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93 of 95 people found the following review helpful:
5.0 out of 5 stars
A Detailed Guide for Trading Seasonal Patterns, December 13, 2005
This review is from: The Almanac Investor: Profit from Market History and Seasonal Trends (Paperback)
As someone who maintains two free trading websites that attract a reasonable amount of traffic, I am regularly asked to review (read: promote) various trading services, software programs, books, and other products. The vast majority of these requests I decline. Almost everything I review is something that I have used or currently use myself and have found helpful to my own trading. In this review, I will bundle two related books: Stock Trader's Almanac 2006 by Yale and Jeffrey A. Hirsch and The Almanac Investor by Jeffrey A. Hirsch and J. Taylor Brown. Although there is inevitable overlap between these volumes, they meet different needs.
I am a short-term trader by design-my holding periods average minutes, not days or weeks-so the information found in the Stock Trader's Almanac is most helpful to me as context. The Almanac is a spiral-bound book that is designed as a desktop companion for traders. Much of it consists of a calendar annotated with historical trading tendencies for that day, major holidays and market-moving events, and thought-provoking quotes. A typical notation in the calendar, for example, reads, "Week After Triple Witching Dow Up 11 of Last 14". Next to days that have significant historical directional tendencies, there is a picture of a bull or bear. That is the kind of context that is helpful to a short-term trader.
Where the Almanac shines, however, is in its pattern-based research. Among the broader patterns described in the book are market tendencies following bullish and bearish Januaries; best performing months in the market; best performing days of the week; and best performing months of quarters. Such information is useful context to longer-term investors as well as traders. Literally dozens of seasonal patterns are detailed in the book. It's a true research accomplishment.
This brings us to The Almanac Investor. It's a larger book, subtitled "Profit from Market History and Seasonal Trends". The first part of the book is organized month by month, reviewing the seasonal and historical patterns associated with that month's trading. As such, it is an organized review of the major findings of the Almanac. The next segment of The Almanac Investor is arranged by time frame and details trading patterns that range from half-hourly to weekly, monthly, annual, and beyond. A fascinating section revisits George Lindsay's "Three Peaks and a Domed House" pattern-something probably unknown to many newer traders who never experienced Lindsay's pioneering work. (For the record, his observations on "separating declines" and "middle sections" of moves might be more valuable than his more eye-catching peaks and dome pattern).
The next section of the book is where it really shines. There is a detailed accounting of the seasonal patterns associated with various market sectors, using long-term historical data with sector indices to establish the tendencies. For instance, The Almanac Investor tells us that the banking sector tends to be strong from October through June, but natural gas issues trade well from February to June. From these data, seasonal trading strategies with sector-based portfolios can be constructed. A very useful compilation of all available exchange-traded funds (ETFs), along with their price histories and major holdings, is designed to help readers implement such portfolios.
If I had to put it in a nutshell, I'd say that the Stock Trader's Almanac is a day-to-day desktop tool for staying on top of daily and larger market patterns; The Almanac Investor is a tool for trading those historical and seasonal tendencies. Both are clearly organized and well-written. My only caveat is that the analyses do not include actual statistical tests of significance, which is understandable given that they are not academic treatises. If you set alpha (the probability of chance occurrence below which you're willing to say a finding is significant) at .05 and then run analyses on every day, month, season, and year, you're bound to identify a number of tendencies that occur by chance alone. For that reason, I would not trade any of these patterns mechanically. I do, however, focus on the most robust patterns and utilize them as context for trade ideas. That alone makes both volumes highly worthwhile.
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21 of 22 people found the following review helpful:
5.0 out of 5 stars
Comprehensive Guide to Stock Market Seasonality and Patterns, March 28, 2006
This review is from: The Almanac Investor: Profit from Market History and Seasonal Trends (Paperback)
The Almanac Investor is a welcome addition to Hirsch's long-standing and indispensable annual Stock Trader's Almanac. Jeff Hirsch has co-authored the almanac with J. Taylor Brown, a VP at the Hirsch Organization. The 500+ page soft cover almanac provides investors and traders with useful insights into the stock market's performance over almost six decades. There are recurring patterns in the stock market and those who study history can put the odds in their favor. The Almanac is divided into three parts:
Part I covers indicators and patterns (e.g., weekly, monthly and annual data, the 4 year presidential cycle, the decennial cycle, bull and bear markets since 1990, and how war and peace impacted the markets).
Part II reviews seasonal sector investing and focuses on the best months to own 19 sector indexes (e.g., semiconductor, real estate, oil, and healthcare products) and their performance statistics. Each sector's performance is tracked on four pages pinpointing the performance during the best seasonal periods compared to buy-and-hold, a price chart typically ten years in duration, the top stocks of the index, the best and worst months performance, and the performance by each month of the best monthly time period. At a glance the reader can easily spot the trends that are persistent over time.
ETFs have grown tremendously in volume and importance over the past few years, and the almanac provides detailed information on most of them in Part II. There is a separate chapter devoted to almost 200 ETFs, including a description of the ETF, its top ten holdings, top sectors, and recent price chart. An index lists all the ETFs alphabetically, as well as by their category (e.g., large cap, Latin America, software, etc.) for those investors who want to compare the ETF composition and performance by category.
Part III is a vast database of monthly price history of the Dow Jones Industrial Average and Standard and Poor's 500 from 1950 through June 2005, the NASDAQ Composite since its inception in 1971, and the Russell 1000 and 2000 since 1979.
Investors and traders who are looking to put money into the stock should definitely consider the eye-opening patterns and seasonality that have occurred in the stock market for decades. Realizing that there is no guarantee on Wall Street that patterns will persist into the future, the knowledgeable investor/trader will benefit from this encyclopedic array of information. Individuals purchasing this almanac are offered a free 60 trial of the The Almanac Investor Online Research platform which is updated continually. Overall, the almanac is a "must have" for any serious investor or trader.
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26 of 29 people found the following review helpful:
3.0 out of 5 stars
Some Useful Information Worth Knowing, March 11, 2006
This review is from: The Almanac Investor: Profit from Market History and Seasonal Trends (Paperback)
If you study the markets, you will come across all kinds of 'cycles' and 'effects' that have correlations to whether the market goes up or down. In many instances, why these correlations and patterns exist is unclear. With that being said, just because we don't know why something happens does not mean we should just ignore it.
This book provides information on many patterns and seasonal effects that seem to correlate to the market. While you may not want to use these patterns as your primary investment decision making tool, to ignore them is to ignore patterns that exhibited high probabilities (70%, 80% even 100%) of repeating, just as they have, in many instances, for 100 years or more. If the market has gone up in every year ending in the number '5' (1995, 2005) for the last 100 years, do you really want to bet it will go down the next time?
This book is mostly a reference guide that contains interesting and useful information about patterns that occur on different time frames --- daily, weekly, monthly, yearly. If you want to 'stack' the odds of a successful trade as much as possible in your favor, you probably will benefit from having this as a reference book.
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