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THEHEDGE FUNDEDGEClick Here DownLoad Trading AdvantageTrading without Fear / Richard W. Arms, Jr.THENeural Network: Time Series Forecasting of Financial Markets I E. Michael AzoffOption Market Making / Alan J.Money Management Strategies for Futures Traders / Nauzer J. Balsara Algorithms and Investment Strategies / RichardHEDGE FUND Systems, Strategies, and Signals / Jake Bernstein Hedge Fund Edge / MarkManaged futures: An Investor's Guide / Beverly ChandlerEDGEBeyond Technical Analysis / TusharThe New Technical Trader / Tushar Chande and Stanley S.Trading on the Edge I Guido J. DeboeckTrading the Plan I RobertThe New Science of Technical Analysis / Thomas R. DeMarkMAXIMUM PROFIT/MINIMUM RISKPoint and Figure Charting / Thomas J. DorseyTrading for a Living / Dr. Alexander ElderGLOBAL TREND TRADING STRATEGIESStudy Guide for for Living / Dr. Alexander ElderThe Day Manual / William F. EngThe Options High Profit Low Stress Trading Methods I George A. FontanillsThe Options Course Workbook I George A. FontanillsTrading 101 / Sunny J. HarrisTrading 102 I Sunny J. HarrisAnalyzing and Forecasting Futures Prices / Anthony F. HerbstMark BoucherTechnical Analysis of the Options Markets / Richard HextonPattern, Price & Time: Using Gann Theory in Trading Systems / James A. HyerczykProfits from Natural Resources: How to Make Big Money Investing in Metals, Food, andClick Here DownLoadEnergy / Roland A. JansenNew Commodity Trading Systems & Methods / PerryUnderstanding Options / Robert Intuitive Trader / RobertMcMillan on Options I Lawrence G. McMillan on I Brendan Technical Analysis I John J. MurphyForecasting Financial Markets, 3rd Edition / Mark J. Powers and Mark G. CastelinoNeural Networks in the Capital Markets I Paul RefenesCybernetic Trading Strategies / Murray A. Ruggiero, Jr.The Option Advisor: Wealth-Building Using Equity and Index Options /Bernie G. SchaefferGaming the Market / Ronald B. SheltonOption Strategies, 2nd Edition I Courtney SmithTrader II: Principles of Professional Speculation I Victor SperandeoCampaign Trading / John SweeneyThe Trader's Survival Guide, Revised / Ted TesserThe Mathematics of Money Management / Ralph VincePortfolio Formulas / Ralph VinceThe New Money Management: A Framework for Asset Allocation / Ralph VinceTrading Applications of Candlestick Charting I Gary Wagner and BradTrading Chaos: Applying Expert Techniques to Maximize Your Profits / Bill WilliamsNew Trading Dimensions: How to Profit from Chaos in Stocks, Bonds, and Commodities /Bill WilliamsJOHN WILEY & INCNew York • Weinheim • Brisbane • Singapore • TorontoAcknowledgmentsThis book is printed on acid-free paper. ®Copyright © 1999 by Mark All reserved.Published by John Wiley & Sons, Inc.Published simultaneously in Canada.Two broad groups of people deserve recognition and thanks forNo part of this publication may be reproduced, stored in a retrieval system or trans-mitted in any form or by any means, electronic, mechanical, photocopying, record-the making of this book and for the events in my life that have leding, scanning or otherwise, except as permitted under Section 107 or 108 of the 1976up to it. The first people are what I term wind beneath myClick Here DownLoadUnited States Copyright Act, without either the prior written permission of the Pub-wings." These are the people who directly helped me in ways thatlisher, or authorization through payment of the appropriate per-copy fee to the Copy-made this book possible. The second group is what I term "theright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax(978) 750-4744. Requests to the Publisher for permission should be addressed to theshoulders of greatness on which I stand." These are people whosePermissions Department, John Wiley & Sons, Inc., 605 Third Avenue, New York, NYwork indirectly has been of enormous and help to me not10158-0012, (212) 850-6011, fax (212) 850-6008, E-Mail: PERMREQonly in putting this work but also in developing the con-This publication is designed to provide accurate and authoritative information incepts described in many of the chapters.regard to the subject matter covered. It is sold with the understanding that the pub-lisher is not engaged in rendering professional services. If professional advice orAmong those who have been the wind beneath my Iother expert assistance is required, the services of a competent professional personwant to thank my parents, particularly my mother, who through-should be sought.out my life has been willing to sacrifice anything to help me toachieve my dreams. I want to thank my significant other, AnitaLibrary of Congress Data: without whose consistent help and support none of thisBoucher, Mark, 1962-would have been possible. I am grateful to my coworkers for allThe hedge fund edge : maximum profit/minimum risk global trendtrading strategies / Mark Boucher.their hard work and effort. Thank you Larry Connors and othersp. cm. — (Wiley trading advantage)for proofreading and offering moral support. I also thank myIncludes index.partners in the hedge fund business, Tony Pilaro and Paul Sutin,ISBN 0-471-18538-8 paper)1. Hedge funds. I. Title. II. Series.whose faith and support led me into this industry. And I want es-HG4530.B68 1998pecially to thank Tom Johnson, my partner and friend, whose re- 98-18230search, faith, fascination, and support made this possible.Printed in the United States of America.This book is greatly enhanced by the previous efforts of oth-10 9 8 7 6 5 4 3 2 1ers who act as the shoulders of greatness on which this effortvi ACKNOWLEDGMENTSstands. First and I must acknowledge with gratitudethe contribution of Mr. "X," a great European money manager.He asked to remain anonymous, but near the end of his life, heshared with me his knowledge and system for financial success.Mr. X, your work will indeed live on and not just with me.Next I thank Marty Zweig and Dan Sullivan for their work onavoiding negative periods in U.S. markets, which provided amodel of what to strive both internationally and across otherasset classes. Also, thanks Marty, for all those wonderful correla-tion studies you filled your newsletter with each month forContents saved them all and sought to apply my own reworkingof them to our master models.William O'Neil has done tremendous work on stock selectioncriteria, emphasizing ways to find the top-performing stocks ineach market, and Frank Cappiello has done pioneering work onthe importance of institutional discovery in the odyssey of aIntroduction1stock's rise from obscurity to prominence. Meanwhile, NelsonThe Importance of Risk2Freeburg has applied a never-ending, incredible stream of timingHow It All Startedsystems to a whole host of asset classes providing me with many5How to Recognize a Market Masterinsights. Also, I am tremendously indebted to all the people at6Click Here DownLoadBank Credit Analyst for their rigorous work and insight into theUnderstanding Is Key to Success9liquidity cycle across most markets on the globe.Overview of the Approach in This Book9My heartfelt thanks go to Ludwig von Mises, Ayn Rand, andMurry Rothbard for their preservation of Austrian eco-1 The Risk of Traditional Investment Approaches16nomics, the ideals of capitalism, and truth. I am grateful for theThe Effects of a Long-Term Bull Market16work of Paul Pilser for putting economic myth in its place andLong-Term Returns in Equitiesbringing forth the theory of alchemy. I want to acknowledge19Stanley for his work on money management and JayProtection against Bear Markets26Schabacker for his brilliant melding of the liquidity cycle andBlue Chip Stocks28mutual fund selection.Investment Criteria30Finally, I thank Tony Robbins for reteaching me how toHigh Returns and High Tradeoffchange and grow and for exposing me to some of the ideas on35which this work is based. If there is anyone out there who has notSummary41yet drunk of the knowledge of any of the great innovators I haveacknowledged here, let me encourage you to partake immediately2 Pump That Artificially Primesfor your own enrichment.Investment Flows43Understanding the Austrian Interpretation ofM.B.the Liquidity Cycle45The Liquidity Cycle Illustrated with anIsland Economy48viii CONTENTSCONTENTS ixThe Liquidity Cycle in Modern Economies 51Disastrous Social Programs 198Timing the Liquidity Cycle 62Minimum Wage Policies 202Understanding Economic Gauges 89Economic Freedom Index 204Implications for U.S. Markets 100When Look for Countries withSummary 106Low Impediments to Growth 206 from Understanding Distortions 2073 Index Valuation Not Ignore theSome U.S. Distortions 209Price You PayEvaluating Government/Media Hype 220Using Index Valuation Gauges 111Secular Themes and Trends 227Limitations of Index Valuation Analysis 115Examples of Secular Themes and Trends 230Using Gauges for Mutual Funds 116Summary 239Valuation Gauges for International Markets 117Summary 1227 Equity Selection Criteria Long andHow Profits Are Magnified 2404 Macro Technical Sure the TideMutual Funds . 241Is Moving in the Right Direction 124Individual Stock Selection 245The Argument for Technical Analysis 125Identifying Meteors and Fixed Stars 248Click Here DownLoadTaking a Wider View 128Equity Fuel 261Using Technical Analysis to Confirm Trends 130Measuring Price against Growth 265Reading the Message of the Markets 132Modern Portfolio Theory Methods 270Overview of Technical Analysis 134Stock Trading Method . 273Answering Criticism of Technical Tools 146Summary 285Summary 1508 Other Asset Classes and Models to Exploit Them 2875 Containing Strategy and MoneyOutperformance and Asset Allocation 287Management Methods and the Principles ofBuilding a Portfolio 293Character Necessary to Achieve ThemExploring Asset Classes 294Money Management Rules 152Summary 327Principles of Character 1619 Asset Allocation Models and Global Relative Strength6 The Essence of Consistent a Portfolio 329Austrian Alchemy 168Using Asset Allocation Models 329Alchemy versus Economics 174Global Relative Strength: Radar Screen forThe Long-Run Growth Paradigm 180Flexible Asset Allocation 336Negative Tax Policies 190Summary 343x CONTENTSAppendix A: Strategies for Short-Term Traders345Trading Runaway Moves347Appendix B: Recommended Services,Data and Letters355Letters and Services355Data Services and Software358Books359Free Report360IntroductionAppendix C: Master Spreadsheet ofSystems Performance362Index365This book is written for every investor or orClick Here DownLoadwho wants a methodology to consistently profit from the marketswithout incurring huge risks.In this era of exploding U.S. and global stock manyinvestors are focusing most of their attention on returns, not onrisk. I can safely say that the methodologies advocated in thisbook offer highly pleasing potential returns. Our newsletter toclients has shown average annual returns of over 32 percent peryear since 1992, without a losing year and, morewithout a drawdown of over 10 percent (this has more than dou-bled the total return of the Standard & Poor's 500 [S&P] overthis period). During this same period, the funds I have con-sulted for have done even better in terms of both risk and re-turn, with real money, investing millions of dollars globally.And in researching the concepts on which these methodologiesare based, my colleagues and I have gone back to the early 1900sto verify their rigor. Thus while I am confident that the method-ologies described here can enable you to pull consistently largeprofits from the markets, I also hope that the book sharpensyour focus on two equally important factors ofand market understanding.2 INTRODUCTIONTHE IMPORTANCE OF RISK 3THE IMPORTANCE OF RISKduring the 1979 runup in gold prices. I had read several booksconvincing me that gold could do nothing but explode in price,Recounting a personal experience may be the most effective wayand I plunged my entire savings into options on gold stocks. Theto explain why risk should be of paramount importance to in-options took off, and my account surged by nearly 500 percentvestors. In the early when I was just nine years old, my fa-from March 1979 to January 1980. Pure luck helped, as I wasther died of cancer. He had struggled to try and leave me a trustforced to exit my December 1979 options just before the gold mar-fund with enough money to my future college education.ket peaked and crashed beginning in January 1980.Since I had at least a decade to go until reaching college age whenI had caught the speculative bug. By early 1980, I was regu-my father set up the trust, he put it into stock funds managed by alarly speculating in a host of highly leveraged commodity posi-bank. From the end of World War II to the late 1960s, stocks hadtions. Not knowing what I was doing, I lost small amounts ofbeen in a wonderfully bull market. The public was par-money consistently until 1981, when I got caught short Marchticipating in stocks to the highest degree since 1929, and the pre-Orange Juice during a freeze in early 1981. I was short Orangevailing wisdom was that if one just hung onto stocks over the longJuice, which shot up from around 80 to 130 in a series of limit-uprun, they showed a better return than nearly any other type ofmoves that lasted for more than a week and prevented anyoneasset. (This type of environment should sound quite familiar toshort from being able to get out of positions. By the time I couldinvestors of the late 1990s.)cover my shorts, I had lost nearly half of my account and moreThings did not go according to plan beginning in 1972. Fromthan half of the profits I had gained from gold's runup. My real1972 to 1975, the value of that trust fund declined by over 70 per-education had begun, and I realized that I needed to study thecent along with the decline in U.S. and global stock prices of asubject much more thoroughly to profit consistently from thecommensurate amount (the S&P and Dow dropped by aroundmarkets. The easy money I had first thought was for the takingClick Here DownLoad50% during this period, but the broader market dropped by muchhad really been luck. Having seen two accounts lose more thanmore than that). By the time I started college in the early 1980s,half their value, I now realized the importance of limiting risk.even the blue chip indexes had lost more than 70 percent of theirThe mathematics of losses and risk is sometimes lost on in-value from 1972 in terms. While my trust had re-vestors until they actually experience it up close and personally.covered somewhat from 1975 to the early 1980s, it was nowhereWhen your account drops 70 percent in value, that means younear the level it had been before my father died. In the earlywon't get back to breakeven until you have made over 230 percent he believed he had provided enough funds for me to go toon your remaining money. It hardly seems fair! One would thinkan Ivy League a decade later the diminished trust ledthat if you dropped 70 percent, you ought to be able to get back tome to opt for instead. In no way could the trusteven when you made 70 that is not the way it works.have covered the cost of an elite private school.As I started to voraciously study the works of investors who hadThe historical fact is that it would have been to pick amade significant long-run gains, I noticed that most great in-worse investment class than stocks from 1972 to 1982. Even ex-vestors and traders sought to keep drawdowns (their largest lossperts like John Templeton and Warren did poorly. This ex-from an equity high) around 20 to 30 percent or mostperience left me with a keen desire to understand what led tomeasured their gains in terms of the drawdowns they had to sus-such a huge disparity in the returns of equities over such a longtain to generate those gains. An investor who loses more than 20period. It also provided an extremely valuable lesson regardingpercent must show gains of 30 percent or higher just to get back to which I sadly had to learn again with my own money before that could take more than a year to even foran excellent investor.it really sank in.I began investing my savings from summer jobs and suchAs the concept of weighing risk against reward hit home, in-when I was a sophomore in high school. My real killing camevestment performance suddenly meant more to me than makingHOW IT ALL STARTED 54 INTRODUCTIONHOW IT ALL STARTEDbig gains: it meant measuring those gains against the risk I wastaking to achieve them.After graduating from the University of California-Berkeley inIf I can prevent just one person out there from going throughthe mid-1980s, I traded on my own for a bit. While at a con-the same painful experience I had from 1972 to 1982, then writingference on trading where I was a speaker, I met two key individu-this book has been a worthwhile effort. I hope I will convince moreals: Tom Johnson, a Stanford Ph.D., and Paul Sutin, his student atthan one of you. Similarly, if I can get one or more investors andthe time. They liked some ideas I had expressed on seasonal com-traders to think of performance not just in terms of total returnsmodity and we decided to begin doing historical re-over the short run, but in terms of reward compared with draw-search together, initially on ways to dispel the myth of thedown and consistency over the long I will be pleased. Far tooefficient market hypothesis, which had broad academic accep-many fund-rating services only list performance in terms of re-tance and basically held that achieving higher than average while totally ignoring risk. Investors wanting to consistentlywith lower than average risk was impossible.perform well in the markets have to be much smarter than that.Dr. Johnson and I began a research effort that lasted moreThe goal of this book is to present a for achieving market-than three years and involved testing and developing nearly long-run returns with substantially lower risk than the long-runevery theory we could get our hands on that had to do withrisk of U.S. and global However, just as important as givingachieving market-beating performance. We tested every conceptthe reader such a methodology is to do it with honesty and in-we could going back to the early 1900s (or earlier, where data based on the philosophy I have as essential forexist; we found records for bonds and some stock indexes from asachieving low-risk consistent market gains. To do this, I must ex-long ago as the 1870s). We were striving to find something histor-plode some myths and misconceptions. And perhaps the most im-ically rigorous.portant lesson I have for market participants is that the answer toOur research concentrated on two areas of study: (1) the test-Click Here DownLoadtheir quest for superior performance doesn't lie in a Holy Grailing of market-beating concepts and methods, and (2) the de-system, but in their own development of the skills necessary totailed study of all those who had achieved market-beatingunderstand major market movements.performance on a risk/reward basis historically and in the pre-While I provide dozens of specific systems and rules alongsent. Tom put significant resources into developing softwarewith their historical records of market-beating risk/reward perfor-that could test and show intricate statistics for any simple or I also stress that it is far more important to understandcomplex trading system or data-set/concept for trading stocks,what lies behind their success and to keep abreast of anything thatbonds, commodities, and currencies. As a result of building thiscould change those underlying principles than it is to follow thosehuge database and accompanying software, Tom and I alsoexact rules and systems. This distinction is, in fact, the differencestarted a small business selling the use of this software for test-between market novices and market masters over the long term.ing other people's ideas. Many large and small investors, traders,The market novice constantly searches for "magic" systems thatand institutions hired us to test their ideas or systems on ourwill deliver a fortune. The master tries to develop the necessarylong-term database. This research effort is the basis for the ideasskills and insight into markets and economics to consistently seepresented in this book, and I am grateful to Tom Johnson, Paulwhat methodologies will work in the forthcoming environment.Sutin, and the many others who helped put that research effortAs I discuss in Chapter 6, the novice tries to find fish holestogether. I also owe a huge debt of gratitude to the great marketwhere the are biting today, while the master learns how tomasters whose ideas we retested and found to be rigorous. Ithe fish holes where the fish are biting every day. The book is de-have no false pride about acknowledging ideas fromsigned to provide the skills that can convert novicemy primary concern is with what actually works. Appendix Btraders into potential market masters.6 INTRODUCTIONTO RECOGNIZE A MARKET MASTERprovides a list of the great investors and researchers whose workrate for the period between entry and futures delivery, but in re-I have found to be exceptional; I urge you to read as many ofality the premium/discount of nearby futures reflects whethertheir works as you can.there is a short-term shortage or overly large inventory of product(or a reason for investors to panic-buy or panic-sell the underly-ing instrument immediately). Since other financial instrumentsHOW TO RECOGNIZE A MARKET MASTERsuch as currencies had shown a tendency to trade at a premiummost of the time, but at a discount during severe bear markets, IA real-life example will illustrate the difference between a marketreasoned that the S&P would be similar. This meant that the sys-master who strives for understanding and a market novice whotem would likely fail in a severe bear period. I tried to convincesearches for magical systems. By some strange coincidence, Tomthe client to add stop-losses and some sort of to protect himand I handled two projects within the span of a year or so that de-against a bear market period if he wanted to continue to trade thepended on the same basic concept. Both of these investors had at-system on its own.tended a seminar by Larry in which Larry proposed aI described two types of stop-loss and trend filters the clientsystem based on the discount/premium disparity between themight use; these however, would have cut total fromS&P cash and nearby futures. Simplifying a bit, the concept was1982 to 1986. I was surprised by the client's response. He saidthat one should buy the S&P futures any time that the futuressomething like, mean, it really does He took off fromwere closing at a discount to the cash S&P, and hold to the follow-our meeting very excited about the original system, and I had theing profitable close. Larry didn't use any stop-loss in the versionstrange feeling that he hadn't heard a thing I said about stop-lossesof the system we were given by our customer.and trend filters.The first market attendedThis client called back every few months to gloat that he wasseminar and began to trade this particular system (Larry usuallystill making money with the original system and had been able toClick Here DownLoadpacks more systems into a seminar than just about anyone, so I'madd to his exposure to it. And in fact, for so simple a system, it hadsure this was just one of many such systems at the seminar). Theworked remarkably well, generating thousands of dollars a yearcustomer, who was showing consistent through this trad-per contract since 1982. It was very rare that one needed an extraing, was shocked at the success of the system and wanted a third$5,000 beyond normal initial margin to maintain each per contractparty to evaluate it before committing more capital to it. The yearposition, since it was usually only held until the first profitablewas late 1986.close, and so the client had increased his trading size every time heI backtested the system and found almost identical perfor-had extra margin plus $5,000. He had made around $10,000 permance to that illustrated by Larry Williams in his seminar. Thecontract, by his reckoning, up until October 1987. On October 27,problem was that S&P futures only began to trade in 1982, so there1987, the day of the great market crash, the S&P December futureswasn't a timeframe long enough to evaluate the system properly. Iclosed at a discount to the cash S&P, and this novice trader had du-met with the client and explained two serious reservations that Itifully bought as many contracts as he could on the close athad about the system. The first was the lack of stop-loss protec-around the 874.00 level. The next morning, the December S&P system that does not limit losses is an accident waitingopened at 859.00 and proceeded to plummet to the 844.00 levelto happen according to my research. The second problem had to dovery quickly thereafter (the S&P contract was $500 per 1.00 pointwith understanding futures markets in general. Again simplifyingat that time). This meant that on the open, the novice trader facedgreatly, most nearby contract futures markets trade at a premiuma potential margin call, because he had a $7,500 per contract lossto underlying cash during a bull market, but trade at a discount toand had only allowed $5,000 room. The trader exited as quickly asthe underlying cash market during a bear market. Theoretically,he could to avoid potential ruin. He sold out very near the lows atthe futures should trade at a premium to cash equal to thearound 846.00 average fill for a one-day loss of just over $14,0008 INTRODUCTIONOVERVIEW OF THE APPROACH IN THIS BOOK 9per which basically wiped him out completely. Had hepotential situations where he would find low-risk opportunitiesused the trend filter and stop-loss I had he wouldfor One wanted to be camped out by a hole someonehave made far less until October but he would haveelse had found where the were biting and bait his hook as faststill made money through the crash. It is also worth noting that ifas possible. The other was simply looking for another way to findhe had had hugely deep pockets and courage of steel, he could havea hole where might be biting for a while.survived the system actually did work, it just required aton of margin, but this trader was going for maximumA few months later, we were reviewing the trading of an excel-UNDERSTANDING IS KEY TO SUCCESSlent investor for input on how he could improve his already stellarperformance. Among the concepts he listed as exploiting was theThere are many books, courses, and software that purport to sellsame Larry Williams concept of looking for buy signals near theHoly Grail systems. They are mostly hype that is based on a per-close of a day or on the day following one in which the nearbyception of the world that does not jibe with reality. One of the rea-S&P futures closed at a discount to cash. I inquired about the con-sons there are so many such books and services is that there are socept and found that he had gone to the same seminar. However, Imany traders and investors hunting for such systems. The pot ofnoted in this trader's actual trades that he had done no buying ongold they are hunting for, however, isn't at the end of the rainbow.October 27, nor during future signals during the October-No-That pot is built, coin by coin, based on your skills as avember 1987 period.investor, and on your ability to consistently find reliable ways toI asked this second trader why he had avoided these trades.limit your risk while participating in opportunities that have much"Are you nuts?" he replied. "Sure I try to look for those opportuni-more reward than the risk you are taking. The pot of gold doesn'tties, but only when I can do so with limited risk and use a stop-lie in some system outside yourself; it lies in the set of skills andloss. Besides, the risk of the market falling further was just tooClick Here DownLoaddegree of understanding and insight that you build within. That is one understanding what was going on at the time wouldwhy I want to give investors more than a methodology; I want tohave even considered going long on the close. And in fact, I ignoredhelp them understand what builds profitable methodologies andall of those signals until I was pretty sure we weren't in a consis-what underlies investing and trading success.tent downtrend, because in a consistent downtrend, closing at aSo this book has chapters that are purely methods and systemsdiscount to cash might be normal."based on a concept, but it also has chapters that give the reader in-Now while the novice trader made several mistakes besides ig-sight and understanding into basic principles of success requirednoring the basic rules of limiting risk and understanding what un-to profit from the markets long term as well as to understand thederlies a system being used, what really differentiated him fromeconomics behind market profits. Although Chapter 6, in particu-the master trader was what he was looking for. The novice traderlar, may seem long and complex to the reader who just wants tech-was looking for a magical system when applied, would printniques, investors who do not understand the concepts in thatcash for him. He didn't want to be bothered with potential short-chapter will ultimately shoot themselves in the foot as investors,comings because he wanted so badly to his pot of gold in aand may even contribute to destroying the mechanism that makessystem. Conversely, the master trader was simply looking for ideasinvesting opportunities possible in a free economy.or systems that he could understand and utilize to help find low-risk, high-reward potential trading/investing opportunities. Hewouldn't have dreamed of trading a system he didn't understand,OVERVIEW OF THE APPROACH IN THIS BOOKor investing without proper stop-loss protection. He wasn't look-ing for magic; he was searching for ideas, systems, andFirst of all, it is impossible to include all the complex tools andmethods that would help him add another arrow his quiver ofmodels that I use in my investment approach in a book of this