INSIGHTS
INTO THE MINDSET OF SUPER TRADERS – Part 4
“It is
easier to make money if you start with a good mentor: but mentors that make
millions on their own and still accept to teach are really few in the industry.” - Dr. Emilio Tomasini
Name:
Martin Zweig
Date
of Birth: July 2, 1942, Cleveland, Ohio
Nationality:
American
Profession: Stock investor, investment adviser and financial
analyst
Career
In 1964, Martin took his first degree at Florida Wharton
School of the University of Pennsylvania. In 1967, he obtained an MBA from
University of Miami, and after that he got a Ph.D. in finance, from Michigan
State University. That was in 1969. He also taught finance at some colleges.
Immediately after obtaining his Ph.D., he created a popular market indicator
called the puts/call ratio. Using a combination of technical and fundamental
analyses, he started writing articles and predictions about the markets in
Barron's magazine.
He founded his own small-scale market newsletters, the Zweig
Forecast. For many years, his articles and predictions were noticeably accurate
and thus, became popular. He appeared publicly on TV programs, and became more
popular because of accurate timings of market movements. For example, On
October 16, 1987, he predicted that the stock market would crash. On October
19, 1987, his prediction came to pass. No sooner had the oracle spoken than his
prophecy came to pass. In 1986 he wrote a book titled “Winning on Wall Street.”
As a successful mutual funds manager, he was the chairman of
Zweig-DiMenna Associates, Inc. Noted for his extravagant and lavish lifestyle;
he owned the most expensive residence in the US at the time. In March 2013, the
residence was worth $125 million. Towards the end of his life, he appeared less
in public.
He died on February 18, 2013, on Fisher Island, Florida.
Insights:
- Martin’s dream
to become a great trader and a millionaire began in his early teenage
years. He bought his first stock at age 13 and vowed to become a
millionaire in life. Whatever your age may be, you can make a decision
right now to become a profitable trader.
- He was seriously
inspired by a great trading legend – Jesse Livermore. He loved to read
Edwin Lefèvre’s book, Reminiscences of a Stock Operator, a book about
Jesse Livermore. Martin’s trading method was based on the inspiration he
got from Jesse. His trading method also has some features that were
similar to William O'Neil's highly successful CANSLIM investing method.
Who’s your role model? Who’s the person that inspires you to greatness in
trading?
- His trading
method combined technical and fundamental analysis, including certain
characteristics of the markets he was interested in. The trading approach
worked for him. In addition to
this, he admitted that risk minimization and loss limitation are crucial
to his trading method.
- According to
Martin, people somehow think you must buy at the bottom and sell at the top
to be successful in the market. That's nonsense. The idea is to buy when
the probability is greatest that the market is going to advance.
- His book that
was written in 1986, “Winning on Wall Street,” proved to be extremely
helpful to investors who followed the advice in the book. They really won
by following his trading ideas. As a result of this, he was featured in
other books, like John Reese’s “The Guru Investor: How to Beat the Market
Using History’s Best Investment Strategies.” Yes, if you’re successful
enough, people will write about you.
Conclusion: In order to be a success, you’ll need to
understand what make people fail. To appreciate how to attain everlasting
success, you need to learn how traders’ careers can become short-lived. Many a
person only wants to know how to become profitable in the markets, but you
should be concerned about how to fail so that you can eventually avoid that and
experience the opposite of failure. You should be aware of the factors that can
kill your dreams as a trader and avoid those things as a plague.
This article is ended with a quote from Martin:
“I measure what's going on, and I adapt to it. I try to
get my ego out of the way. The market is smarter than I am so I bend.”
