Book Review > Trading The Sharemarket the ASX Way

This is book two in a series of three produced by the Australian Stock Exchange (ASX). It is aimed at investors who have some knowledge and who now want to buy and sell (trade) shares. Book 1 - Starting Out in Shares is designed for novice investors and Book 3 - Trading Options is designed for more experienced investors who may wish to trade options.

The book is well set out and is in an easy to read format. It assumes the reader has some knowledge of investments as it does not explain basic concepts (although it does explain the dividend imputation system in some detail). This is reasonable given it is Part 2 in a series and I assume these were covered in Part 1.

The book covers a range of trading strategies from fundamental analysis to speculating. It does not advocate any particular system but provides readers with an overview of some of the systems which can be used. For example, using fundamental analysis the book explains some basic ratios and how they can be used and what they mean (or don't mean). It also covers a number of strategies such as value investing, investing for growth, growth at a reasonable price (GARP), investing for income, ethical investing and market neutral investing. For each of these strategies the book outlines the principals, what the investment process is and how to do it yourself. In each case an exit strategy is part of the process and I think this is actually the most important part of the process which many books ignore. The book is not prescriptive and leaves it to the reader to develop their own system. It also recommends testing the system you develop before actually doing it with real money. There is also a chapter on managing your investment portfolio.

The second half of the book looks at trading as part of the bigger picture. It explains other types of investments eg cash and property, managed investments, superannuation, negative gearing and taxation. The information provided is not detailed but gives readers a good introduction to these areas.

My first impressions of this book were "why wasn't it available when I started buying shares". The main message which sticks in my mind from reading it is "never buy a share if you don't have an exit strategy". If only I had known this when I started investing in shares over 10 years ago, I might have had fewer losses.

I would recommend this book to anyone who is just starting out and has a basic knowledge of investments.

Jenni Eason is a member of the AIA.