Zack Miller's Tradestream Your Way to Profits: Book Review ~ market folly

Friday, August 6, 2010

Zack Miller's Tradestream Your Way to Profits: Book Review

If you're looking for another book on the same old topic of stockpicking, then this isn't for you. However, if you're searching for a new-age approach to investing that incorporates the use of copious online resources (including social media), then you've found the right book. Readers of Market Folly should find this work of particular interest given its focus on mimicking top hedge fund managers, a topic we cover on a daily basis. Today we're taking a look at Zack Miller's Tradestream Your Way to Profits. Miller is Managing Director at Lighthouse Capital Ltd and received an MBA from the Kellogg School of Management at Northwestern University and a BA in economics from Harvard.

For this book, Miller tapped his expertise in combining finance and the world wide web. His experience in this regard stems from his time as an early stage hire at Seeking Alpha where he helped launch 'Finance 2.0', a mash-up of Twitter and Facebook for the financial world. Simply put, Miller's book aims at teaching you how to build a profitable portfolio utilizing resources such as streaming information, data aggregation, guru tips, blogs, and social media. He applies his prowess in asset management, equity research, and internet technologies to help you craft a portfolio based on eight investment approaches & resources. Among many topics, Tradestream Your Way to Profits encompasses:

- Insight from financial blogs & aggregators: The largest free investment research organization
- Piggybacking the pros: Following top hedge fund managers
- Stock screens: Utilizing formulas the world's best investors use
- Stockpicking communities: Finding the next Warren Buffett

While we can attest to Miller's basic approach, we're a bit biased here because a) is a financial blog, b) our daily focus is on tracking hedge funds, c) we're a part of online financial communities like StockTwits and Twitter, and d) we use copious amounts of resources online for market research on a daily basis.

That said, Miller provides ample insight as to how to best utilize these sites. The tools are there, but many people aren't taking full advantage of them. Tradestream Your Way to Profits outlines a plethora of online resources for use including hedge fund replicators like Alphaclone, something we've highlighted numerous times. He also highlights online communities like StockTwits, buyside networking and professional sites like SumZero, crowdsourcing platforms like Wikinvest, streaming data sites like SkyGrid, platforms for discovering new managers such as kaChing and Covestor, aggregators like Seeking Alpha and many more resources.

Given its focus on piggyback investing and tracking hedge funds, Chapter 2 of Tradestream Your Way to Profits was our favorite. This chapter concludes that hedge funds don't derive their performance from just one stock, but rather the collective sum of their top 20 holdings or so. Portfolio performance can be garnered simply by tracking and mimicking these expert stockpickers. Miller teaches you how to track these funds, something MarketFolly strives to do for you on a daily basis. He also hones in on Alphaclone, the ultimate hedge fund replicator we use to backtest strategies, clone hedge fund portfolios, and discover new managers.

Also of particular interest is Chapter 5 which deals with investment screening. The book simplistically outlines how to screen for stocks that fit Joel Greenblatt's magic formula, Ken Fisher's super stocks, and Peter Lynch's criterion, among other things. Miller's work also teaches you how to track a company's insider moves with ease. Collectively combined, all of these tools provide investors with the necessary information to make pertinent investment decisions. Tradestream showcases the wealth of resources available online, how to use them, and what to do with the information.

Novice investor? This book is a great place for you to start. What better way to learn the ropes than by watching and mimicking the pros. Intermediate or advanced investor? There's guaranteed to be plenty of new resources and tools for you to learn about that will highly complement your regular research regimen. There's hundreds of different books out there that train you how to pick stocks. This book does not do that. Instead, Tradestream Your Way to Profits teaches you how to incorporate new online tools, methods of research, and investment approaches in order to construct a more profitable portfolio.


For more insightful books on markets and investing, be sure to check out our other recent reviews of Christine Richard's Confidence Game, Steven Drobny's The Invisible Hands: Hedge Funds Off the Record, and Scott Patterson's The Quants.

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