Investing with the Trend: A Rules-based Approach to Money Management

498 Pages·2013·8.47 MB·English

by  Gregory L. Morris

INVESTING
WITH THE TREND
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INVESTING
WITH THE TREND
A Rules-Based Approach to
Money Management
Gregory L. Morris
Cover Design: Wiley
Cover Illustration: Smoke Background © iStockphoto.com/Storman; Virtual Chart © iStockphoto.com/
everythingpossible
Copyright © 2014 by Gregory L. Morris. All rights reserved.
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ISBN 9781118508374 (Hardcover)
ISBN 9781118726976 (ePDF)
ISBN 9781118726693 (ePub)
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
To Laura, and our children, Dusti, Grant, Derek, and Kane.
And our grandchildren: Katy, Kinsey, Grayson, Connor, and Elaine.

Contents
Foreword ix
Preface xi
Acknowledgments xv
CHAPTER 1
Introduction 1
PART I: MARKET FICTION, FLAWS,AND FACTS 13
CHAPTER 2
FictionsTold to Investors 15
CHAPTER 3
Flaws in Modern Financial Theory 27
CHAPTER 4
Misuse of Statistics and Other Controversial Practices 51
CHAPTER 5
The Illusion of Forecasting 57
CHAPTER 6
TheEnemy in the Mirror 71
CHAPTER 7
Market Facts: Bull and Bear Markets 83
CHAPTER 8
Market Facts: Valuations, Returns, and Distributions 113
PART II: MARKETRESEARCH 139
CHAPTER 9
WhyTechnical Analysis? 141
CHAPTER 10
MarketTrend Analysis 159
vii
viii Contents
CHAPTER 11
Drawdown Analysis 231
PART III: RULES-BASED MONEY MANAGEMENT 267
CHAPTER 12
Popular Indicators and TheirUses 269
CHAPTER 13
Measuring the Market 281
CHAPTER 14
SecurityRanking,Selection,Rules, and Guidelines 319
CHAPTER 15
Putting It All Together:The “Dancing with the Trend” Model 355
CHAPTER 16
PuttingTrend-Following to Work 391
CHAPTER 17
Conclusions 399
Appendix A: Passive versus Active Management 409
Appendix B: Trend Analysis Tables 413
Appendix C: Market Breadth 445
AppendixD:RecommendedReading 457
Bibliography 459
About the Author 467
About the OnlineResources 469
Index 471