Fw: non [CANSLIM] Stan Weinstein

From: "Dean Edwards" <d_edwa00@ihug.co.nz>
Subject: Fw: non [CANSLIM] Stan Weinstein
Date: Sun, 15 Nov 1998 14:00:20 +1300
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That figure does not match this source

http://www.businessweek.com/1998/10/b3568137.htm

for the Professional Tape Reader


I just want to make a few comments:
I don't know anything about Stan Weinstein, not a "fan",  haven't read his
book nor am I a subscriber to  his newsletter. I am just using common sense
here. If his returns
were that lousy, his publication should be defunct by now. The stock market
on average, for the S&P 500 over the last 50 years has returned 11 percent
per annum compounded. Using the law of regression, some years the S&P 500
will be above
that figure and below. But like betting at the casino, the odds are
mathematically fixed against you. In the the long run you are dead as they
will grind out their 2.5 percent winnings on every bet. The same could be
said for the S&P 500, the odds are stacked gainst you as well, if you
continue to bet  on  S&P 500 being below sub-performance.

Question: Would you put money into mutual fund that has made an outstanding
performance return of between 50-100 percent the previous year? I wouldn't.
The odds are against you, that it will revert back to its regression mean or
average annual performance over the last 3-5 years. William O'Neil appears
to be a contrarian as well. The remarks he has made, concerning "diversified
growth mutual funds", is to load up when the mutual fund is in a bear
market.  "When stocks recover after a bear market, these funds will recover
as well - they almost have to."

Two things are going to happen.  With regard to all those newsletters. The
next 10 years is a catching up period. The "newsletter group" does well as
whole and the  Professional Tape Reader has above average performance,
against its peers.

Or the system or results have been flawed: Business Week appears to have
used a different set of figures "Annualized, 1988-97" while  fund advice
forTable 1: Newsletter performance 1987 to 1998 has used another set of
figures, 8/87 to 8/98.
Let us now  put this in perspective. When ever I was interested in investing
in a mutual
fund in the late 1980's early 90's, I always noticed a strange anomaly. The
mutual funds would give their annual performace, 3 year or 4 year
performance but decided for some strange reason, to leave out their 5 year
performance. This would have seriously
damaged or eroded their performance as a whole. Because of the 1987 crash
had affected their results. Enough said!

I always like to confrim a source with at least 2 independent reports. For
the very reason, it could be bogus report or a mistake. It was reported by
CNBC (how reliable are they?), " that all Technical Analysis Mutual Funds
AND Market Timing Funds underperformed the S&P index for the last six years"
Nothing remarkable about that.
But if you analyse this further, the only article that I have read,  which
specifically did an indepth review on a technical analysis fund, was in the
Forbes magazine. Yes, this fund did underperform the S&P 500, but they has
less volatility as a consequence. It appears, they did not ride out the bear
crashes or the substantial corrections that occur in the stock market from
time to time.Thet were doing market timing to get out of the market.  Most
investors panic when the stock market crahes, so investors and the fund
manger of this technical fund felt  more"peaceful", when did not have to
live through a gut wrenching calamity.

Martin E. Zweig has said the same thing and he has also under performed the
S&P 500 as well.  He is not the same fund manager;  mentioned  in the
previous paragraph. By the way, he has done away with his famous news letter
to concentrate solely on mananging a  billion dollar hedge fund. Must be
more money in it. :-) He reckons its too time consuming writing a news
letter. Wants to free up his time, spend more time with the children  etc.

Last but not least is my favourite piece from Ed Seykota from Market
Wizards. The analogy is the same for news letters.  "Management wanted me to
change the system
so it would trade more actively, thereby generating more commission income.
I explained to them that it would be very easy to make such a change, but
doing so would seriously impede performance. They didn't seem to care." How
many people have the patience of Warren Buffet. Able to buy a stock and own
it for the next 10-20 years and just forget about the stock market.

- -----Original Message-----
From: Johan Van Houtven <Johan.VanHoutven@ping.be>
To: canslim@lists.xmission.com <canslim@lists.xmission.com>
Date: Sunday, November 15, 1998 4:24 AM
Subject: non [CANSLIM] Stan Weinstein


>Stan Weinstein, know to many on the list as the author of " Secrets for
>profiting in Bull and Bear Markets" also publishes a newsletter named "The
>Professional Tape Reader".
>
>Do you know what his annualized Newsletter performance is frim 1987 to
>1998? Take a wild guess...
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>1%.
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>This figure comes from the table I mentioned in the previous post.
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>The article has certainly given me some things to think about.
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>Johan
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