Intermarket Analysis and Investing: Integrating Economic, Fundamental, and Technical Trends

A thorough, if academic and somewhat dated, explanation of the various forms of stock market analysis.

Published posthumously, this second edition of Gayed’s 1990 book was republished “without updates or changes, keeping it true to the original in his honor,” writes the author’s son in a foreword. Interestingly, this may be both the book’s greatest strength and weakness. As a textbook on analysis, the work is solid and timeless. Gayed carefully and methodically describes the process of investing in stocks. Then, in detailed individual sections of the book, he fully describes and lays out the assets and liabilities of three distinct methods of analysis: economic, fundamental and quantitative. In the context of these analytical schools, the reader is likely to learn a great deal about business and stocks in general. In discussing economic analysis, for example, Gayed covers the business cycle, inflation and interest rates, the composite index, and leading, lagging and coincident indicators. The section on the fundamental school of analysis, which the author says is “by far the most widely used by the majority of Wall Street professionals,” includes a comprehensive discussion of financial statements, an excellent subsection that explains the importance of analyzing businesses by industry groups and an overview of fundamental investment dynamics, including book value and the power of earnings. In describing quantitative market analysis, Gayed addresses the tenets of market timing and describes the difference between top-down and bottom-up market timing. When the author turns his attention toward investment strategies, however, the downside of a 20-year-old text may be evident. Indeed, using the “Crash of 1987” as the primary example to teach a lesson about investment strategy is hard to justify when the Great Recession of 2008 goes unmentioned. Despite this omission, which should have at least been acknowledged with an editor’s note, the principles discussed by the author do, in fact, apply across the decades.

With scrupulous attention paid to factual accuracy and detail, Gayed’s volume could easily function as a fundamental text on stock market investing, but it may overwhelm the average investor.