The Art of Contrarian Trading: How to Profit from Crowd Behavior in the Financial Markets
$12.24
| Author(s) | |
|---|---|
| Pages |
238 |
| Format |
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| Published Date |
2009 |
Why is it so hard to beat the market? How can you avoid getting caught in bubbles and crashes? You will find the answers in Carl Futia’s new book, The Art of Contrarian Trading. This book will teach you Futia’s novel method of contrarian trading from the ground up.
Author’s Introduction:
Chapters 1 to 5 develop the foundation on which our method will rest. We answer the question of why some speculators win but most lose, and in so doing we identify the successful speculator’s characteristic edge. Chapters 6 to 11 explain a practical approach to contrarian trading. Here we learn about the contrarian trader’s principal tool, his media diary.
In Chapters 12 to 15 we apply the techniques explained in the preceding chapters to the stock market. I kept my own media diary in real time during the years 1987 to 2008. I think you will be surprised to see how effectively it identified the many valuation mistakes the stock market made during those years.
Chapter 16 contains a small number of very brief essays and notes I wrote for my own benefit as I learned to be a contrarian trader. It explains the development of the theory of contrary opinion, highlights the contributions key individuals made to the theory, discusses briefly several books every contrarian should read, and offers comments on back-of-the-envelope value investing for the contrarian trader.
Contents:
- Can You Beat the Market?
- Market Mistakes
- The Edge
- The Wisdom and Follies of Crowds
- The Life Cycle and Psychology of an Investment Crowd
- The Historical Context for Market Mistakes
- How Crowds Communicate
- Constructing Your Media Diary
- Important Investment Themes
- Interpreting Your Diary: Market Semiotics
- The Grand Strategy of Contrarian Trading
- The Great Bull Market of 1982–2000
- Collapse of the Bubble: The 2000–2002 Bear Market
- The Postbubble Bull Market of 2002–2007
- The Panic of 2008
- Vignettes on Contrarian Thought and Practice
The Art of Contrarian Trading: How to Profit from Crowd Behavior in the Financial Markets By Carl Futia pdf
15 reviews for The Art of Contrarian Trading: How to Profit from Crowd Behavior in the Financial Markets
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Alexis Hammond (verified owner) –
A compelling read on the market, a must read for all market junkies. A refreashing perspective to challenge and move you to a better edge.
Derrick Ibarra (verified owner) –
Easy book to read and follow for a medium and long term trader/investor. No carefully chosen charts in the book to fit a hypothesis. Carl tells you when you blew a call honestly. If any traders is 100% correct then they are 100% lying.
Daniel Shepherd (verified owner) –
Carl has written a terrific book for those looking to analyze the markets in a sane balanced fashion. If you are an active investor or just a fan of the market dynamic this book provides a great perspective on the how and why. Among Carl’s greatest traits is his patience as a trader, I learn from his actions every day.
Dennis Tanner (verified owner) –
Having worked professionally in the markets for nearly 20 years and after comparing just about all the trading/investing books out there with what really works in the day to day life of managing risk, I came to the conclusion that the only truly worthwhile books were written long ago. Think “Reminiscences of Stock Operator” or “How I Made $2million Dollars in the Stock Market”, etc. Well Carl Futia has just written a book that is long overdue and I can now finally recommend a modern trading & investing book to my friends and work colleagues. Carl’s book is not only accurate in his market analysis from both a scientific and artistic perspective, but his approach to entering trades and more importantly managing risk is realistic. Appropriate for all investors, I am carefully reading this book for the second time.
Jasmine Hall (verified owner) –
I purchased this book because I needed help managing my finances.
I have no problem making money; however, I needed help knowing where to invest it.
Carl Futia is a brilliant Leader and is generous enough to share his knowledge so we can all profit.
There should be more people on Earth like this man.
Reese Townsend (verified owner) –
I like the book from heed to toe, Mr C. Futia blog is a must as well.
One thing though, would require a few synthetizing tables ( e.g. in a kind of algorythmic style, if Moving average of —-up, then do—-) to summarize his market events/opportunities strategies !!!
Would probably buy his next book (this is an invitation to write)
Harmoni Wilson (verified owner) –
I have read many trading books and this is definitely a must have. Not everyone is cut out to be a contrarian trader and for this very reason it gives those who are “the edge” to beat the market. However, it requires hard work and dedication and reading a book will not get you there… but having this book is the first step in the right direction.
Katalina Santos (verified owner) –
The author dismisses fundamental and technical analysis to a large degree. This is not right as he will mislead many readers who buy into his theory. It is true that neither are crystal balls, but they are valid investment tools in their own right, so long as one does not misuse them. Fundamental analysis can help give a rough gauge as to where many feel prices should be relative to where they are. Also, technical analysis doesn’t just piggyback on the fundamentalist view, but is a useful tool in helping to sense the mood of the crowd (which is what contrarians try to do). There are so many methods of fundamental and technical analysis that aim at giving the user a better picture of things, so no investor should dismiss an entire field without seeing if it works for them.
On the other hand, Carl’s views are fairly interesting and thoroughly explained. They will also be of use to investors if they are able to integrate it into their investment philosophy and method. However, I would recommend that investors do this with care and tread slowly at first to achieve a deeper understanding of how to use Carl’s methods profitably.
Lastly, Carl should have been more systematic in detailing how to use a contrarian system rather than giving guidelines. Perhaps a step-by-step plan as an appendix would have helped.
Madilynn Contreras (verified owner) –
Finally, a book that combines insightful analysis of markets with a unique perspective and often witty insights into the behavior of crowds. I found this book to be a most intelligent guides to the nature of markets. The book provides cogent and clear advice for the individual investor to profit in the markets. I have not read any other investment book that can compare to this one. In time, this book will achieve classic status (rivaling MacKay).
Holly Patrick (verified owner) –
Contrary Investing for the 90’s..By Richard Band….You can get this used books for < $ 1. gives better or the same information.
Walker Snyder (verified owner) –
There is a wealth of insight in this book for investorts, traders, and speculators alike…I highly recomend it! After establishing what contrary approach to the markets is all about – he goes into his primary tool – the media journal – and outlines two systems: conservitive and aggressive…Only complaints I have is the the rules of each system could have been better tabulated and the aggressive system does have some shortfalls (but all systems have pros and cons)…I recomend using these as part of your own integrated trading sytem that includes fundimntals, technicals, as well as sentiment.
Thomas Hunt (verified owner) –
I have been investing for 17 years and running money for 10 years this book has provided the key missing factor in my investment strategy a methodoloy for reading market sentiment that is reliable and not used widely by market participants, therefore its gives you a significant edge if employed with fundamental analysis and technical analysis. Since reading this book my ability to time the market correctly has lept signficantly as has my investment results. This book sits with by top 5 investment books with Jame Montier, Bill O’Neil, & Woody Dorsey and various books on Buffetts investment strategies.
Callie Roberts (verified owner) –
As someone who personally trades and follows the markets I was expecting this book to confirm two of the most important words in the title “art and trading”. This book as no operational knowledge so with confidence I can say it has no practical use. It is more a collection of short stories that the author has experienced with a theme of “buy when others are fearful”. Although in theory at some point this philosophy can make you enormous returns at what point is the question? An example being in the Bear Markets of 2000 and 2008 when triple digit stocks where leveled to single digits and some to zero ( witness the internet stocks or a General Motors). With all of economic and mathematical degrees this author has he should be able to hit the nail on their head with no problem. Unfortunetly this book does not!
Emilio Harrison (verified owner) –
The author puts tremendous weight on using popular media headlines to gauge whether a bullish or bearish crowd has emerged and/or predominates. However, this no long works. The author himself states that determining whether the sentiment is bullish or bearish through the media has not worked after the tech bubble burst in 2001. Perhaps this is due to the incredible speed and fickle nature of print media, CNBC talking heads, and bloggers in the modern era. It’s no longer slow, old-fashioned print media.
If you follow his method, you have a choice of (1) not being fully invested at the bottom of the bear market and missing an upswing (his conservative contrarian method) or (2) jumping in during sizeable pullbacks with the risk of trying to catch a falling knife and getting burned (his aggressive contrarian method). HOWEVER, the author also says that the worst mistake of the contrary investor is not being fully invested when there is a bull market, especially in the earliest stages (as the bear market turns very unexpectedly and abruptly skyrockets). This is a contradiction in philosophies. Also he even states that the “aggressive contrarian” got wiped out by this method during the Great Recession of 2008.
Overall, the author suggests some bizarre combination of momentum trading, using old fashioned market technicals, keeping your pulse on the media, and then breaking the rules you set up because they don’t really work anymore.
Genevieve Allison (verified owner) –
Back in 1990 I read an article in the July/Aug issue of the Commodity Traders Consumer Report(CTCR)that forever turned my trading mindset around. Carl Futia wrote the article. And no, I don’t personally know Mr. Futia, and I have no interests financial or otherwise in his world. But in my 25 years of trading, I can honestly say that this article helped to shape my trading mindset forever. To make a long story short, I’ll quote and explain to you the two concepts from that 1990 article that engendered the changes in my trading mind.
Concept #1: Quote: “I had seen clearly that if I relied on oscillators and trend-following techniques, I was always getting into the trend too late. It struck me that I should try to “Anticipate” the beginning of trends rather than waiting to enter in the middle after they had started”.
Concept #2: This concept was the idea of “Free Exposure” which Mr. Futia was taught from a seminar by the legendary trader Peter J. Steidlmayer. In essence Free Exposure meant; To enter the market where the risk is the least and the reward is the greatest, one must find, and be able to read where “Value” lies in the market. All entries made at “Value” are essentially tantamount to a “Free” ride in the market, with very little risk “Exposure”.
These two concepts started me on my mental journey into what I now call “Anticipating Value” in the market. In any case, back then, after doing months of research and extensive reading on these two concepts my trading was completely turned around for the better. Today, both concepts have melded in one technique, and now form the foundational element of my trading strategy and methodology. Further, since reading this new book, I can see that most of his ideas have since matured into a cohesive philosophy, worthy of anyone’s personal library. And by the way, my personal library once numbered over 800 books, so I believe I know a good one when I see it.
Thankfully, I too arrived at some of those same conclusions in his book a long time ago. This is because they were the natural and logical progression from his initial concepts in the 90’s. Do yourself a favor and at least read this book, even though you may not agree with it now. Some time in the future, after you have been “sorely tested” in the market for a while, you may be truly thankful that you did. It might just spark a new way of looking at the market for you.