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The Art of Speculation
Even among Wall Street legends, Philip L. Carret is a giant, the founder of one of the first mutual funds-the Pioneer Fund, which debuted in 1928-and a fount of knowledge and experience whose investing wisdom is acclaimed to this day. This classic guide to the nuts and bolts of speculating in the market, assembled from a series of articles for Barron's, is still one of the best primers available for beginners... and an excellent brush-up lesson for old hands. In clear-eyed, down-to-earth language, Carret discusses: . what is speculation? . why the investor must speculate . how stocks resemble real estate . trading on margin . over-the-counter trading . how to find a reliable broker . the disadvantages of options . the secret of the "sure-thing speculation" . forecasting market swings . understanding a bull market . how to read a balance sheet . and much, much more. American entrepreneur and financial writer PHILIP L. CARRET (1896-1998) is also the author of Buying a Bond.
376 pages, Paperback
First published January 1, 1975
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Displaying 1 - 9 of 9 reviews
June 7, 2012
I had to sell my organs to meet a margin call, and I finally understand why!
August 21, 2018
Every year, every business cycle and every decade has its hero. Few keep the track record over an extended time period so one conclusion is that he or she just happened to be long or short the asset proved right to be long or short at a certain time. Philip Carret (1896 – 1998) cannot be accused of being a one hit wonder.
He was the founder (in 1928) of the Pioneer Fund which he ran for 55 years, during which an investment of $10,000 became $8 million. Warren Buffett said of him that he had "the best long term investment record of anyone I know". (This is actually the longest measured successful period, confirmed by the book “The World’s 99 Greatest Investors”.)
However, he was not off to a good start since the fund lost money in the stock market crash of 1929 and the Great Depression that followed, but from the mid-1930's Carret had an amazing performance. How many would have stayed with his/her investment philosophy after negative returns for such a long time?
Two years after starting the fund ''The Art of Speculation”, was published. It was originally written as a series of articles for Barron's in 1927 and described the process he used for his investing. He was around 30 years writing these articles/book and starting the fund. To keep one’s head cool living through the mother of all bullmarkets is clearly an achievement in itself, especially when being in the early 30’s.
Keep in mind that Benjamin Graham’s Security Analysis was published in 1934. My guess is that The Art of Speculation meant a lot to Mr. Graham and you could argue that the contents of the two books are rather similar. However Carret’s book is clearly the lighter version. The good news then is that this book is a much easier read, and also I think it makes some very good observations in the end. The text is obviously dated and irrelevant in some instances and sometimes the author is a bit slow to make obvious points.
The book is beautifully wrapped up in the last chapter with “Twelve commandments for the speculative investor”. These and his comments have travelled well since they were written. My top 4 are below.
• At least once every six months, reappraise every security held;
• Seek facts diligently, advice never;
• Borrow money sparingly and only when stocks are low, money rates low and falling and business depressed;
• Set aside a moderate proportion of available funds for the purchase of long-term options on stocks in promising companies whenever available.
The author’s intro: Successful speculation requires capital, courage and judgment. The speculator himself must supply all three. Natural good judgment is not enough. The speculators judgment needs to be trained to understand the multitudinous facts of finance. It is the hope of the author that this book can be of assistance in that connection.
I agree with his statement and hope that many more read this wonderful book.
He was the founder (in 1928) of the Pioneer Fund which he ran for 55 years, during which an investment of $10,000 became $8 million. Warren Buffett said of him that he had "the best long term investment record of anyone I know". (This is actually the longest measured successful period, confirmed by the book “The World’s 99 Greatest Investors”.)
However, he was not off to a good start since the fund lost money in the stock market crash of 1929 and the Great Depression that followed, but from the mid-1930's Carret had an amazing performance. How many would have stayed with his/her investment philosophy after negative returns for such a long time?
Two years after starting the fund ''The Art of Speculation”, was published. It was originally written as a series of articles for Barron's in 1927 and described the process he used for his investing. He was around 30 years writing these articles/book and starting the fund. To keep one’s head cool living through the mother of all bullmarkets is clearly an achievement in itself, especially when being in the early 30’s.
Keep in mind that Benjamin Graham’s Security Analysis was published in 1934. My guess is that The Art of Speculation meant a lot to Mr. Graham and you could argue that the contents of the two books are rather similar. However Carret’s book is clearly the lighter version. The good news then is that this book is a much easier read, and also I think it makes some very good observations in the end. The text is obviously dated and irrelevant in some instances and sometimes the author is a bit slow to make obvious points.
The book is beautifully wrapped up in the last chapter with “Twelve commandments for the speculative investor”. These and his comments have travelled well since they were written. My top 4 are below.
• At least once every six months, reappraise every security held;
• Seek facts diligently, advice never;
• Borrow money sparingly and only when stocks are low, money rates low and falling and business depressed;
• Set aside a moderate proportion of available funds for the purchase of long-term options on stocks in promising companies whenever available.
The author’s intro: Successful speculation requires capital, courage and judgment. The speculator himself must supply all three. Natural good judgment is not enough. The speculators judgment needs to be trained to understand the multitudinous facts of finance. It is the hope of the author that this book can be of assistance in that connection.
I agree with his statement and hope that many more read this wonderful book.
March 14, 2017
Timeless principles from a 1930 classic, one of the most underrated investors. Misleading title, provides insightful comments on analysing companies from a business perspective.
October 18, 2021
Written in 1930, still relevant 91 years on!
October 29, 2025
Some of the contents are definitely outdated considering when this book was published.
However, that does not negate the fact that one can extract valuable insights from this book regarding balance sheet accounting, defensive stocks, a little bit of technical analysis, and market psychology. I think the author deliberately decided to provide not too comprehensive a coverage on things. He could have gone into some very deep dive case studies. Maybe the work is left for the speculator !
After all, Do your own research.
However, that does not negate the fact that one can extract valuable insights from this book regarding balance sheet accounting, defensive stocks, a little bit of technical analysis, and market psychology. I think the author deliberately decided to provide not too comprehensive a coverage on things. He could have gone into some very deep dive case studies. Maybe the work is left for the speculator !
After all, Do your own research.
August 15, 2019
Incredibly intriguing as to the variety of investment vehicles that concerned the mind of Philip Carret. He is the founder of the pioneer fund and has great insight when it comes to the dealings in the financial sector. This is a bit of a historical read so be prepared for turns of phrases and colloquialisms that may or may not describe your negotiations and dealings.
December 17, 2024
- The panic of 1907 has a lot to do with interest rate. Interest rate was set originally low, but as it increases, cracks appear in the market.
- The San Francisco earthquake has a wide effect on the economy. But not visible at first
- Never try to time the market. Market gain stem mostly from long term patience. Ignore the sudden breakout of news and stay the course.
- The San Francisco earthquake has a wide effect on the economy. But not visible at first
- Never try to time the market. Market gain stem mostly from long term patience. Ignore the sudden breakout of news and stay the course.
May 23, 2023
A superb primer on investment; some parts are definitely dated, but the last chapter in particular is quite a gem. Additionally, the discussion of depreciation, valuations, and options still has relevance to today
October 11, 2015
probably a gem in the 1930s, many ideas remain relevant today
Displaying 1 - 9 of 9 reviews