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Since 1972, he is the editor of a financial letter
(The Professional Tape Reader) which is headquartered in Hollywood, Florida
and which counts more than 15 000 subscribers.
He is also the author of one of the technical
analysis books among the most accessible and pleasant to read that have
been published to date in the United States:
Secrets for Profiting in Bull and Bear Markets (in French: Secrets pour gagner en Bourse ŕ la hausse et ŕ la
baisse, published at Valor Editions). Among the French-written
books, it is probably the bestseller of the technical analysis books.
Weinstein is one of these gurus which have
anticipated the crash of October 19, 1987. On October 16, it has recommended
to the subscribers of its financial letter to liquidate 76% of their stock
positions. The same day, it has declared in the daily newspaper USA Today:
"What occurs in this moment, it is all except a normal correction of
the market, I expect an absolute massacre of the stocks next Monday". On
Monday October 19, the New York Stock Exchange recorded the biggest fall of
its history.
Not without reasons, Weinstein deplores the
esotericism of the majority of the books devoted to the technical analysis,
so complicated that only the authors and their disciples can understand what
it deals with. It denounces certain stereotypes conveyed by Wall Street
since ages, as the one which says that to beat the market it is necessary to
buy low and sell high. He rather thinks that it is necessary to buy high and
sell even higher. In this way, one can say that he is in favour of a
momentum approach of the technical analysis.
He says that a good technical analysis strategy must
be simple enough to be applied with constancy and effectiveness. It is the
discipline which counts. The worst tactics to be adopted is the one which
consists in being fundamentalist one week and technician the next week, or
to follow a technical indicator for a month and another indicator for the
next month.
The investment strategy of Stan Weinstein is one
which can be described as "top-down", because it goes from top to bottom.
Indeed, it starts with a technical analysis of the overall market in order
to determine if it is favorable or not; it then seeks to identify the
industrial sector indexes which are performing well; if the market is good
and that some industrial sectors are largely more "positive" that others, it
concentrates on two or three industries which show the most significant bull
signals and the lower risk of fall over the next months.
Once these questions are solved, the security
selection can be carried out with the stocks that match the technical
signals recommended by Weinstein.
André Gosselin
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