Trader Vic--Methods of a Wall Street Master

by Victor Sperandeo, T. Sullivan Brown (Editor)

Overview

Trader Vic — Methods of a Wall Street Master Investment strategies from the man Barron's calls "The Ultimate Wall Street Pro" "Victor Sperandeo is gifted with one of the finest minds I know. No wonder he's compiled such an amazing record of success as a money manager. Every investor can benefit from the wisdom he offers in his new book. Don't miss it!" —Paul Tudor Jones Tudor Investment Corporation "Here's a simple review in three steps: 1. Buy this book! 2. Read this book! 3. See step 2. For those who can't take a hint, Victor Sperandeo with T. Sullivan Brown has written a gem, a book of value for everyone in the markets, whether egghead, novice or seasoned speculator." —John Sweeney Technical Analysis of Stocks and Commodities "Get Trader Vic-Methods of a Wall Street Master by Victor Sperandeo, read it over and over and you'll never have a losing year again." —Yale Hirsch Smart Money "I have followed Victor Sperandeo's advice for ten years, and the results have been outstanding. This book is a must for any serious investor." —James J. Hayes, Vice President, Investments Prudential Securities Inc. "This book covers all the important aspects of making money and integrates them into a unifying philosophy that includes economics, Federal Reserve policy, trading methods, risk, psychology, and more. It's a philosophy everyone should understand." —T. Boone Pickens, General Partner Mesa Limited Partnership "This book gave me a wealth of new insights into trading. Whether you're a short-term trader or a long-term investor, you will improve your performance by following Sperandeo's precepts." —Louis I. Margolis Managing Director, Salomon Brothers, Inc.

Product Details

ISBN-13:	9780471304975
Publisher:	Wiley
Publication date:	08/30/1993
Edition description:	Reprint
Pages:	304
Product dimensions:	5.90(w) x 8.90(h) x 1.00(d)

About the Author

VICTOR SPERANDEO has been a professional trader and money manager for 24 years. He currently manages and advises institutional and large individual portfolios for Rand Management Corporation. He has been profiled in Barron's and The Wall Street Journal and appears frequently on CNBC and other television networks, and is in demand as a lecturer.

Table of Contents

Foreword iii

Preface ix

Acknowledgments xiv

Part 1 Building Your Knowledge from the Ground Up 1

Introduction: The Secret of the Gamboni 1

1 From Gambler to Market Master: The Making of a Professional Speculator 3

A Quest for Freedom 5

The Wisdom of the Tape 6

Horsetrading Options 8

A Taste of Independence 10

Discovering the Nature of Trends 12

Finding My Freedom 13

2 The Alligator Principle: Proof of the Need to Think in Essentials 15

Being Eaten Alive 15

Thinking in Essentials16

3 A Business Philosophy for Consistent Success 21

Preservation of Capital 21

Consistent Profitability 24

Pursuit of Superior Returns 26

Conclusion 27

4 Finding Order in Market Chaos: An Introduction to Dow Theory 29

Good Ideas Often Misunderstood 30

The “Hypotheses” of Dow Theory 32

The “Theorems” of Dow Theory 35

Conclusion 46

5 A True Understanding of Trends 49

Uptrend, Downtrend, Move All Around Trend 49

Let’s Reduce It to Basics 49

The Importance of Confirmation 52

The Four Phases of a Market 54

Important Volume Relationships 57

Conclusion 57

6 The Merits and Hazards of Technical Analysis 59

Tidewatchers 60

The Manipulators 63

The Purists 66

Summary 67

7 Where Fortunes Are Made: Identifying a Change of Trend 69

Determining the Trend—Drawing the Trendline 71

Identifying a Change of Trend: It's Easy as 1-2-3 74

2B, or Not 2B? That’s Worth Some Money! 78

The Cause of Tests and the 2B Pattern 81

The ABCs of Secondary Corrections 84

Summary 84

8 What the Analysts Don’t Know Can Kill You 87

How Important Can Anchovies Be? 87

Understanding Moving Averages8 8

A Different Perspective on Relative Strength 93

Momentum Indicators (Oscillators) 96

Making Specific Stock Selections 104

Conclusion 108

9 The Way the World Really Works: The Basics of Economics 109

The Jigsaw Puzzle 109

Economics According to Robinson Crusoe 112

The Role of Money 115

Economics and Human Nature 118

Production Before Affluence 121

Savings, Investment, Credit, and Wealth 124

Summary: The Closest Thing There Is to a Free Breakfast 130

10 Booms and Busts: Who Holds the Pump and Who Holds the Needle? 133

Booms and Busts: The Business Cycle 133

The Nature of the Business Cycle 134

The Structure and Role of the Federal Reserve System 144

How Money and Credit Availability Is Created and Controlled 146

Reserve Requirements, Fed Funds Rate, and the Discount Rate 151

How to Predict the Trend and Changes of Trend Based on Fed and Treasury Policy 160

Conclusion 162

11 Managing Money By Measuring Risk 163

The True Meaning of Risk 163

A Revolutionary Approach to Risk Assessment 166

Allocating Capital with Odds Management 170

12 There Must Be Fifty Ways to Lose Your Money 175

The $4017 Hairdryer 175

Trading Rules and the Reasons Behind Them 176

The Rules Defined 177

The 85% Rule 187

Conclusion to Part 1: Putting It All Together 189

Part II The Commitment to Make It Happen: Emotional Discipline 191

The Trader’s Dream: A Fable 191

13 The Spock Syndrome: Reason and Emotions at War197

Introduction 197

From Predator to Trader: The Evolution of Human Emotions 199

Emotions as Benefactor 202

Emotions as the Villain 204

The Source of Consistency: Emotional Discipline 206

Conclusion 208

14 Success is What You Make It 211

The Prerequisites of Success 211

The Meaning of Success 212

The Supercomputer of the Mind 214

Discovering and Using Motivation 216

Conclusion220

15 Changing So It Sticks 221

Using Your Body 222

Using Your Conscious Mind 225

Discovering Awareness 226

Finding Your Focus 228

The Power of Questions 231

The Importance of Evaluation 232

Values and Character 232

Beliefs and Personality 234

Harnessing the Power of the Subconscious 239

Anchoring 242

Conclusion 244

16 Conquering False Pride 245

The Most Important Reason People Fail in Trading 245

Your Evil Twin: The Idealized Self-Image 246

The Search for Glory 247

Compulsion and Imagination 250

When Wishes Become Claims 251

The Tyranny of the Shoulds 252

Real Pride/False Pride 256

17 Finding Your Freedom2 59

Notes 263

Glossary of Terms 271

Bibliography 281

Index 283

Editorial Reviews

By definition, investors' horizons are long-term (years) and traders' are short-term. This book is aimed at the latter, obviously limiting the scope of its applicability. Noted investment manager Sperandeo explains how he traces stocks and commodities using trends, Dow Theory, Fed-watching, stop-losses, charts, and the panoply of technical analysis combined with his own wrinkles. His chief antagonists are program traders (who move billions likewise in the short-term) and the whims of the market. In the second half, Sperandeo explores the psychology of trading and the use and importance of emotional discipline. He also stresses personal success, not just financial, and presents a solid condensed explanation of real economics, scathingly destroying the wishful-thinking economics of academics and politicians. First half fascinating + second half instructive = a buy for business collections.-- Alex Wenner, Indiana Univ. Libs., Bloomington

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