Book of the Year 2021

By | CYH

It is time of the year to select the most impactful book to me. Note that I choose the book of the year by the time I read it and not based on when it was published.

The key factor in selecting the book lies in its practicality – how have I applied it in my life. Or it has to at least provide me with a new paradigm of thinking.

Here are the previous years’ book of the year

And for the book of the year in 2021, drumroll please…

It is undisputedly Stocks on the Move by Andreas Clenow!

Andreas Clenow is a hedge fund manager and has published a number of books on various trading strategies.

This isn’t a new book and I have read it some years back but it just didn’t resonate with me then. I guess the idiom, “when the student is ready, the teacher will appear”, is very true.

I was looking for a strategy that could avoid value traps as well as getting in on high growth stocks where valuation plays a less important role. I know that trend following strategies would help but I just find reading stock charts with technical analysis too subjective.

Clenow is more of a quant and it is an approach which I have always preferred because it is more precise and easier for most people to follow. The paradigm shift for me was that he used exponential regression to quantify momentum. I no longer need to look at the chart to determine the trend! All could be done in numbers.

Apart from that, he gave a complete strategy that involves clear buy and sell rules as well as risk parity sizing and a market crash capital protection rule. You can practically apply a professional-grade trading strategy for yourself. It is rare that it is given away in a book like this.

I am more into fundamentals and I saw the opportunity to combine this momentum principle with some fundamental analysis.

Instead of using the S&P 500 index, I created new stock universes by using fundamental metrics such as gross profitability, revenue growth rates and enterprise multiple.

Just by reading this book allowed me to create 3 new strategies and a new course for others to learn.

Definitely the most impactful book I have read this year.

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