Masters in Business: Laszlo Birinyi

Barry Ritholtz is a Bloomberg View columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He blogs at the Big Picture and is the author of “Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy.”
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Great investors are like great chefs. So says Laszlo Birinyi, founder and president of Birinyi Associates, in this week's Masters in Business podcast. Rather than take a shopping list to the supermarket, the best chefs go to market and see what is freshest, he says. Based on availability and ingredients, only then will they decide what they are going to serve. Investing and cooking are alike in that are both three-fourths based on paying attention to what the market is telling you.

Laszlo Birinyi started at Salomon Brothers in 1976, where he eventually became head of equity-market analysis. He sat just off the trading floor, where he created the Salomon-Russell International Index, an early version of a global-markets index. He also created "Stock Week," the firm's weekly market commentary, and "The Equity Desk," a training manual for newly hired traders. Birinyi's block-trading analysis eventually became a widely used tool known today as "money flow."

"The negative case is always more articulate, as it is based on what is going on right now," he says. "Positive arguments are never quite as in focus. It requires a little faith."

In our interview, we discuss many of the myths that Birinyi has helped debunk over the years, including volume, American Association of Individual Investors sentiment measures and moving-average crossovers. Birinyi's consistent criticism of technical analysis landed him in MIT professor Andrew Lo's book "Heretics of Finance." Birinyi is the author of "Master Trader: Birinyi's Secrets to Understanding the Market" and was a regular on Louis Rukeyeser's show "Wall Street Week."

You can stream the interview on SoundCloud or download the podcast here. Next week, our guest is Jeff Saut, chief strategist at Raymond James, which manages about $400 billion dollars.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

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