Book Recommendations: Day Trading and Market Timing?

[Skerrick]

A close family member is becoming bored as he nears retirement and is convinced that he should start trading.

I know I want no part of it, but he is relentless... What would be a good book to dissuade him? We have had many discussions on the topic, but I am not getting through.

Personal finance, budgeting, living below your means, etc does not need to be a focus. Mainly looking at the investing aspect...

Would The Quest for Alpha: The Holy Grail of Investing be a good start?

[livesoft]

The only good book is probably his checkbook. When it goes to zero, that's when this side adventure will likely stop.

If there was a way to wall off the trading, so that it didn't materially affect retirement, then the lesson could be learned. That is keep the day-trading account isolated.

Here's a link to read: http://bucks.blogs.nytimes.com/2012/12/ ... cess-cash/

[FinancialDave]

I have seen this happen, and trust me, once they have a few trades go their way, nothing can be done to change their mind - NOT even losing their children's money and having to pay it back.

A few meetings of gambler's anonymous might be a good idea!

[Skerrick]

One of the issues is that he looks at day trading and market timing as ways to reduce risk.

[Fallible]

One of the issues is that he looks at day trading and market timing as ways to reduce risk.

How exactly does he see it as reducing risk?

Also, if you can't stop him from trying, is he open to setting aside "play" money for trading? Does he even have enough money he can afford to lose? Does he do any casino gambling? Is there anyone else in the family or are there friends who could also talk to him?

I don't know of the right book on this topic alone but I'm sure someone will post about one. Here is some very direct info on the topic from the S.E.C.: http://www.sec.gov/investor/pubs/daytips.htm

[chaz]

Try "the four pillars of investing" by William bernstein.

[bertilak]

Try Wall Street Self-defense Manual by Henry Blodget. See especially Chapter 7 - Meet Your Competition on page 36.

Blodget should know about that since he once WAS your competition. From the book's Introduction:

Let me begin, however, by acknowledging an obvious irony: My writing this book. Yes, I am that Henry Blodget....

and from Wikipedia:

In 2002, then New York State Attorney General Eliot Spitzer, published Merrill Lynch e-mails in which Blodget gave assessments about stocks which allegedly conflicted with what was publicly published.[4] In 2003, he was charged with civil securities fraud by the U.S. Securities and Exchange Commission.[5] He agreed to a permanent ban from the securities industry and paid a $2 million fine plus a $2 million disgorgement.[6]

The book is an exposé on how the deck is stacked against most investors. That is, those investors who do not understand Boglehead principles. No, he doesn't call it that but his advice lines up pretty good. At least I don't think he calls it that but there is no index so I can't look it up. He does use Vanguard as a counter-example to some of the bad things that go on in the mutual fund industry.

The book really has nothing new, other than the perspective it is written from and I think that perspective might strike a chord with your family member.

[Tom_T]

Show him this article.

http://www.businessinsider.com/henry-bl ... get-2010-3