Book review - Finding the next Starbucks

[SimonPB]

Finding the next Starbucks (Hot to identify and invest in the hot stocks of tomorrow) by Michael Moe

I plan to review investing and trading books for the website and this weekend I saw the above book but was undecided (concerned it may be to American) so I skipped it. Then on Sunday the NYT insert in the Sunday Times carried a review of the book by Roger Lowenstein and he wasn't very impressed.

The review is online at http://tinyurl.com/yqzsm9, BUT you need to be a Times Select user or pay some $5 to read it. So if you missed this weekends Sunday Times I will give a brief overview of the review below.

As expected from the title the author promises to help readers find the next hot growth stock while it is still a cheap little penny stock being over looked by all an sundry. Without doubt we all wish we could do just that and the authors claim to fame is that he got into Starbucks while it was still a cheap little unrated stock (he also spotted Google). The book advises readers to "invest in companies in hot industries that are run by the right people and that boast sustainable growth opportunities.". The author is also not put off by sky high PE ratios as he focuses on companies "that can have rapid growth for a long period of time".

Problems identified by the reviewer include

While the author admits to mistakes he never gives any details so we can't learn from his errors.

He uses backwards looking techniques, focusing on stocks he now knows to be winners and showing how they fitted into his theory. Sure but how many others would also have fitted his theory but bombed?

The author seems confused, he emphasises long-term earnings. But then he also urges readers to focus on short-term factors. So which is it?

The final sentence of the review reads ".but sends completely the wrong message, as do his other reminders on the supposed impact of quarterly earnings. It risks turning long-term growth investors into hot money traders.

So in short the reviewer was not impressed.

Simon

[#2]

Hi Simon,Is it possible to give a list of good,relevant books out there to read on trading etc.I have read many but wish to continue reading as I find most very useful.Unfortunately to find a good book by just buying it is costly,especially if it is rubbish.Perhaps SBK or yourself can set up a 'USEFUL READS" column on this site.Just a thought.Thanks

[#3]

cancel,sorry read the post wrong,see u are planning that.It is Monday after all.

[SimonPB]

Only really three books I have ever read for trading;

Trend following by Michael Covel

TRADING IN THE ZONE by Mark Douglas

REMINISCENCES OF A STOCK OPERATOR by Edwin Lefevre

Also highly rated, but not read by myself so unable to really comment;

MARKET WIZARDS: INTERVIEWS WITH TOP TRADERS by Jack D Schwager

On the TA side my bible is;

TECHNICAL ANALYSIS EXPLAINED (4th ed) by Martin J Pring

Two other TA books, but not read by me;

THE ENCYCLOPEDIA OF TECHNICAL MARKET INDICATORS (2nd ed) by Robert Colby

WILEY TRADING ADVANTAGE: TRADING SYSTEMS by Perry J. Kaufman

More details on the books at; http://www.fin24.co.za/trading/sawarrants/displayarticles.asp?ArticleID=305523