Book Review > Active Investing: How to Manage your Portfolio like a Professional in less than One Hour a Week, Revised ed

The book is a revised edition and as such includes some material not included (or perhaps missed by this reviewer) in the previous edition. One is the inclusion of a chapter on short selling. I heard Alan speak around October 2007 and clearly state that it was time to be or get out of the market. On page 153 of the book the reasoning behind that statement is; “Do not open new positions when both the All Ords and the Dow have their 10 day moving average below their 30 day moving average.”
The purpose of the book is to make it clear that investment is about making money by taking personal action.

I appreciate the journey through what makes the market tick providing a conceptual framework in the first half of the book. This is followed by a detailed exposition of the steps needed to implement an investment system.

The evolution of markets, their participants, and a distinction between investment and asset management starts the book. There is a focus on the requirement to treat investment or asset management as a business and how to accomplish the roles of governance, strategy, and implementation for this business of investment. A strength of the book is that it is neither orange (fundamental focus), nor green (technical focus) finding a place for both in what he terms “Dynamic Analysis” which is the link between the two parts of the book.

The second half of the book can be used as a guide on how to use his newsletter, or can be used by the reader to develop their own process. Contrary to some writers he makes the formulae of the indicators he has developed public and this is of special value to those who want to develop their own process as well as to anyone who wants to understand what they are doing, and isn't that all investors! There is enough in this book to develop a disciplined active investment process. This is illustrated by the “guest authored” chapter 12, a week by week description of actions to be taken.

My conclusions on reading this edition are that (1) there isn't a profession with a vested interest in making money for me, (2) if I do nothing and am lucky I will get nothing, and (3) if I take responsible action I shall survive and maybe prosper.

Tim Kottek is a member of the AIA.