Thursday, September 27, 2012

Aburdene, Conscious Money

Conscious Money: Living, Creating, and Investing with Your Values for a Sustainable New Prosperity (Atria/Simon & Schuster, Beyond Words Publishing, 2012) by Patricia Aburdene addresses the common conflict that people experience between making money and making a difference. It argues that a person’s values are not an impediment to wealth but a foundation for wealth creation and that conscious investors “seek to thrive financially without damaging others, themselves, or the Earth. Instead they: rely on human values to guide investment choices, invest in initiatives that further human and planetary evolution, and tap into intuition to balance and complement rational, objective financial data.” (p. 186)

As you might suspect, Aburdene draws on the mainstays of self-help literature as well as the socially responsible investing movement to make her case. In Megatrends 2010: The Rise of Conscious Capitalism, she described companies that had a set of values different from the run-of-the-mill; for one thing, they embraced a purpose beyond earning money. In Conscious Money she adds the individual and his/(mainly, it seems) her value set to the mix. Part I is entitled “The Inner Dimension of Conscious Money”; Part II, “The Conscious Marketplace.”

The result is something of a new-age intellectual mishmash. For instance, once you have “an instinctive sense of the business environments and practices that attract you, it’s time to turn inward, tap into your intuitive potential, and ‘get a feel’ for companies where you might want to do business.” (p. 105) How is this accomplished? In four steps: (1) creating a sacred space, (2) collecting questions, (3) connecting to a “felt sense,” and (4) harvesting the fruits of intuition. To accomplish step (3), “Take five deep, slow breaths to relax. Spend the next five minutes attempting to ‘feel into’ the business. Notice any place in your body that enters your awareness. If you feel constriction, for example, inquire as to what that feeling might be telling you. If your heart feels open, invite it to speak its message.” (p. 106)

For those who are open-minded and “open-hearted,” Aburdene offers some practical steps to understanding and improving one’s money mind-set. Some of these suggestions are eminently reasonable; others, such as “Make your next bill-paying session an Abundance ritual. Buy flowers or light candles. Play relaxing music,” not so much.

If you are a hard-core fear and greed investor, this book is not for you. If you believe in reason above intuition or spiritual consciousness when it comes to choosing companies in which to invest, you will probably not be persuaded otherwise (even though the power of intuition is well documented). If it takes arguments to convince you to consider a hypothesis, you will come away unconvinced. I admit to falling into the skeptical camp. And in many ways that’s too bad because our value systems underlie everything we do—how we vote, where we shop, who are friends are, what we hang onto and what we are willing to let go. Our attitudes toward wealth make it easier or harder to attain wealth, more or less desirable even to try.

Conscious Money touches on a range of important, timely topics. It just didn’t speak to me.

Tuesday, September 25, 2012

Wagner & Balog, Advanced Technical Analysis of ETFs

Deron Wagner, among his many other activities, is the founder of Morpheus Capital LP and Morpheus Trading Group, a trader education firm specializing in ETFs and stocks. Edward Balog is the head ETF trader for Morpheus Capital and coauthor of the Wagner Daily newsletter. Wagner and Balog have pooled their skills and experience, drawing extensively on their newsletter, to produce Advanced Technical Analysis of ETFs: Strategies and Market Psychology for Serious Traders (Bloomberg/Wiley, 2012).

The authors are swing traders who follow the trend of the broad market and who look for ETFs that have relative strength compared to the market as a whole. Their basic charts include the 20-day EMA as well as the 50- and 200-day MAs as trend guides. In addition, the authors explain their so-called advanced techniques: candlestick patterns, Fibonacci price levels and time series, and accumulation-distribution with RSI. They amply illustrate the use of these indicators with Tradestation charts.

What distinguishes this book from so many others in the field is that it walks the reader through fifteen long trades and fifteen short trades that the authors took using their own capital, including losing trades. Those who are expecting to see advanced technical analysis in action will be disappointed, however. As the authors write, “Because we have already provided specific trade examples of how to apply the advanced technical strategies, the trades in this [and the next] chapter seek to illustrate that profitable trading can be achieved simply through following the basics of our top-down ETF strategy. Application of the additional advanced strategies would only serve to enhance one’s profitability even further.” (p. 71) The skeptical reader is forced to ask why, if the strategies described in this book would add to profitability, the authors didn’t use them in the 2010 and 2011 trades they described in their newsletter. After all, these strategies aren’t exactly brand new.

Wagner and Balog round out their book with some thoughts on market psychology and a description of the most recent innovations in exchange-traded products (along with their tax consequences).

The authors use this book in part to promote the Wagner Daily newsletter, in existence now for ten years ( But the book is not merely a promotional piece. It shows how technical trading is actually done and provides some valuable lessons.

Monday, September 24, 2012

Thursday, September 20, 2012

Duhigg, The Power of Habit

“All our life, so far as it has definite form, is but a mass of habits,” William James wrote in 1892. Well, that might be a bit of an overstatement: a researcher in 2006 knocked that “mass” down to “over 40 percent.” Whatever the percentage, we are creatures of habit. In The Power of Habit: Why We Do What We Do and How to Change It (Random House, 2012) Charles Duhigg explores the work that neurologists, psychologists, sociologists, and marketers have done over the past two decades to figure out how habits work and how they change. It’s a fascinating tale.

So what is a habit anyway and why are habits so important? After we figure out a sequence of actions and practice it sufficiently (Duhigg uses the example of backing out of the driveway), our brain converts that sequence into an automatic routine, a habit, and stores it in our basal ganglia. We no longer have to think about backing out of the driveway; our brain is free to think about something else or to quiet itself. “Habits, scientists say, emerge because the brain is constantly looking for ways to save effort. Left to its own devices, the brain will try to make almost any routine into a habit, because habits allow our minds to ramp down more often.” The brain becomes more efficient; we can devote our mental energy to “inventing spears, irrigation systems, and, eventually, airplanes and video games.” (p. 28)

Most habits are innocuous enough; they don’t make a major difference in our lives. But some habits do, and not always for the better. Moreover, no matter what we do, those bad habits never really disappear; “they’re encoded into the structures of our brain.” The good news is that although old habits never die, they can be “ignored, changed, or replaced.” (pp. 29-30) How? Quite simply, at least in theory: by changing the habit loop of cue, routine, reward.

Ad men figured this out early on. Claude Hopkins, for instance, was responsible for making Pepsodent a sensation at a time when hardly any Americans brushed their teeth; “when the government started drafting men for World War I, so many recruits had rotting teeth that officials said poor dental hygiene was a national security risk.” (p. 39) A decade after the first Pepsodent campaign, more than half the American population brushed their teeth daily and flashed that Pepsodent smile. And they presumably believed that they no longer had that dingy film on their teeth that they could feel when they ran their tongue across their teeth, the cue that Hopkins devised to entice them to brush in the first place. (In fact, the toothpaste did nothing to remove the film, but then ads have never been known for their truthfulness.) So a simple habit loop was formed: cue (tooth film), routine (brushing), reward (beautiful teeth).

What if you already have a habit that you want to change? In that case, “you must keep the old cue, and deliver the old reward, but insert a new routine.” (p. 60) As one of the developers of habit reversal training said, “It seems ridiculously simple, but once you’re aware of how your habit works, once you recognize the cues and rewards, you’re halfway to changing it.” (p. 70) Some people need a support group to reinforce their belief in change, others are fine on their own.

Changing some habits makes very little impact on other parts of a person’s life; keystone habits, by contrast, have ripple effects. They “start a process that, over time, transforms everything.” (p. 87) “They help other habits to flourish by creating new structures, and they establish cultures where change becomes contagious.” (p. 94) Duhigg recalls Paul O’Neill’s fixation with safety when he became CEO of the troubled Alcoa and how “O’Neill’s plan for getting to zero injuries entailed the most radical realignment in Alcoa’s history.” (p. 91)

Keystone habits, which admittedly are difficult to identify and put into practice, create widespread changes because of the principle of small wins. “A huge body of research has shown that small wins have enormous power, an influence disproportionate to the accomplishments of the victories themselves. ‘Small wins are a steady application of a small advantage,’ one Cornell professor wrote in 1984. ‘Once a small win has been accomplished, forces are set in motion that favor another small win.’ Small wins fuel transformative changes by leveraging tiny advantages into patterns that convince people that bigger achievements are within reach.” (p. 96)

One example of what seems for many people to be a keystone habit is exercising. “Typically, people who exercise start eating better and becoming more productive at work. They smoke less and show more patience with colleagues and family. They use their credit cards less frequently and say they feel less stressed. It’s not completely clear why. But for many people, exercise is a keystone habit that triggers widespread change.” (p. 93)

Duhigg extends his analysis to willpower, how retailers predict (and manipulate) habits, how movements happen, and the neurology of free will. But let me stop here and make a couple of off-the-cuff, not especially profound observations.

Traders often repeat the same mistakes over and over, acting on triggers that have served them poorly time and time again even as they continue to expect a tidy profit as a reward. Not only is this insanity, the problem is that they’ve developed a powerfully destructive habit loop. They need to figure out a new routine—and in this case, I believe, contrary to habit reversal theory, either a new, non-monetary reward or a more probabilistic view of the reward.

Beginning traders sometimes feel compelled to swing a big line, and normally they lose big. Just think how many accounts have been blown out. Small wins are powerful levers (and don’t have the downside risk of using too much leverage). “Levers, not leverage”—it has a nice ring to it!

The Power of Habit is chock full of fascinating information—from Michael Phelps’s training regimen to how Target “targets” pregnant women as potential big-time spenders without seeming intrusive. I thoroughly enjoyed it and learned from it. Who can ask for much more? Now on to that next small win. (If you’re intrigued with this topic, you can follow it up with Peter Sims, Little Bets: How Breakthrough Ideas Emerge from Small Discoveries. I admit I haven’t read it yet.)

Tuesday, September 18, 2012

Buytendijk, Socrates Reloaded

A couple of years ago I wrote two posts on an earlier book by Frank Buytendijk, Dealing with Dilemmas. He is back with yet another thought-provoking book, Socrates Reloaded: The Case for Ethics in Business and Technology (Beingfrank Publications, 2012).

Buytendijk is an IT guy, not a philosopher. But he’s an IT guy with a fresh way of looking at intellectual and practical problems; as he titles his first chapter, “IT: Information Technology or Independent Thinking … Interesting Thought!”

Socrates Reloaded is wide-ranging. The author contemplates whether Marx predicted the end of the Internet giants, investigates the often stifling notion of best practices, and dispels the myth of one version of the truth.

In this post, however, I’m going to confine myself to a single topic: Can computers think?

Buytendijk starts with the famous Turing test from 1950: “Is it imaginable that a computer could fool a human being, and be taken for a human being as well?” If we focus only on the results, Buytendijk argues, “we cannot escape the conclusion that computers can think. In fact, they can think much better than we can. They can reason better, faster and deeper than human beings, with much more precision.” (p. 76) They would ace IQ tests. They can learn and evolve. Moreover, computers can be self-aware in the sense that they can run self-diagnostic software and report system malfunctions. Computers don’t seem to be all that different from us.

And yet we know they are, at least in their current state. “The killer argument is that computers do not create and invent things like we do. Computers haven’t created any true art simply because they felt like it. Computers haven’t displayed altruistic behavior. Computers don’t make weird lateral thinking steps and invent Post-it Notes when confronted with glue that doesn’t really stick, or invent penicillin by mistake.”

Buytendijk contends that ‘mistake’ is the key word here. Intellectually, “we, human beings, are special because we are deeply flawed. We make mistakes, we don’t always think rationally, our programming over many, many years of evolution is full of code that doesn’t make any sense, and so forth. We are special because we are imperfect.” (p.82) So for computers to become more like human beings they need to become more imperfect and rely more on fuzzy interpretation. Google’s search engine is, according to the author, a good example of the non-perfect computing paradigm.

Socrates Reloaded meanders through the history of philosophy looking for insights into business and IT problems. As a philosophical exercise, it’s not particularly satisfying. But for those in business or IT who want to expand their intellectual horizons it’s a great read. It’s challenging, not in the sense that it’s hard but in the sense that it shakes up preconceptions. And for those who worry about their privacy in the information age where function creep—in which data are used for purposes far different from the purposes for which they were collected—“simply happens” (p. 135), this book is a wake-up call. Reading Socrates Reloaded is definitely a worthwhile way to spend a few hours.

Friday, September 14, 2012

Schüll, Addiction by Design

Natasha Dow Schüll’s Addiction by Design: Machine Gambling in Las Vegas (Princeton University Press, 2012) is one of the most compelling books I’ve read in the past few years. Not because I was ever captivated by slot machines or video poker. In my entire life I lost a total of $5 to a slot machine and, quite frankly, even then I didn’t consider the experience worth anywhere close to $5. But the experience has changed, thanks to technology and mathematical algorithms; it has a deeper hook. Screen traders will recognize its addictive appeal.

Schüll, an associate professor at MIT, argues that addiction to machine gambling stems from the interplay between the gambler and the machine. Drawing on fifteen years of field research in Las Vegas and extensive interviews with both designers and addicts, she shows how the “duty to extract as much money” as possible from customers and the desire to play for as long as possible combine to produce a recipe for potential addiction.

Slot machines have come a long way from the coin-fed mechanical one-armed bandits. They now use video technology, which speeds up play significantly. On average, pulling a handle resulted in 300 games an hour. Video poker players can complete 900 to 1,200 hands an hour; the rate is similar on video slots. (p. 55) The financial flow in casinos has also sped up. Players no longer have to carry around heavy cups of coins or wait for payouts. Instead, casinos are “cashless.” Moreover, players who run out of money can easily tap into their checking accounts, credit cards, or debit cards—in numerous jurisdictions right from their machines—to keep on going.

Early on programmers devised techniques “not only to distort players’ perception of games’ odds but also to distort their perception of losses, by creating ‘near miss’ effects. Through a technique known as ‘clustering,’ game designers map a disproportionate number of virtual reel stops to blanks directly adjacent to winning symbols on the physical reels, so that when these blanks show up on the central payline, winning symbols appear above and below them far more often than by chance alone.” (p. 92)

Increasingly, mathematicians are designing games that match “math with markets, player types with schedule types.” (p. 109) There are two basic types of players—jackpot players who prefer “high volatility, low hit frequency” games and escape players (play-to-win-to-play players) who prefer “low volatility, high hit frequency” games. “On both machines you end up in the same place, which is zero. … It just takes longer to get there on the second one.” (p. 111)

The gamblers that Schüll interviewed were escape players. As a casino executive said, “What they really want to do ... is to play and forget and lose themselves. … [They want to] get in the zone” where “their own actions become indistinguishable from the functioning of the machine.” (pp. 170-71) This zone is not a happy place. Unlike Csikszentmihalyi’s flow, which is “life affirming, restorative, and enriching, … repeat machine gamblers … experience a flow that is depleting, entrapping, and associated with a loss of autonomy.” (p. 167) It is decidedly worse than T. S. Eliot’s melodramatic description of playing solitaire as “the nearest thing to being dead.”

Schüll’s book is masterfully crafted; it “hooks” you to keep reading until there is nothing left to read. You come away, however, enriched, not depleted. The interviews are gripping, the analysis is sophisticated, and the topic is important—not least because we are all being bombarded with technology that enables us to be “in the zone” in a host of deleterious ways. Traders who are even slightly self-reflective are bound to see something of themselves in these gambling addicts, and may perhaps take a deep breath.

Tuesday, September 11, 2012

Smith, Who Stole the American Dream?

If you cheered Elizabeth Warren at the DNC, you’ll love Hedrick Smith’s latest book, Who Stole the American Dream? (Random House, 2012). If you’re an Ayn Rand devotee, you’ll probably hate it. If, however, you’re one of the 99%--Democrat or Republican, liberal or conservative, you owe it to yourself to read Smith’s plea to restore middle-class prosperity and power. Hedrick Smith, for those too young to remember, was a New York Times reporter who wrote a brilliant 1976 book, The Russians, and who shared a Pulitzer for the Times’s Pentagon Papers series.

Smith analyzes the U.S. slide from “one large American family with shared prosperity and shared political and economic power” in the decades following World War II to “a sharply divided country—divided by power, money, and ideology,” a “house divided against itself” which, as Lincoln famously warned, “cannot stand.”

Slowly but inexorably, beginning as Smith tells the tale with a 1971 memorandum written by future Supreme Court justice Lewis Powell, the country embraced a “pro-business power shift in politics and a new corporate mind-set” and abandoned the middle class. Worker salaries stagnated, CEO pay skyrocketed. Business lobbyists dramatically outspent lobbyists for labor, nearly 60 to 1 from 1998 through 2010.

The first “bend in the path of American history” came not during a Republican administration but in the late 1970s when Democrats controlled both Congress and the White House—that is, during the Carter administration. Congress embraced deregulation. They passed an omnibus tax bill that contained the 401(k) provision, intended at the time as a tax break for corporate executives at Xerox and Kodak but soon enough expanded to apply to the rank-and-file, to replace lifetime company pensions with do-it-yourself retirement savings plans. And, balking at Carter’s tax bill that closed loopholes for the wealthy and for corporations and that cut taxes for lower-income families, Congress passed a bill that cut the maximum capital gains tax rate from 49 to 28 percent, cut the top corporate tax rate from 48 to 46 percent, and included generous write-offs for small businesses. “Although the size of the tax cuts was relatively small, it marked a watershed in Washington’s tax and economic policies. Instead of following the traditional pattern of using the tax system to redistribute income from the affluent and from corporations to the less well-off, the 1978 tax bill charted the opposite course, a course that would be pursued by Ronald Reagan and George W. Bush.”

The New Economy undid the equality and prosperity of the postwar period. No longer would Americans at all income levels move up together. “The dynamics of the New Economy disrupted the virtuous circle of growth, the economy of middle-class power, and the Great Compression, where the destinies of management and labor had been linked.” By 2011 the OECD ranked the U.S. thirty-first—fourth from the bottom—among its thirty-four member countries in ratio of incomes.

How can average Americans counteract the influence of money in politics, what Joseph Stiglitz called government “of the 1%, by the 1%, for the 1%”? Smith contends that “millions of average Americans will have to become directly involved once again in citizen action—making their presence felt, taking to the streets, just as millions did in the 1960s and 1970s—to restore the vital link between Washington and the people.” Occupy Wall Street was an inchoate first step, “but for significant long-term impact, either Occupy will need to mature or some new movement will need to emerge with broader participation, better organization, more clearly articulated goals, and specific policy targets.”

A movement of the 99% would, of mathematical necessity, cut across party lines. It would connect people to government instead of alienating them from it; it would give them power in place of their current powerlessness. It would bring the political power game out of the shadows into the broad daylight. And it might just restore, and even strengthen, the middle class. Smith’s book is a call to action. The choice for Americans, in the words of Louis D. Brandeis, is stark: “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”

Monday, September 10, 2012

Cohen, The Insider Edge

Guy Cohen, the author of several books on options and CEO of, has developed a new indicator—OVI (Options Volatility Indicator)—for stock traders. The indicator is proprietary, so naturally The Insider Edge: How to Follow the Insiders for Windfall Profits (Wiley, 2012) is in large part a marketing tool. There are, however, two upsides for those who are cheap. First, readers who go to the website linked to the book can view Cohen’s top twelve OVI charts for free. Second, even though mighty few readers will have the extensive data base necessary to reverse engineer the indicator, the principle behind the indicator is relatively straightforward. Imaginative traders may be able to figure out ways to implement it, in what would have to be a dumbed-down form, with readily available data. Of course, those who are truly enchanted can sign up for Cohen’s subscription services. They seem to be reasonably priced, although I can’t pass judgment on their value.

The OVI is an oscillator that moves between -1 and +1 in accordance with the buying and selling of stock options at multiple but not all strikes and some but not all expirations. “[N]ot all of the options for one stock are going to be relevant to the sentiment of investors toward the stock in question, so the art is to know which options are relevant for each stock. This is part of the secret sauce.” (p. 59) The oscillator has three components: option volume, open interest, and implied volatility. It is “closely correlated with medium-term trending price-action as it tends to be roughly in line with the major trend of the markets. The OVI is especially useful in sideways markets where it can often indicate the most probable direction of the breakout.” (p. 64) It is, Cohen claims, a leading indicator.

The OVI is best used with “the most important chart patterns in the stock market: flags and channel breakouts.” (p. 109) Cohen discusses these patterns at some length, explaining among other things how to avoid market manipulation by placing entry orders “away from the herd of amateurs.” (p. 133)

Cohen offers the reader a trading plan, complete with stops and profit targets, that incorporates chart patterns and his OVI indicator. In the final analysis, however, he is selling his software services. I wish him well.

Thursday, September 6, 2012

Morris, Fly Fishing the Stock Market

I learned more about fly fishing than trading in this book. I don’t mean this as a criticism of Stephen Morris’s Fly Fishing the Stock Market: How to Search for, Catch, and Net the Market’s Best Trades (Wiley, 2012). After all, I went fishing only once in my life—a fish story best left untold, and I’ve been involved with the financial markets and literature about the markets for many years. Moreover, unlike most metaphors that fail after a chapter or two, the fly fishing metaphor is rich enough to go the distance. And it requires a lot of fleshing out for those of us who are unfamiliar with the intricacies of fly fishing.

Dr. Stephen Morris, a practicing orthodontist in Idaho, is not only an avid fly fisherman but one of the top performing traders of Alexander Elder’s SpikeTrade Group. Morris readily acknowledges Elder as his mentor, so it is not surprising to find the impulse system and the force index in Morris’s “tackle box.” But Morris has developed his own catch and release trading system, which includes the weathervane, the weather station, matching the hatch radar screen, the strike indicator, and the drag system. On his web site,, he sells TradeStation programming for this system.

Fortunately Morris describes his indicators in sufficient detail that anyone with even a modicum of programming skills should be able to reproduce them for use on his own trading platform. The weathervane, for instance, combines the weekly VIX and S&P 500 along with an eight-week EMA for the VIX. In a separate panel is Martin Pring’s market seasons indicator—the weekly S&P 500 MACD. This weathervane chart provides buy and sell signals. (I’m not divulging the rules here, but they’re pretty simple.) For shorter-term forecasts (daily, intraday, hourly) he uses the VXX and SPY, going down as low as ten-minute charts.

Morris illustrates his ideas with ample color bar charts printed on heavier than usual stock.

Fly Fishing the Stock Market is a relatively elementary book, but it is certainly not a primer. It describes a complete trading system with specific strategies matched to particular patterns and market conditions—entries, exits, and trade management. The trader who is looking to make sense out of chart patterns and to keep his trading rules simple is offered an excellent model here.

Tuesday, September 4, 2012

Chan, The Value Investors

Ronald W. Chan introduces an interesting cast of characters, many of whom may not be familiar to readers. In The Value Investors: Lessons from the World’s Top Fund Managers (Wiley, 2012) we meet Walter Schloss, Irving Kahn, Thomas Kahn, William Browne, Jean-Marie Eveillard, Francisco García Paramés, Anthony Nutt, Mark Mobius, Teng Ngiek Lian, Shuhei Abe, V-Nee Yeh, and Cheah Cheng Hye.

Irving Kahn, age 106, has the distinction of being the oldest living active investment professional. Both he and Walter Schloss, who died this year at the age of 95, were students and later employees of Benjamin Graham, so they have impressive value investing pedigrees. Their first jobs were with Wall Street firms; eventually they founded their own highly successful businesses.

I mention the job history of these two men because I was struck by how relatively late in life (of course, not by Kahn standards) many of the value fund managers interviewed in this book found their true calling. Mark Mobius, for instance, of the Templeton Emerging Markets Group fame, started his career as a business consultant (to be more precise, a consulting research coordinator) in Tokyo, studying consumer behavior in the region, and later founded his own research-oriented business consulting firm. Cheah Cheng Hye, co-founder of Value Partners, the largest asset management company in Asia, worked in journalism for eighteen years before he entered the financial world as a stock analyst.

Other future value fund managers started off in finance but faced a different kind of hurdle. They were hired by firms who were devoted to growth investing. They felt uncomfortable in their jobs, though not necessarily understanding why. It took them some time to realize that they were, for whatever psychological/intellectual reasons, at heart and in mind value investors.

Value investing is in many ways an intellectual no-brainer. It’s smart bargain shopping. You buy a lot of pasta at 50% off because the supermarket messed up its inventory but avoid the strawberries that are on sale because they’re half rotten. Simple enough. On the other hand, value investing is extraordinarily difficult emotionally. You buy a stock that you think is undervalued only to see it become even more undervalued (and that’s if your analysis is correct). You may buy more if you’re self-confident, but you have no external validation. The market is telling you that you got it wrong. And, yes, the market is often right.

The value investors that Chan profiles, all of whom have handily beat their benchmarks, are not a particularly stressed lot. In fact, many of them explain what investing techniques they use (in some cases merely diversification) to be able to sleep soundly at night and avoid stress. I suspect, however, that the real explanation lies not so much in methodology as in personality. It takes a special kind of person to take the inevitable lumps (such as not participating in the dot-com boom) as well as to enjoy the long-term, often slow-grind upside of being a talented value investor.

Chan’s book is a good read. Value investors may make some new international friends. Struggling individual investors may find a style that resonates. And frustrated, antsy twenty somethings may come to realize that life doesn’t end at thirty.