Taming the Lion - 100 Secret Strategies for Investing

By Grace Cheng on May 2, 2007 | More Posts By Grace Cheng | Author's Website

Author: Richard Farleigh
Richard Farleigh, one of the stars of Dragons’ Den, is a very successful investor who “retired” at the age of 34 in 1994, after managing the trading desk at Bankers Trust Australia and then heading a private hedge fund in Bermuda. He then continues as an active investor in early stage tech companies. This book is a compilation of his trading and investment advice. He talks about his views of the financial markets, risk, price behaviour, market timing, and psychology. Here are some points he mentioned, such as:

The markets can overwhelm government intervention

Respect the markets, not the experts

Manage and embrace risk

Add to winning trades, not losing trades

Know when to stay out of the market

I totally agree with “Most professionals are not outguessing the market”. Here is a short elaboration of this point:

“…you may also wonder about all the money made by the people working on Wall Street or in the City of London. Surely they know something about markets? Let me put you straight on this. The truth is that very few are successfully backing their views on markets. Most of them wouldn’t have a clue what the market is going to do. They make money in other ways, such as commission and management fees…….Equally, don’t be impressed with your stockbroker just because they sound confident and know a lot of stories and figures. Does the broker make a living out of picking stocks? Probably not. He or she is sitting in their seat because they’re getting the fees you pay them to buy and sell on your behalf. It’s very easy for someone to have a view when it’s with someone else’s money”.

I often say no one (not even bank CEO, analysts, economists, bank traders, brokers etc) can be trusted, especially when they have a vested interest.

Richard is more of a trend-following stock investor; he based his trading on both the fundamentals and price action. There are some points that I do not agree with. One of it is “Chartists are just astrologers”. In fact, many forms of technical analysis work to a large extent in the financial markets as a result of self-fulfilling prophecies, but as I emphasize many times, technical analysis has to be combined with the prevailing market sentiment for maximum success.

This book is mainly geared towards stock investors and you will find some gems of investing psychology in this book.

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