Martin Zweig's Winning on Wall Street

I almost hate to tell you how good this book is, for fear that Zweig's Stock Screen will quit working for me if too many people know about it. I read the book, and in early 2005 I started using Zweig's stock screen (US stock market). The S & P500 made less than 5% in 2005, but I made 36% in 2005 on my portfolio using Zweig's screen! Here's how I did it. First, I got an account at Scottrade, where each trade costs only $7. Then I joined the American Association of Individual Investors, which sells a computer program called "Stock Investor Pro". Stock Investor Pro has Zweig's screen (and a bunch of others) already programmed in, and you can download fresh stock data each week. Each week, somewhere between 10 and 25 stocks pass the screen. I base my buy/sell decisions on those results. AAII also independently rates all those stock screens, and the long term perfomance of the Zweig screen topped all the others for cumulative gain from 1998 through 2005. In any given year, another screen may top Zweig's performance, but his screen is the overall winner by far. Even during the tech bubble collapse of 2000, Zweig's annual return was positive. It's annualized rate of return was over 40% over that 8 year period. That's an ANNUALIZED rate of return, not the cumulative rate of return. Don't believe those people who tell you that you can't do better than the S & P500 over the long term because the market is "efficient". I don't know what they're smoking, but it can't be too healthy.

As a matter of fact Martin Zweig is one of the few Phds who's "able" to explain even somewhat complicated subjects in plain words. The same thing can't be said about the contemporary authors of various market, finance or economics books published over the last years. Hands down, this is one of the best and one of the most (again) simple books ever written on Wall Street. It provided me with new insights on different aspects of trading and economics in general, like the Four percent model indicator, the Monetary model, the Mutual Funds cash/assets ratio, the three crucial conditions for bear markets. There were also other brief and concise ideas which seem to stand the test of time, like "It's ok to monitor the crowd and go against it, but you only want to do so when the crowd is extremely one-sided", "Recognizing the relationship between trends and the industries that might benefit from them can lead to above normal returns", "If you could just eliminate the worst 10% of all stocks and choose even randomly from the rest, you would certainly beat the market". And the most surprising of them all (at least to me): "There seems to be some inborn reasoning in Wall Street that better profits mean higher stock prices, but this simply is not true in aggregate. The best gains made in bull markets tend to come in the first six months of a fresh bull market, when profits are usually declining". But when it comes to the brass tacks of his methodology, I think the best part of this book is the one about scanning the financial section. His method of picking the winners by simply checking the latest quarterly figures in company sales and earnings in the daily financial section of The Wall Street Journal or The New York Times and the process he goes through afterwards, until deciding in the end which ones to buy is simple, yet very powerful. I don't know why, but almost every single page of this book reminded me of the legendary Jesse Livermore and his valuable and immortal lessons. After reading M. Zweig's book you'll never invest the same way as before. "Winning on Wall Street" is an intelligent and insightful investing book, yet simple to understand. Rather than trying to razzle-dazzle the reader, this book explains why it is so important to stick to simple concepts and rules such as " buy strength and sell weakness, stay in gear with the tape, the trend is your friend, etc"; rules you have read and heard about a gazillion times before, but which are so easy to violate! As a trader once said: "The market is the train, so be the caboose".

Winning on Wall Street is the first book I ever read about investing (back in 1990). Marty Zweig may not be the most glamorous or charismatic guru, but his disciplined and unemotional approach to the markets is what makes him my most revered market player. Famous for calling the 1987 crash (forever captured on the archives of Wall Street Week), Zweig has receded from public view considerably. He discontinued his valuable Zweig Market Letter about 5 years ago and ever since Rukeyser disbanded his elves, Marty rarely shows up on the show. So, this is your best opportunity to tap the mind of an investor whose success has lasted for decades.Admittedly, Zweig's writing style is fairly academic (he's a PhD). The book is different from many in that much of it works to set forth a model which will allow you to be on the right side of the general market for its major moves. When you boil it down, the primary influences on the model are interest rates, and measuring the underlying strength of the averages. I can now attest firsthand to the durability of this model - I have been dutifully running it myself since 1990 and it has performed admirably. Major BUY signals came in 12/90, 1/96, and 1/01. SELL signals came in 5/94 and 9/99. Again, those were not perfect bottoms and tops, but allowed you to participate in the major upmoves and avoid significant stretches of downward activity. Other useful discussions include those on sentiment and seasonal indicators. The fundamental portion of the book leaves something to be desired - stock picking is not Zweig's strong suit. By the way, opinions suggesting that Zweig is a speculator are off the mark. In fact, his approach is designed to 1) minimize risk, and 2) catch the majority (middle portion) of a market move. (...) Winning on Wall Street has become one of my best reference tools. If you are serious about building your understanding of the markets and improving your investment results, this is a book that you must own.

A basic work that every investor should read. The best source for simple explanations of the mechinisms that drive bull and bear markets. "Outdated and misleading" says one reviewer who did not find it applicable for trading the .com mania in Feb 2000, but why that market crashed a month after the review was written can be found in Mr. Zweig's work. The fact is the theories and applications found in this book have correctly called every major market move since the mid 1980's. You can find books that can help you make more money during bull markets, but if you want to KEEP the money you make this is the best place to start.