The Value and Momentum Trader: Dynamic Stock Selection Models to Beat the Market (Wiley Trading)

269 Pages·2009·1.76 MB·english

by  Grant Henning

The Value and
Momentum
Trader
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The Value and
Momentum
Trader
Dynamic Stock Selection Models
to Beat the Market
GRANT HENNING
JohnWiley&Sons,Inc.
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LibraryofCongressCataloging-in-PublicationData:
Henning,Grant,1941–
Thevalueandmomentumtrader:dynamicstockselectionmodels
tobeatthemarket/GrantHenning.
p.cm.–(Wileytrading;442)
Includesbibliographicalreferencesandindex.
ISBN978-0-470-48173-8
1.Stocks–Prices. 2.Investmentanalysis. 3.Portfoliomanagement.
4.Speculation. I.Title.
HG4636.H462009
332.63'22–dc22
2009021674
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
Thisbookisdedicatedto
Lydia,Jonathan,Madison,Lincoln,Elgin,andNaomi,
thenextgenerationoffaithfulstewards.

Contents
List of Tables and Figures xv
Foreword xvii
Preface xix
Acknowledgments xxi
CHAPTER 1 A Philosophy of Trading 1
Analogies 1
Pragmatism 3
Goal-OrientedBehavior 5
Timing 6
StocksversusCommodities,Options,MutualFunds,
andBonds 7
ShortTrading 9
UseofMargin 10
TradingandGambling 11
BoldPassion 12
Summary 13
CHAPTER 2 Tools of the Trade 15
OnlineAccess 15
AReliableBrokerageAccount 16
Information 17
FormalStudy 18
AnalysisSoftware 20
vii
viii CONTENTS
ProtectedWorkspace 21
MathematicalTradingSystems 21
MarketTimingIndicators 22
Summary 22
CHAPTER 3 Constructing Mathematical Models
for Stock Selection 25
TechnicalApproachestoStockSelection 25
FundamentalApproachestoStockSelection 26
HybridApproachestoStockSelection 27
TheNatureoftheStockSelectionChallenge 27
CommonMistakesinSystemDesignforDecisionMaking 28
EarlyBeginningApproaches 30
AdvantagesandDisadvantagesofMathematization 32
Summary 33
CHAPTER 4 Stock Selection:
A Technical-Momentum System 35
QualifyingVariables 35
SampleRecommendationSummaryTable 39
QuestionsandAnswers 40
Summary 44
CHAPTER 5 Stock Selection:
A Fundamental-Value System 45
QualifyingVariables 45
FundamentalVariables 47
QuestionsandAnswers 55
Summary 57
CHAPTER 6 Stock Selection:
A Technical-Fundamental
Hybrid Approach 59
QualifyingVariables 59
Point-and-FigureAnalysis 64