Synopses & Reviews
In this must-have resource,
author Gregory MorrisChairman of the Investment Committee for Stadion Money Managementdraws on his years of experience to offer a process for analyzing the present state of the marketplace in order to maximize investment possibilities. Throughout the book, Morris presents compelling evidence that debunks commonly held investing myths that typically hold investors back. Filled with practical examples, and based on solid research and data, Investing with the Trend
explains why all too often well-accepted theories on finance, economics, and the market in general can keep investors from reaching their investing goals.
Morris's approach, which he skillfully implemented while Stadion's Chief Technical Analyst, is designed to help investors capture most of the market's good times while avoiding the bad. To get started with the process, Morris outlines four essential indicator types and defines the most common investing terms. In clear language, he describes this rules-based technical approach to investing that consistently outperforms market averages.
Engaging and informative, Investing with the Trend offers an insider's view of how to evaluate the market through a variety of technical indicators. As Morris explains, each indicator is assigned a weight based on its history as a driver of returns. To maximize investment potential, Morris advises that investors adjust their portfolio exposure from cash and fully invest in response to the aggregate value of the indicators. This method has consistently provided better returns than a buy-and-hold approach and without taking on extra risk. In contrast with modern investment theory, which equates risk with volatility, Morris equates risk with portfolio drawdowna distinction that is the foundation of his entire investing approach.
As the title implies, this important book reveals that markets tend toward trendiness and that technical analysis, when properly used, can measure the trend of the market at any point in time. Sure to be any investor's key to financial success and backed by the author's investment performance, Investing with the Trend provides an innovative way to use technical analysis to minimize risk and outperform market averages.
“…make Greg's Investing with the Trend your next book purchase ... and in light of the current market action, the sooner the better.” —Advisor Perspectives
Dancing with the Trend will describe the rules-based technical approach to investing that has enabled Greg Morris to consistently outperform market averages. As chairman of the investment committee for Stadion Money Management, which manages $5.4 billion, Morris’s approach is designed to capture most of the market’s good times and miss most of its bad times. In Dancing with the Trend, Morris explains how he evaluates the market through a variety of technical indicators. Each indicator is assigned a weight based on its history as a driver of returns. Morris adjusts portfolio exposure from cash to fully invest in response to the aggregate value of the indicators. The approach has consistently provided better returns than a buy-and-hold approach and without taking on extra risk. In contrast with modern investment theory which equates risk with volatility, Morris equates risk with portfolio drawdown – a distinction that is the foundation of his entire approach. In addition, Morris makes the case that markets tend toward trendiness and that technical analysis – probably used – can measure the trendiness of the market at any point in time. A challenging book that is backed by the author’s investment performance, Dancing with the Trend provides an innovative way to use technical analysis to minimize risk and outperform market averages.
Dancing With the Trend skillfully describes a rules-based technical approach to investing that has enabled top technical analyst Greg Morris to consistently outperform market averages. Drawing on more than thirty years of experience in this field, Morris explains how he evaluates the market through a variety of technical indicators. He reveals how each indicator is assigned a weight based on its history as a driver of returns, and addresses how he adjusts portfolio exposure from cash to fully invest in response to the aggregate value of those indicators.
Investing with the Trend
provides an abundance of evidence for adapting a rules-based approach to investing by offering something most avoid, and that is to answer the “why” one would do it this way. It explains the need to try to participate in the good markets and avoid the bad markets, with cash being considered an asset class. The book is in three primary sections and tries to leave no stone unturned in offering almost 40 years of experience in the markets.
Part I – The focus is on much of the misinformation in modern finance, the inappropriate use of Gaussian statistics, the faulty assumptions with Modern Portfolio Theory, and a host of other examples. The author attempts to explain each and offer justification for his often strong opinions.
Part II – After a lead chapter on the merits of technical analysis, the author offers detailed research into trend analysis, showing how to identify if a market is trending or not and how to measure it. Further research involves the concept of Drawdown, which the author adamantly states is a better measure of investor risk than the oft used and terribly wrong use of volatility as determined by standard deviation.Part III – This is where he puts it all together and shows the reader all of the steps and details on how to create a rules-based trend following investment strategy. A solid disciplined strategy consists of three parts, a measure of what the market is actually doing, a set of rules and guidelines to tell you how to invest based upon that measurement, and the discipline to follow the strategy
Praise for Investing with the Trend
"If you want to take a master class in financial markets, this is the book for you."
—Mebane Faber, CIO, Cambria Funds
"Greg Morris is a learned scholar, sharp observer, rational thinker, and successful stock market analyst and investor. All these characteristics are displayed in his new book Investing with the Trend. It is a gem. His understanding and refutation of many Wall Street myths are brilliant; his evaluation of stock market indicators is well-reasoned; and his investment style and risk avoidance methods superb. Anyone, professional or otherwise, interested in a reasoned, fact-supported, comprehensive book on the stock market should own it."
—Charles D. Kirkpatrick, CMT, Kirkpatrick & Company, Inc.
"Anyone wanting to read about technical analysis should read this book first. It is the benchmark book that all other books on the topic should be compared to."
—Peter Mauthe, Investment Banking
"If you invest in stocks without first investing in this book, you are a fool. Well written, documented, and practical, Greg's work is an amazing accomplishment, combining knowledge with wisdom. In my library of thousands of market books, there are only a few 'must reads'. This one has earned that honor."
—Larry Williams, Trader
"The trend is your friend, so make friends with Investing with the Trend. Whether you are emotional or disciplined, a numbers nerd or not, Greg will show you how successful investors let the rules rule."
—Sam Stovall, Chief Equity Strategist, S&P Capital IQ
About the Author
Gregory L. Morris is Chairman of the Investment Committee for Stadion Money Management, LLC, which manages approximately $5.4 billion, and their Chief Technical Analyst. Prior to this role, Morris served as a trustee and advisor to the MurphyMorris ETF Fund and as treasurer and chief executive officer of MurphyMorris Money Management Co. and MurphyMorris.com. He has been a technical market analyst for over forty years, ranging from analysis software development and website analysis and education to money management. Morris is the author of two books, Candlestick Charting Explained and The Complete Guide to Market Breadth Indicators. He has appeared frequently on financial news shows, has lectured on technical analysis worldwide, and has been featured in major magazines. Morris was a U.S. Navy fighter pilot, is a graduate of the Navy Fighter Weapons "Top Gun" School, and holds a degree in aerospace engineering from the University of Texas.
Table of Contents
Part I: Market Fiction, Flaws, and Facts 13
Fictions Told to Investors 15
Flaws in Modern Financial Theory 27
Misuse of Statistics and Other Controversial Practices 51
The Illusion of Forecasting 57
The Enemy in the Mirror 71
Market Facts: Bull and Bear Markets 83
Market Facts: Valuations, Returns, and Distributions 113
Part II: Market Research 139
Why Technical Analysis? 141
Market Trend Analysis 159
Drawdown Analysis 231
Part III: Rules-Based Money Management 267
Popular Indicators and Their Uses 269
Measuring the Market 281
Security Ranking, Selection, Rules, and Guidelines 319
Putting It All Together: The “Dancing with the Trend” Model 355
Putting Trend-Following to Work 391
Appendix A: Passive versus Active Management 409
Appendix B: Trend Analysis Tables 413
Appendix C: Market Breadth 445
Appendix D: Recommended Reading 457
About the Author 467
About the Online Resources 469