Zweig begins his book by sharing some of his life stories with the reader – about investing, and some examples of ‘life lessons’ along the way – giving us an insight into how he learned his craft. Zweig points out that Edwin Lefevre’s Reminiscences of a Stock Operator inspired him – a book that we reviewed and recommended earlier in this series. He then goes on to explain his methodology. In a nutshell, he uses a combination of fundamental analysis and technical analysis, as we do at Cadence. Zweig’s model relies on macroeconomic indicators (such as interest rates and prime rates) as well as using ‘momentum’ indicators.
The author explains his model with a high level of clarity; it is easy to understand. He does a good job supporting his model with data, although as a result the book is written in a somewhat academic style. Zweig also writes about market sentiment and its cyclical nature. He explains in detail how to time the market (using a series of sentiment and seasonal indicators), how to pick which stocks to invest in and, once invested, how to benefit from using stop-loss orders.
The book was written in the late 80’s so some of the information might be out of date. However, the key message of the book remains relevant: a model that combines technical and fundamental analysis can outperform the market.
Zweig writes in an objective, unbiased style that is effective. Winning on Wall Street is also an insight into how successful investors think about, and build, their investment models. We recommend this book for anyone interested in investing – particularly those keen to learn more about macroeconomic indicators and timing the market.