Friday, October 30, 2009

Stock Trader’s Almanac, 2010

Every year about this time I have to make a major executive decision—what kind of calendars and appointment book(s) I want for next year. You may guffaw, but this decision is not inconsequential. It defines how I plan to frame my time and what I consider to be noteworthy events in my life. I of course have an online “appointment book,” but its main function is to record upcoming economic reports so I don’t get caught unaware. I also get innumerable wall calendars; I hang up a couple and never look at them except when I flip the month and see a new nature picture. But I always need some kind of calendar I can touch and write on.

The Stock Trader’s Almanac by Jeffrey A. Hirsch and Yale Hirsch (Wiley, 2009) fills the bill perfectly. It’s a spiral-bound hardcover, which means that once opened it lies flat. The calendar section of the almanac (about 2/3 of the book) has on facing pages historical data on market performance (verso) and a week’s worth of calendar entries (recto). Each trading day’s entry also includes the probability, based on a 21-year lookback period, that the Dow, S&P, and Nasdaq will rise. Particularly favorable trading days (based on the performance of the S&P) are flagged with a bull icon; particularly unfavorable trading days get the bear icon. A witch icon appears on options expiration days. At the bottom of each entry is a quotation. There’s about a five-square-inch space in which to write.

Published every year for over forty years, the Stock Trader’s Almanac is a handy source for a wealth of statistical information. It records intraday performance, day of the week performance, and monthly performance. It highlights the ten best and worst days, weeks, months, quarters, and years for the major averages. It continues to update the January barometer, devised by Yale Hirsch in 1972, and looks at the correlations between politics and markets. And on and on.

Seasonal trading strategies have taken a hit recently, but they’re in good company. Moreover, the track record for most of these strategies is detailed, so we can see if and when they broke and perhaps, in light of this information, devise alternatives.

Whatever the rationale for owning this almanac, I consider it indulgence on the cheap. And unlike the chocolates I buy for the Halloweeners who never come (and admittedly often devour before Halloween, trusting that the outlier won’t happen) this almanac not only gets you through a whole year but remains a valuable reference work long into the future.

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