Now you can learn to profit when financial markets rise and fall. With Secrets for Profiting in Bull and Bear Markets by Stan Weinstein, you get a book that provides you with practical tools that you can use to win when markets fall and rise.
Author: Stan Weinstein
Topics: (1) Finance, (2) Trading, (3) Framework
Year: 1988
Number of Pages: 368
Language: English
Publisher: McGraw-Hill
Summary
“Secrets for Profiting in Bull and Bear Markets” is the book where the author Stan Weinstein describes his successful methods for timing investments, which will deliver good results over time. The topics in the book range from Stan Weinstein’s personal investment philosophy to the ideal time for buying and selling (shorting), refining the purchasing process, and the best long-term indicators to spot Bull and Bear markets. Thus, it covers all the essential topics for delivering consistent and good results.
You cannot read good contemporary books on investment and trading without encountering a recommendation of Stan Weinstein’s Secrets for Profiting in Bull and Bear Markets. Those of you who have read Mark Minervini’s books know that this book tops the list of books he recommends. The same applies to David Ryan, who mentions this book in Jack Schwager’s Market Wizards as one of the essential books in technical analysis. The book’s technical framework is based on what the author calls stage analysis. Here four different “stages” are distinguished:
Stage 1: The Base Area (A period where a price moves within a range)
Stage 2: The Advancement Phase (This is where the price rises sharply)
Stage 3: The Top Area (This is where the price starts to peak after significant increases)
Stage 4: The Falling Phase (The phase where the price falls sharply)
According to the author, these different phases can be identified using a 30-week moving average. Then, characteristics are discussed when the price shifts between the different phases. You’ve rarely got your money’s worth within two chapters of buying a book, but this is indeed the case with this book. It is a recommendable book that both beginners and more experienced investors can use. The reasons why this book is good include:
- You are introduced to technical concepts in an easy way supplemented with many different examples.
- You are presented with a complete investment framework, where you are guided through everything from entry/exit to stop losses to how to short stocks.
- There are quizzes along the way where you can test your knowledge about what you’ve just read.
The methodology that Stan Weinstein uses is very much in line with the style used by Jesse Livermore and Nicolas Darvas. Basically, the process of finding the best stocks is as follows:
- Identify the market trend (rising or falling trend)
- Identify the strongest groups (industries, sectors, etc.)
- Identify the strongest stock in the strongest group (technically)
- A strong stock technically is identified by the following points:
- No resistance if the stock breaks out of the base (support/resistance)
- High relative strength (Stock’s development relative to the market)
- The stock is moving in an upward trend (using a 30-week moving average)
- The stock breaks out of support/resistance (moving averages, trend lines, etc.)
- Breakouts occur on favorable volume increases.
There are a few things where you can be critical. One is that some of the charts in the book could be clearer and easier to read, and thus detract a bit. However, remember that the book was published in 1988. Another thing is that the author uses a 30-week moving average (30WMA), and you can question whether this is as relevant today as it was in the 1970s and 1980s. In addition, the book could also have been filled a bit more with material about money management, position sizing, and how to size your positions in what he calls “continuation trades”. However, these things are minor and do not affect the overall impression of the book.
Even if you have your investment process and way of doing things, or if you’re completely new, this is a recommendable book which you can use to supplement your investment framework or use to build your investment framework. It’s rare to find such practical books with successful applications in this field. All essential areas of an investment process are touched upon, which is also a rarity. All of this combined makes the book highly recommendable.
Rating
We have chosen to give “Secrets for Profiting in Bull and Bear Markets” the following rating:
Overall rating: ★★★★★
Overall, it is a truly recommendable book, where you are trained in a highly successful investment process focusing on achieving good results in both good and bad periods.
Style: ★★★★★
It is a relatively easy book to understand in terms of language. It clearly reflects that the author wants to appeal to new investors.
Structure: ★★★★★
The structure is perfect and the way you are guided through the different chapters matches what you have learned in the previous chapter. It gives a sense of the book being cohesive.
Level: ★★★★★
The level is very good and should be OK readable even for new investors. Investment terms are used, but there is an in-depth review of these at the beginning, which you can refer to on an ongoing basis.
Technical: ★★★★★
Since the book is aimed at new investors, this is also something that can be reflected in the technical level of the book. It should be relatively manageable even if you do not have a technical background.