curiouscat.com > Books > Investment > Investors > Humphrey B. Neill
More investors: Buffett, Livermore, O'Neil, Soros
Tape Reading and Market Tactics is a classic investment book. Nicolas Darvas, author of How I Made $2,000,000 in the Stock Market brought this book back into print when he "asserted he read Tape Reading almost every week, along with Gerald Loeb's Battle for Investment Survival."
As with other classic investing books age does not detract from this books value. Originally written in the early 1931 the book has been updated over the decades. The book does have some anachronisms but don't let that stop you. If you are impatient the first 50 pages may have you thinking that this book is out of date. But your perseverence will be rewarded. It is just as true now that "it is utterly useless for us on the outside... to conjecture on what "they" are doing. We cannot know what the insiders intend to do, but we can see their orders on the tape when they execute them." (page 22)
As with all other leading traders he emphasis the importance of accepting and limiting losses: "Countless losses must be accepted: the problem is to limit the losses." (page 23)
An excellent summary of his philosophy is found on page 161: "If we all would trade only when the trend is definitely indicated and then patiently wait until the action signifies the probable termination of the move, how much larger our profits would be! Six to twelve successful trades in a year, based upon the important, intermediate trends will return far greater profits than countless attempts withing the minor fluctuation, whereby a large number of losses must ensue and where profits will be small."
He again emphasis the importance of limiting losses on page 209: I honestly believe that the most important problem before both the investor and the speculator, is the limitation of losses. In other words, the emphasis... should be put on the prevention of large losses and the willingness to accept many small losses.
He also counsels taking profits early, leaving the last few points to others: "Rapidly advancing prices, together with increasing volume, are indicative of the end of that movement, or swing. While these price-advances are profitable if the top is detected in time to sell, it is undoubtedly more profitable generally to let the other fellow try for the last two or three points." (page 230).
He ends his introduction with an apt request: "If you are not willing to study, if you are not sufficiently interested to investigate and analyze the stock market yourself, then I beg of you to become an outright long-pull investor, to buy good stocks, and to hold on to them; for otherwise your chances of success as a trader will be nil." (page 25)
The value of books like Tape Reading are not as separate and distinct knowledge that can be applied without other knowledge. But with the study of Tape Reading, How I made $2,000,000 in the Stock Market, Reminiscences of a Stock Operator, How to Make Money in Stocks, Learn to Earn, The Essays of Warren Buffett and more along with years of experience and study of your own investing it is possible to have success. These books will provide contradictory advice and even the same author will change recommendations as they move through their investing life. No simple magic bullet exists to guaranty investment success.