Trader Vic on Commodities: What's Unknown, Misunderstood, and Too Good to Be True Hardcover – Feb 8 2008
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From the Inside Flap
Commodities are experiencing a new up cycleand an examination of the major factors contributing to these price increases suggests they are not short-lived. World populations continue to expand, increasing global demand. Industrialization in China and India, as well as in other emerging markets, has greatly increased the need for energy and industrial products, while the supply remains limited. With the increased volatility in the commodities markets, the surge in interest, and the generally higher prices in everything from crude oil to copper to cocoa, it seems clear that every investor should have at least some exposure to commodities.
In Trader Vic on Commodities, Wall Street legend Victor Sperandeo explains in simple terms how these markets operate, removes some of the mystique and uncertainty involved, and offers a proven method for capitalizing on commodity market trendswithout taking giant risks. He introduces a valuable toolthe Standard & Poor's Diversified Trends Indicator (S&P DTI)to capture price movement, premiums, and discounts in the commodity futures markets. Sperandeo shows that, as commodities are cyclical in nature, the best goal is to capture as much of the major trends of each market as possible, while balancing that goal with a minimum of risk. The S&P DTIdesigned to be complementary to other investments, but with a negative historical correlation and completely uncorrelated to other investment classeshas produced alpha consistency with low volatility rather than outsized returns with higher volatility.
Perhaps most importantly, Sperandeo acknowledges that losses are part of the trading business. But if you are trading properly, he explains, you will find yourself able to lose more often than win and still remain profitable overall. Learning to accept, deal with, and minimize losses is the most important factor in determining your success as a trader.
Finding ways to remove the emotion and personal judgment from an investment strategy is also a crucial factor in long-term market profitability. The S&P Diversified Trends Indicator accomplishes these goals more successfully than most other strategies you will find. It will provide a well-researched, low-volatility strategy for taking advantage of commodity trends in a systematic way so as to earn consistently superior index returns over the long run.
From the Back Cover
Praise For Trader Vic On Commodities
"Victor Sperandeo is an extraordinary mentor, a 'wise and faithful advisor, friend, or teacher' as my dictionary says. His readers quote his advice long after reading his books. His new book, Trader Vic on Commodities, in some ways builds on his famous 2B rule, which is that you lose properly. This book, however, is really about winning and breaking new ground in commodities trading strategies. Sperandeo describes how an index that includes both traditional commodities and financial futures can provide a better inflation hedgeand more profitable trading strategythan an investment in traditional commodities alone. The book is a treasure of statistical tables to show both the 'how to' and the validity of Sperandeo's trading strategies. Readers will find him still, as Barron's titled him years ago, Trader Vic: The Ultimate Wall Street Pro."
Elizabeth B. Currier, President, The Committee for Monetary Research & Education
"Trader Vic on Commodities will surely become one of the must-read books for anyone interested in trading commodities."
Thomas Finley, Managing Director, Global Markets & Investment Banking, Merrill Lynch
"Only the legendary Trader Vic Sperandeo could bring such clarity to what to most is a complex and indecipherable subject. This book is a splendid achievement from one of the investing world's true originals. The only thing I'd recommend more highly than the book is taking Vic's trading advice."
Keith Styrcula, Chairman, Structured Products Association, CEO, WealthNotes Capital Management, LLC
Most Helpful Customer Reviews on Amazon.com (beta)
The book is 194 pages, the first 34 of which give some meager background on commodities investing. Page 35-194 (the end) is nothing but promotion of why to invest in the Standard and Poor's DTI INDEX ... an index of commodity trading he created and is compensated for. It contains pages and pages of supporting statistics to induce one to purchase the index. There is not even acknowledgement of incredible new tax advantaged products such as the Swedish Bank's Jim Rogers Raw Materials Index offerings. The index may actually work, in fact, it wouldn't even surprise me if it did, but to have to PAY for the right to learn about it is a sorry promotional use of the "Trader Vic" identity ... which is assumed to be one of trader education, not self promotion.
Having purchased some 100+ books from AMAZON since its inception (mostly of investment and computer topics), this one is the first I will have ever returned!
It troubles me to take the time to rate a book poorly, but to make people pay for a sales pitch, rather than at the promoter's expense, is something these publishers need to cease ... this one obviously fell for the marketability of the "Trader Vic" brand.
A great disappointment indeed!
For those of you who have learned about break-out trading systems, Donchian-style models, and moving average cross-over models, Victor's patented models (CTI & DTI) are a great place to start if you're looking for insight into how to design a trading model. In the book he delineates why and how he made certain trade-offs in creating his model.
I believe this is an Intermediate-level book, however the aspiring trader can use Victor's models as a starting point to create your own robust model to trade the commodity markets. The DTI for example, is passive Long/Short and is rebalanced monthly. As an exercise, see what you can do to trade it more actively.
You can hear Victor in his own words in two podcasts that I recorded with him in June 2009 and January 1, 2010. They are also available at MartinKronicle on iTunes.
As of August 2008, the featured Rydex funds are doing horrible, one can only feel sorry for the master trader Sperandeo, since his indicator is (at this time) performing very poorly.