinking in Finance Isn’t Financial
- The Behavioral Phenomenon
- Anomalies
Far from Random: Using Investor Behavior and Trend Analysis to Forecast Market Movement By Richard Lehman pdf
| Author(s) | |
|---|---|
| Pages | 255 |
| Format | |
| Publication Year | 2009 |
17 reviews for Far from Random: Using Investor Behavior and Trend Analysis to Forecast Market Movement
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Scarlett Valenzuela (verified owner) –
Lehman cracks open a door we should all be looking through. This book goes way beyond his first one on options (which is still a great primer on covered call writing, by the way). Not only does he shoot holes in the traditional (and always self-serving) rhetoric on Wall Street, he offers an alternative — and a doggone provocative one at that! Thankfully, someone credible is willing to hit Wall Street between the eyes with their blind obsession to buy-and-hold. I’d been seeing references to Behavioral Finance and thinking it was just marketing spin, but I now see things quite differently. We will sit around for decades waiting for Wall Street to change the way they think. If you’re tired of being herded into a convenient but untenable philosophy about the stock market, you want to read this.
Eithan Stanton (verified owner) –
In Far From Random, we learn we aren’t so removed from our ancestors as we might think. This highly readable book demonstrates that markets are neither efficient nor random, and that being stone-cold frozen with fear (a saber-tooth tiger eyes us for lunch) is akin to buy-and-hold-no-matter-what (our securities portfolio drags us down to our doom). Rick Lehman boldly states that human emotion, and not green-eyeshade analysis, is what really drives prices –whether it’s Dutch Tulips, Stocks on margin, or 30 X 1 leverage on illiquid credit default swaps and subprime mortgage derivatives. Far from being nonsense, this view makes perfect sense. Far From Random shows how our collective emotional behaviors, and the markets they move, become predictable. That’s an edge any investor would want, and Far From Random will give you a tantalizing glimpse at that edge.
Erin Phelps (verified owner) –
Light on actionable material. About 75% of the book is presenting studies on why markets are not fully efficient. If you have read anything on behavioral finance before you won’t find anything new here. When the author finally gets to the technique, it’s pretty light. What time frame is most successful? I can create several different channels over the last two years. If I incorporate the lows of 2016, the channel of 2017 hasn’t touched the bottom yet. If I narrow it to exclude 2016, it’s a very thin channel which we just broke out of upwards in Nov. Redrawing the channel lines shows we broke out again. The author says that you should widen the lines when there is a false breakout. Of course you only know it is false after the fact. How would the author make a channel in today’s market given we just had acceleration upwards again?
Theodora Douglas (verified owner) –
Great book!!! It brings a very interesting approach of the stock market. It points out to things that aren’t been discussed out there. I would definitely recommend it.
Andre Patton (verified owner) –
Interesting insights into the world of behavioral finance. Informative and enjoyable book.
Sierra Trevino (verified owner) –
This well-written book provides extremely valuable insights on the psychological nature of the stock market. Even experienced investors will find relevance and utility in the analytical approach to trend analysis suggested by the author. I say this as a full-time investor with many decades of experience.
Derek Zamora (verified owner) –
An easy read, this book discusses market anomalies and technical analysis in easy to understand terms. Transparent, de-mystifying, and helpful to the novice investor.
Emberly Bernal (verified owner) –
My expectations were very high, because Bloomberg published this book. It is a disappointing read. Lots of words. 9 chapters and 182 pages worth of hearsay and pseudo science. When the book finally does get to investing/trading using TCA, the treatment is very light. The author seems to be very knowledgeable about what was written by other people but the book lacks any depth about his own insights into actual investment.
Lorelei O’Connor (verified owner) –
He basically points out that one does not always have to have a position and being in cash is ok if your uncertain. That’s the whole book summarized.
Ophelia Orozco (verified owner) –
As an avid investment student of age 61, I read “Far from Random” entirely. The book is close to worthless. It should be dismissed.
FFR purports to teach us how trend analysis can make investors money in the market. The treatment is superficial. If you have interest in technical trading, there are many more superior books starting with the classic from Pring.
My great dissapointment is because Bloomberg Press printed the book. I thought the publisher would impose a respectable standard of quality. They did not. Henceforth, investbook books from Bloomberg should be considered suspect. McMillan, of Options Writing fame, should be ashamed of his endorsement.
One can learn from investment books and apply ideas profitably. However, FFR is not the book in any manner. The book is not appropriate for any level of investor, nor any age.
Keanu Buckley (verified owner) –
The author claims that he has seldom made errors in his prognosticatons – well perhaps so. But don’t expect his ostensibly well grounded hypotheses to provide any help with buying individual stocks. His discursive chapters tend to be mostly repetitive.
Jaime Moyer (verified owner) –
As someone who has spent over 20 years in the financial industry I can attest that most of what Richard Lehman writes is true. Many common myths are debunked in this book. This is a must read if you put your money in anything but money market funds. Don’t assume you are an investor if you buy shares of stocks. Very good point is made about the market factor that is mostly sentiment. My only reservation is about the use of technical analysis that comes into view in the last two chapters. As Richard admits, this is an anathema in the professional financial circles. I just want to point out that if you take band-limited random walk you will be able to detect “channels” in it no matter what. This is not information. It has zero predictive power.
Mason Chang (verified owner) –
As an avid investment book reader and active trader, I am appreciating the nuances of random and non-random market phenomena that Richard Lehman points out. In a nutshell, investing/trading is not black or white. There are many facets to the market and this book does a fine job drilling down at a detailed and practical level while still keeping the reader engaged.
Zola Fuller (verified owner) –
This is a book written by someone who for sure never made money in the markets and probably lost it all that’s why he’s writing books.
This one is a complete platitude, full of BS. It’s a loss of time (it took me 5mn to throw it away, seriously) and money.
DON’T BUY IT.
Any professional or even amateur will never say a good thing about it. Those who do, are supect, they must be friends of the author for sure.
The whole book is only text whereas the promising title has one expect lots of charts. There are a few : he shows you how to draw a trend channel ! He really treats the buyer as an idiot. That’s what I feel like and I suggest everyone reading my comment remembers his name (“Lehman”, how ironic, I should have thought first, it’s a doomed name) and never buy any of his future “books” and warn everyone about that. He got my money but he should somehow pay now.
I’ve been studying markets very long and I have discovered very interesting things, I know what can be done, I know what looks serious or not. This is definitely only there to make money.
Jaycee Hernandez (verified owner) –
This book is a must-read for ALL who have any exposure to the Stock Market. Like our physical health, we need to take control of our financial health and this book will give you a very good history of where markets have been and why they behave in the way that they do. It will provide you with an updated perspective on dealing successfully with the market. Again, a MUST-READ. Far from Random: Using Investor Behavior and Trend Analysis to Forecast Market Movement
Hamza Burnett (verified owner) –
Author emphasizes a lot (or maybe too much) on the behavior finance. Although it is informative and interesting, it takes too less pages on how to really construct an useful technical charts (the Trend Channel Analysis introduced in this book is too subjective and always is a tentative chart) with higher probability to enter and exit the market.
Princeton Lee (verified owner) –
I read a lot of innvestments books…10-12 a year and have for years..evey book, point of view and methodology teaches you something to add to your own processes.
I liked this book because I appreciate clarity. In order to be clear and to makes something seem easy, an author has to have a profound knowledge of the subject matter and the ability to communicate clearly. Richarde Lehman ahs both of the those pre-requisites.
Investor behavior and motivation are two keys to understanding market behavior. Understanding who those investors are, how they are rewarded (or compensated), what motivates them are keys to insight into the confoundingly contradictory movements that drive everyone crazy. . You will have a much keener understanding of the news that is being reported to you and have real insight into what is being told to you after having read the book.
With a perpective, the author then provides you with a charting method that will enhance your ability to enter and exit markets..this is a rather useful skill. Your probabilities of executing profitable trades, realizing a greater percentage of the profits in the moves you have chosen, and your peace of mind while doing do will be enhanced with the background and techniques shared in Far From Random.
This will also go on my periodic re-read list and not many books make it there.