What Works on Wall Street

 by James P. O’Shaughnessy

I first read this book two editions ago. I always considered it a sober and sensible book, and I found out about it because I invested in a fund that used this book as the cornerstone of its investing strategy. WWOWS has always taken a more than practical approach to investing in stocks. Being analysis intense, it is also quite detailed and wide-ranging. That’s mainly because, although there is always some shifting, there are plenty of strategies and methods that actually work on Wall Street.

This new edition retains much of the content and structure from previous editions. Most of the chapter titles are the same, and although the order of their presentation is changed somewhat, they are still eminently readable as a linear progression or as “one offs” on specific topics. This book has a much cleaner look than some previous editions, having gotten rid of the somewhat pointless (get it?) line graphs that illustrated certain points. These are often replaced by bar charts or tables, which although they are much dryer, they are also much more useful. Physically, WWOWS’s fourth edition is double the size of the revised edition, and as far as I could tell, all pertinent figures illustrating a point are updated with more recent data samplings and examples. The starting and ending points of samples of data, however, tended to be somewhat arbitrary, possibly to demonstrate a topic or theory more clearly and dramatically. The data that is supplied is extensive and always clearly illustrates the topic at hand. It’s smooth and informative reading. In other words, this work just keeps getting better and better.

In the volatile, unpredictable world of equities investing, it goes without saying that what works today might not work tomorrow, what worked yesterday might not work today, and what worked when the second edition of this book came out might be running out of steam at this point. Still, for a general introduction to stock investing, stock analysis, investment and speculation strategies, and quant perspective, WWOWS remains the quintessential handbook. I can’t think of a reason, therefore, not to give it a full five dollar signs.