OK, so I went to Amazon and this is what I found:
By Charles E. Harper (Charlottesville, VA) - See all my reviews
The book is a fun read. It describes Mr. Weinstein's chart breakout method. The problem is that Mr. Weinstein does not provide a track record of his method in the book. I was able to find a 1998 reference from the Business Week website citing a ten-year return of his now-defunct Professional Tape Reader service of 7.13% per year. The S&P returned approximately 15% per year over the same period.
Interestingly, the New USA Fund, established by David Ryan, and using another breakout strategy, that of Investors Business Daily's CANSLIM method, posted only a 3.14% return per year from April 1992 to May 1995. This was after he had won some U.S. Investing Championships with over 100% gains. This fund is now defunct.
When you look at charts of stocks that have had big runups, you will often find a breakout from an area of consolidation. The problem is that careful examination of charts of stocks in general will reveal these same patterns, often not followed by a big price move. Any decent method will show periods of spectacular return, but the vast majority won't beat the indices long-term.
The main value of this book, in my opinion, is reinforcement of the importance of risk control and exit strategy. Don't buy this book expecting to find the Holy Grail of investing.
AND
By A Customer
I bought this book because of the high ratings in Amazon. I must say that I fail to see why it deserves such high ratings.
The book introduced one central theme - look for a big volume jump when the price crosses the 150-day moving average - and was repetitive after that. The book tried to discuss chart patterns (e.g. head-shoulders) but was pretty lame. The book did not mention anything about other market indicators such as MACD, RSI, etc. Were these indicators unimportant? Were these indicators not in fashion back in 1990? I was perplexed. If you are looking for an introduction to technical analysis, there are better tutorials out on the web than this book (just google "technical analysis"). Save your money for your next investment.
So it appears that if one were to go to a bookstore and do a quick read, the main idea of the book could be grasped in a 15' session.
Isn't it interesting that
Weinstein and
Ryan, when given the chance to run their own funds and put their ideas in actual practice, did worse than average?
Is beating the index a hard thing to do? I don't know. Personally, I have a 23% average and that does not take into account my recent return average of 73%. I am neither a classic TA or fundamentalist. In fact, I would state that my main strategy is to be as conservative as possible.
I believe there are benefits to reading the charts and "the tape". Yet, I am in general agreement with the sentiment that most TA is like astrology. For me when looking up the night sky at the stars, some people will see patterns like the zodiac and make some kind of belief system based on that (astrology). Others look at the stars, make measurements, test hypotheses, and develop a science (astronomy).
Thanks Gunnski and others for your book recommendations. I do read your suggestions and often check them out at Amazon or at my local bookstore. I am always looking to educate myself.
-JD