This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

WSJ's Zweig Misfires Touting Latest Back-testing Breakthrough

In fact, the arc of events that follows the discovery of a hot new stock-picking advantage is very predictable :

  • A "successful investing strategy" is discovered by back-testing, though the strategy never had any actual money following it;
  • Cue the mutual fund sponsors to quickly cobble together products to take advantage of this newly discovered can't-miss strategy;
  • The marketing machines are revved up to move fund investors' billions out of their current funds (Target-Date Funds were the last big ruse) and into these new (Quality) funds.
  • Fast forward three years when Morningstar rates the first of these to reach their third anniversary: Three Stars (i.e. mediocre).
  • Wait for the inevitable gnashing of teeth at the mutual fund houses as Chief Investment Officers and Portfolio Managers pore over their spreadsheets searching in vain for how on earth such WILDLY POPULAR funds could fail to outperform?
  • Listen carefully for the quiet snickering of fund sponsors rolling in their management fees, whispering about what new academic research they'll next use to hoodwink a new set of marks, er, muppets, er, investors.

It’s a sad and cynical path and of course the fund sponsors have reaped what they sowed by enduring epic fund outflows from actively managed funds for the past five years.

Toward the end of Mr. Zweig’s more recent column, he seems to hedge his earlier enthusiasm:

There's no rush. Let the funds launch and get seasoned. See whether the managers can deliver. Then wait some more, sitting out the inevitable boom in popularity. Before long, investors will be complaining that quality is overrated and that other investing styles work better.

All good advice. But then Mr. Zweig hedges on his hedge:  “Mark my words: At that point you will be able to get quality in quantity.”

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.99 0.00%
FB $102.01 0.00%
GOOG $682.40 0.00%
TSLA $151.04 0.00%
YHOO $27.04 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs