Wednesday, October 28, 2009

Book I Am Reading

I have been reading Capital Ideas by Peter L. Bernstein the past few days.

It provides an insightful account of the origins of Wall Street and also touches on the pionering work of all the early scholars with their new theories on risk, valuation, investment returns and the actual implementation of these theories to the real world.

This book really provides in-depth insights and timeless advice and shows how the unique contributions of these various individuals have profoundly changed the investment world as we know it today.

Why people should read this book is because it provides a very academic response to what has proven to work and doesn't work in the world of stocks.

Random Walks in Stock Market Prices - A Case against Technical Analysts and Fundamental Analysts

Eugene Fama quote on Chartists:

"He must show that he can consistently use these patterns to make meaningful predictions of future prices"

Eugene Fama quote on FA:

"The analyst cannot merely protest that he thinks the securities he selects do better than randomly selected securities; he must demonstrate that this is in fact the case."

My Stand

The onus is on all chartists and fundamental analysts to prove that their system works better than a portfolio of randomly selected securities. I do not side with any camp.

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