Al Weiss. Market Wizard of Risk

Al Weiss was (I do not know if he still is) an independent fund manager interviewed by Jack Schwager in his book The New Market Wizards.

When Schwager made the interview, this guy had the best record in relation to the ratio profits/risks for the last decade.

Al Weiss trader

He used to have offers from people with a lot of money to manage their funds. However, after some time he decided to close the entrance in his fund and manage 100 million $.

He would accept some small customer if he saw sincerity, but he would refuse any institutional account. It seems that Weiss was not a greedy man and that he valued privacy and intimacy above other things.

He could manage 5 billion dollars, but he would have more problems. The truth is that there are people who do not too much money to live well.

Moreover, by doing this he would keep a low profile, far away from the media, in line with his personality.

Schwager said that this interview was one of the worst he made, but I found it quite interesting, despite its briefness. The interview was difficult because Weiss was quite a timid guy.

Al Weiss quotes

One of the first things he said was:

It was not an overnight process. I spent four years of solid research before doing any serious trading. After literally thousands of hours of poring over charts, going back as far in history as I could, I began to recognize certain patterns that became the basis of my trading approach.

This is very good. And you do not hear many great traders saying something like that. I mean before he decided to trade he spent thousands of hours studying the markets and historical data.

Most people will start trading with just a few weeks of months (and many even straight away). If we were not in such a hurry for winning, and would do like this man, we would save up a lot of money that traders usually lose in the beginning.

It does not mean that it will be easy after 4 years of study either. But it is true that studying hard and seriously, and we apply that to swing and trend trading, and not day trading, results will come sooner or later.

Another interesting thing he said:

In the case of the grain markets, I was able to go back as far as the 1840s.

Al Weiss cycles

Impressive, this man studied all prices as far as he could, for more than 100 years. And the more important fact comes later when he said that his trading was based on his perception of the economic cycles as well as on technical analysis. That is why his trading strategy varied depending on the cycle he thought the economy was in.

It is very important despite the fact that Schwager did not seem to realize. If you know that when the dow gold ratio is approaching one (like in the seventies), it is very likely that there will be a great bull market in stocks (the stock market was ranging in the seventies). Then you could act accordingly.

It is important to have a notion about where the economic cycle is, and what the long term interest rates are telling us.

That fact may serve as an “edge” over many people. A lot of people do not care about this and invest for the long run in the middle of a kondratief winter (like now).

Those who trade knowing the theory of cycles, and use some technical analysis know that the probability of a big bear market is very high. Then it will be time to be short in a big way again.