The Value and Momentum Trader: Dynamic Stock Selection Models to Beat the Market
In The Value and Momentum Trader, Grant Henning presents a comprehensive approach to stock trading, which centers around Excel-based research methods he has developed. In this book, Henning presents the trading tools he has used to become a successful trader, and discusses some of the greatest challenges facing active market participants.
Author’s Introduction:
This book is offered as a resource to those who seek success in stock market trading. I especially wish to pass it on to my children and grandchildren and nephews and nieces as a tool for good stewardship of the resources that have been entrusted to them. I am keenly aware of the fact that there are many books written on the subject of stock market trading, and many of them are in my own library. However, you will find this book unique in that it actually describes several mathematical models for stock selection.
It therefore has potential for greatly enhancing performance over most other anecdotal references. In the best of worlds, readers will adapt these models to their own needs and trading styles and will add their own personal refinements.
There are many ways to succeed in stock trading, and this is a summary of only a few of those approaches. However, the methods outlined here have been tried and tested over many months and years of market warfare in both bull markets and bear markets. They are the end products of more than 20 years of trading of stocks, options, mutual funds, and commodities, and the past decade has been one in which I have traded for a living.
They are offered in the profound belief that market activity is not random, but like other natural phenomena in the wider creation, it follows certain predictable patterns and rules. As Albert Einstein once mused, “God does not play dice with the universe,” and I believe this is as true in market phenomena as it is in weather patterns or in the motions of planetary bodies. If we look carefully, we can see that market undulations can be as beautiful as the waves of the sea washing on the shoreline.
There is both science and art here, like surfing on a perfect wave, and the sheer thrill of interacting with rhythmic market phenomena is difficult to match in any other profession. Perhaps this is why Einstein is also reported to have said that, if he had it to do over again, he would have become a professional stock trader.
Contents:
- A Philosophy of Trading
- Tools of the Trade
- Constructing Mathematical Models for Stock Selection
- Stock Selection: A Technical-Momentum System
- Stock Selection: A Fundamental-Value System
- Stock Selection: A Technical-Fundamental Hybrid Approach
- Buying Stocks
- Selling Stocks
- Portfolio Management
- Market Timing
- A Performance Record
- A Typical Trading Day
- Threats to Success
- A Summary of Trading Principles
- Morality in the Marketplace
- Random Walk or Rational Wager
- On the Nature of Risk
- Trading in the Information Age
- Using a Trading System with an Excel Spreadsheet
- Afterthoughts