Alan Shaw Says the Days of Charting Stocks By Hand Are Over

have a special extra podcast this week. I went to one of the m t A, the Market Technicians Association's conferences earlier this spring, where I got to sit down with a legend of technical analysis. Alan Shaw is really everybody's favorite UH technician. There are so many people whose entire careers trace back to Alan Shaw. He was the founder of the m t A. He was somebody who just helped get so many balls rolling in the world

of training and in the world of technical analysis. Many many people owe a debt of gratitude for their expertise and their careers to him. A super nice guy. I think he's eighty four eighty two, sharp as attack, very witty.

This was in a in a conference event. It was the two of us sitting in front of a few hundred people, so it's not the usual format when you get a guy like that and he wants to just tell a story, telling an anecdote, and meander, Hey, it's not up to me to interrupt him and keep him on a broadcast schedule. All I did was just kind of poke and privade and trying to keep him going. And it was really only about forty five minutes or

so of conversation. If you are at all interested in technical analysis or market history, or if you just like the thoughts of the guy who called the greatest bonds market rally and in history, dead on a very outlier contrarian call, and who continued to get it right. It wasn't just one lucky call. He was pretty dead on and stayed then on for a long time. Then I think you're gonna enjoy this conversation, So our special extra holiday weekend podcast, my mt A Events Conversation with Alan Shaw.

Let me start with a really interesting question. I've I've spoken to a number of technicians, and many of them have noted that they began on the fundamental side before switching to technicals. Tell us about how that transition, that evolution took place with your self. I'm gonna make a very long story as short as I can. We got four hours. First of all, it's a real, real pleasure to be here with you all, and thank you for showing your interests in all this. The first thing I

had to do is flunk out of college. Um My father when he read the note that I was no longer wanted back. This was a school in central Pennsylvania called Susquehanna University, he said, Sonny said, you'll never be You don't know what success is unless you fail every now and again. I don't know. Forget that and uh. He came home from work the next day with a help wanted to add from the Wall Street Journal, and

I answered the ad. I went into the city to the Newall Street Journal's headquarters here and they they hired me as a glorified salesman. The Wall Street Journal was then expanding its business, uh from being you know, with just a Wall Street type paper to being a you know, a daily uh and reporting on the real news and this and that. And I would go around to brokerage firms and asked to speak to the manager of the

office or whatever and try to sell subscriptions. One day I found myself in Washington, d C. Wall Street Journal has just opened their brand new plant there on fourteenth Street. And I walked into an office of a broker's firm called Harris Upham, and I had to speak to the manager, Edwin Bastaball his name was, And he said, young man, you're a pretty damn good salesman. We can use people

like you in our business. I'm going to give you my card and make may get you an appointment up at our main office and one twenty Broadway in New York, and I'd like you to follow through so lo and behold. I went to one twenty Broadway, a few blocks away from here one day in nineteen fifty eight, and UH asked to see the fellow who's in hot in charge of trainees, and I was escorted in to see a gentleman by the name of Henry You Harris Jr. Who was the son of the senior partner. Henry was a

partner himself. UM, wonderful guy. And he said, well, you don't have a college degree. UM, I don't hold that against you. I said, Oh, don't worry about Henry. I'm going to school at night now. And I was that actually going out to Adelifi trying to get caught up. That's that's a hello test to do night school, and he said, let me check it. I got home that day there was a call waiting for me from Henry that there was an opening in the research department, and

I said, I'll take it, and I did. I went to work. They showed me this little death the desk, about this wide one column of draws on the right hand side. And I was really in a clerical role helping out some of the senior people there. But I was introduced to a gentleman name of Ralph, Ralph Rottenham who was at that time the president of New York Society Security Analysts. Right. Ralph was my mentor. I mean,

he was the greatest walking living historian. He could tell you what happened to the market after the battleship, mean was sunk when a moment's notice uh edible guy uh and uh Harri stuptam was set up in a way that uh, I have to tell you about my first paycheck. Um this this is a real that's a real joke. I mean I saw people getting these yellow pieces of paper every two week and I wasn't getting one yet.

And uh. Long Behold. They got me to the accounting department and I got one those yellow pieces of paper and I figured out my salary was fifty eight dollars a week as my starting Sorry, I still have that check pretax. Uh it's funny pre tax. Yeah, uh, it was funny. So Harri Stupple had a research department that was like oh others, mainly with people specializing in the steel industry, aluminium industry, you know, specialized analysts. But there

was one one slot missing. They didn't have a consumer consumer undurable analyst like foods, tobacco, soft drinks. And I I was. I was Ralph Frodden's assistant now to see, I was doing his relative strength work. This was my first come puter. Still have it to this day, that old wooden slide rule. The only thing missing is a little slide that goes on and that fell off many years ago somewhere. Uh. And I asked Ralph, I said,

you know, can I have a hand at this? I said, I I madeed in accounting, even though I didn't go back and go back for my second year, but I love the course and I know what five phone life will mean. Um, could could you give me a could you could I possibly have a chance of following the food in the treat he said, And he said, well, okay, you sure about that? And I said, yes, I'm sure about it, and so he he let me off on

my own. I did research, but upon research, upon research, upon research, and the end result was the published publishing of my very first research report in September nine until the Harris up them heading at the top investment opportunities of the food industry, and we tried our best to put forth why these stocks we should be looked upon as growth stocks and not widow and often income stocks because there was an item coming into the industry called convenience foods. As a matter of fact, I had a

whole paragraph about a guy named Clarence Bird's Eye. There was actually a guy named Bird's Eye, you know, who invented the frozen food. And the profit margins on each products were exhorbernant. It was amazing, and most of it was a little going down to the bottom line, and I highlighted all of that in this report. Just scats and scats of companies recommended because there are so many of them, from general Foods to Hershey Chocolate to Bury biscuit.

I mean names that are no longer around, some of them now. Little did I know at the time that my report was being published during a stock market cycle which was heavily favoring consuming no durable stocks. Within the next year, every stock in this report, if it didn't double, it tripled. I was an instant here with the research to problem. This was so funny. I mean, really, I

still was only making seventy dollars a week. But no, nevertheless, Uh but Ralph, ralphacka poor Ralph Rottenham communed with a fellow by the name of Jim Morgan from Princeton every day. Jim Morgan was ahead of a firm called Morgan, Rogers and Roberts, which was headquartered at one forty Broadway More and Rogers and robertson those days were the purveyors a point and figure data, point and figure numbers to make

point and figure charts. And they had a chap on their step by the name of Alexander H. Wheeland, who had just published a booklet called Study Helps and Pointing Figure Technique. Ralph had received a copy from Jim Morgan this one morning on the train, and I'm bringing him in his daily data, you know, he did overboard over Soul that was always giving him his numbers, trying to do all this work too. And he said, Allen, I got this this morning. You might fin might find that interesting.

I said, oh my god, Ralph, I mean, well, there's tit tattoo stuff, you know. He said, well, read it to see what you think. Well. I found this book fascinating, absolutely fascinating, so fascinating that I traveled over to one forty Broadway, which obviously was next door to one twenty Broadway where I was, and I introduced myself to Jim Morgan.

I told him I wasn't making much money at this point, but was it possible that he could give me some copies of point and figure charts like General Foods, Stokely, Van Camp, National Dairy Products, all the names of those days. He said, I'd be happy to And I said, well, could you also supply me with the price change service that I need to keep these charts up to date every day? And he said, well, I'll have to talk to your boss about that, because that does cost money.

But I didn't wear Ralph to know that I was keeping these charts. You know, this is the voodoo stuff because supposedly so. I started in plodding away making one point reversal charts of all the stocks that were in my report. And finally in the first half of nineteen and the last half from nineteen sixty one, a year or so after the publication of the report, I started to see patterns emerge in these stocks on the charts.

Now in Alexander Willem's book, on page twelve he had a page of pattern identification, and he had a calm called tops and a calm call bottoms. And I started to look at my patterns. I said, my god, this is this is making a top and and and I said to myself, how can this be? Well, my earnings estimates are coming through, stocks are doing you know, those stocks are all up because there was a key right there.

I can't go down unless you're going up. Um. And I walked into Ralph's office and I said, Ralph, I haven't missioned. I pulled out the charts to behind my back. I've been keeping these in my desk drawer. That's my knuckles onn saw um. And to look at these patterns this book, you see the stock is topping out. He said, well, allan. He said, maybe you're about to learn something which I hope you'll never forget. You're gonna learn how to operate a company from its stock. Well I was so taken back.

What are you talking about, Ralph? Are you telling me that the stock might go up? And even though the company's earnings, don't you know to separate the company from its stock? And then the key phrase came out, barometer and at a thermometer. Never forgot all these things, uh, marcus a discounting function, uh, and all the stuff I learned from him. So I said, well, do you have an objection if I put out a lighten up all wires to the branch offices since there are so many

much profits in here. See that's what that was our terminology, not sell right, lighten up. So I sent out what we called those days, an all wire message to all the fifty two branches plus Geneva of Harris Upham uh with a with a with a of course, this this was the basis of it original report. These stocks have all gone up there starting to look a little suspicious on the ape. We have no objection if your clients want to lighten up. Well, ladies and gentlemen. This was

in late in nineteen sixty two. We had this incredible bear market, as you all remember, which finished with the Southern climax of the Kennedy confronting the steel industry for raising prices in May of that year. My stocks collapsed, Every one of them collapsed. Now, how did I know that forty five times earnings was expensive? For general Foods? Had never sold it before? You say, I had no historical evidence to go back and say, we'll see what happened in int or whatever. You know, So I didn't

know until afterwards. And you know what, of course, sixty two was called a pe adjustment. Can you imagine going to a client, a broker, You've just been wiped out, Barry, It's just a pe justice, don't worry about it. They'll come back. So at that point was the key for me. Let me ask you a question about clients. I heard a rumor. I'm gonna read this to make sure I

don't get it wrong. Back in the sixties and seventies, you would do technical analysis knowing that clients might not be enamored of it, and so you would have to go out after you made your technical decision and find fundamental reasons to put like ornaments on a Christmas tree in order to sell the call to the client. True or false? Well, that's not entirely true, is it partly true? Is it a little bit true? It's a little bit true in this way. Uh. I began to run for

the private clients side a master list. It started harris up them. We would recommend stocks based mostly on their technical potentials. And I would indeed at least get a yellow sheet in front of me to make sure I had had earrings. Um. And you know I wasn't going into the tube fundamentally, and I could get that from a little in a brief paragraph that was on top of the S and P l um, So I feel better about it. Um. So there's truth from that point

of view. Because we'd follow up the recommendation until the day we got out of it, and we would keep a track. We actually had a long In fact, the publication that went out with a record of the transactions was longer than the actual recommend recommendations themselves and in size. So yes, at that point we would do that just to check out. So so Ralph famously said, fundamentals tell you what to buy technicals tell you when very very well done, very well done. Okay, so let's move on

from that. Um, you said something earlier. I want to revisit. How could these stocks be making tops when the fundamental news is right online and earnings are coming in for all these companies. It doesn't make any sense. So how did you make the transition from that to, oh, the market's a future discounting that news? Well, I remember the story about the stockholder who raised his hand at the annual meeting and he and he asked the president. He said, Sarah,

how's the business. The president said to him, we couldn't be better. So the guy ran on the phone called its broker and sold all the stock and the broker said, what are you happening? Said, the president just told me the business couldn't be better. So you see that. That's the same thing you say, is is he really tie it together? It's the same thing. I mean. Stocks can top out when the business couldn't be better, like they

will bottom that out when the business couldn't be worse. Uh. Fear, greed, greed, fear, you know all that stuff. It all plays into that psychology, which is what about what we study now? We call behavioral finance. I love it. It's all part of reading a chart to a great degree. So let me give you another quote from Tom Dorsey. The core advantage is that point and figure chart is strictly tied to the irrefutable law of supply and demn It takes volatility totally

out of the question. The equation unquotes how does someone know when to use point and figure charts versus traditional chart? That's very good, Barry, only because of my experience. I would tell you as I did in the other interviews, if you want to be a point and figure advocate, start with the one point reversal. Learn how to make the one point reversal. That's like looking at a short

term to intermediate term trend as it unfolds. If the twenty dollar stock becomes a fifty or sixty dollar stock, you now I mean being invited to condense it into a three point reversal. You see, point figure is so versatile. If you start with the one point reversal and then make a three point reversal, a pattern that was this wide perhaps can become this wide for the same time period. And then point and figure also allows you to condense

the vertical. Let's say you get a really high priced stock, make it a ten unit shart or a five unit chart. It's gotta go up and down five points before you put in that X. And you can see you can reduce your horizontal and your vertical, which we would do particularly in the high flying days in the sixties and fifty fifty with Avon and all those kinds of names. Um oh, let me share some of these stories with

you get a kick out of it. We've built a very strong relationship with Morgan Guarantee Trust um Trust department. They they like every other institution in the city, alot to the gazill with Avon products. I know, I forget the day I walked from one to one from sixth Avenue, which was one our officers there, over to their office on fifty seven Street with the Avon Products chart in my black pocket and I walked into the head of the investment manager and I covered up the name of

the stock. Yea, I said, look at the stock. Uh, would you be a buyer here or a seller here? And of course I asked you if you're it's gonna be a seller as assumes as you own it. Um, you can't sell something you don't own. But just give me an answer one or the other. Would you be a buyer or a seller? He said, I don't think I'd be a buyer, not in a stock that's how to run like this. I said, how about a seller?

He said, well, there's not enough evidence of that. And I said, well, look carefully at how all these rallies I had the one point shot. See how all these rallies are failing to get higher. A rally that fails to break out is selling into strength, like a decline that fails to break down is buying into weakness. That's where the point and figure shigns through and giving you

the feeling of supply and demand distribution, virtuals accumulation. And uh So he looked at this and I said, you know what, I said, entertain me and sell half of your million chats and see what happens. And he did. And that was the That was the end of Avon products. We just couldn't see it going up anymore. It wasn't that we could possibly see major risk yet, but it just didn't show any reward potential. So that's a great story.

I used to do this a lot. I mean I'll tell you the time I went to a major mutual fund in Boston. I'm gonna mentioned the name, and uh, I don't. I didn't. I didn't see many people here. It's not it's not yours, David. Uh and uh. All the managers were sitting around table, and I would go in with the charts without beings on them. And uh. Just one time I sat there and I had the

guts to put these charts up on the wall. They were in the technology field in the sixties, late sixties, early seventies, whatever, and uh, and I'd say, just simply, would you own these stocks? No hand went up and as East would put if they were forming frowns. She liked to buy smiles. These were falling frowns. And one guy got so pissed upset at me. He came up and he took me to the doors, let me to the elevator, and he said, get out of here. I

never want to see you again. And the salesman sat there, but will then, what am I gonna do? My analyst is being thrown out of here. And the salesman came to me. I said, Dave, we're gonna be right, We're gonna be right. Look at this. They threw me out. They're overweighted in these stocks and there's no way they're not going up anymore. And we were right. I never if forget that meaning. So you mentioned earlier. You mentioned

earlier behavioral pyschology and behavioral finance. What does this say about portfolio manager's ability to be objective if he doesn't want to sell his stock, but if he's looking at a chart without the name on it, he has a very different read of it. Well, I don't know, it's it. Sometimes you can be over informed, right, maybe just the reality of the chot picture. If you've got the understanding and you gain the feel, and let's face it, you

won't know this experienced people. Do you feel the supply and demand when you keep your charts to your studies, whether it's by the computer or by hand. I have staff that kept up our three four hundred as it was, pointing figure charts every day. But I would slip in and and take two or three books myself as many mornings as I could, because the thing I love to do is actually see what is really going on and update these charts. Letting someone else do it wasn't really

benefiting me at all. Do you do you think technology has had a negative impact, that you lose something when you're no longer doing it by hands. Very there's probably a lot to be said for that. I mean, you know, I I'm a I'm a peculiar person in the sense that I came in with a doubt four hundred five d ninety eight and left when it was uh in the well over ten thousand. I lived through the greatest and participated in the greatest bull market and history if you think about it, um, So a lot of my

leanings are not going to be akin to now. We're in an entirely different cycle. Obviously, I personally think you're in another major bully move now, um that hasn't shown any signs of correcting. And we got to do this conversation before. If you're studying the market today, throw out your linear charts. You need geometric charts, you need semi

log graphs. That last night, I was getting ready to go out to dinner with Ralph and and the TV on this woman it could have been a guide and as a matter of the person was complaining that the market was down forty somebod points and it was crashing. How disappointing after being up two hundred down forty and I said, my god, one it was five hundred forty points was crashing, But not when it's twenty thousand. That's amazing. There's no grasp of reality, if you will, where are

we in the whole thing? That's why I love log shots. I mean, and you just stepped back and and take a look. Really fun, Let's let's let's talk about um the number one you mentioned five hundred. Let's look about a hundred and a thousand you reference, and I'm assuming this is in the sixty eight two period. The Dow tried to get over a thousand repeatedly, I think you said seventeen times and failed. And you went back in the history books and you looked at a hundred and

lo and behold something similar. Very that was that? That that that? Thank you to bring that up, because, as I said, that was my last piece of research that I published, and it was a joy to do. I love going back looking at historic pictures. And that's exactly. My god. I had the books, all the stuff there in the room, but the study fell apart. I retired

in two thousand four. Study a part really in the bear mark at two thousand seven eight, more so in the recovery, because we're not supposed to be through ten yet in a material way. But the final the final sentence did say that the next major secular uptrend won't become really visible in two thousand eighteen, will become visible in that pots on track. But what happened in the jiggles in between didn't seem too to work out correctly. So so there's no significance about base ten numbers ten

hundred of thousand. Well that was all psychological anyway, you know, But it was a fun exercise, Okay, it gave me something to talk about. So everything you use, all of your indicators, all your strategies, all of that is publicly available to anybody who wants, right, anybody wants to do the work. What made your approach to technico analysis stands out? And how much of it was art and how much of it was sorry, very good, Please put the first page up first. I know, really do this myself, but

I'm not a member of the union. Don't let me do it now. The first page, the very first page, the title, the title, the cover, No, not that this one our technical bull case for bonds written in what year May. Based on our technical analysis, we believe that a structural bullmarket is underway for bonds. We believe the shorter, immediate and long term in the cave is allowing the best bond bet to be made and possibly the entire investment career of the reader. Where's the heads there? Okay,

tell me that there's Oh, we're always hedging. We strongly suggest that balance institutional and private investor portfolios contain a larger than here to four prudent bond position. We believe that representation is blah blah blah. This strenths is being published. Billity is a thought provoking document even the world's smartest man couldn't project with empirical climate collect there's the references we make. Technical analysis helps uncovered friends that leave the

curious mind to explore the explanation. That's the spirit of the report. Now, in order to get our point across, I'm going to show you the best proprietary indicator for a few pages that you get to the rubber band. Um find a picture of There it is Alan's hands under the xerox machine. I had so much fun with this. I would go out I'll never forgetting Winston Salem. A crowd of people like this, you know, private clients or a big group, and I have the band's a whole

pocket full of them. And I started to stretch it, and the guy in the first road acurse would be moving back, not knowing what was going to happen. All I was trying to point out here you see this is interest rates. Uh no, no, this is the bond price. I'm very sorry. These are not rates. Now they are rates? Are I said, Look, if rates could go from eight percent to four and four years, why couldn't they snapped back just as quick? That was the purpose of the

rubber band thesis. And you know that's exactly what happened. Without a forecast, No was something. Get the mind open, it might happen. You know it could happen. And what else do you all see? Come on, all you folks, look at this chart. It's wonderful. You see for the first time in the forty some odd years of interest rates um the first higher bottom. That was the clue

to us. It was really the top in the price that caught our attention because we did not catch the high end rates, but we certainly caught the reversal and stayed with it for some years. And right now we believe that rates a reversing again in a different direction. And as we used to say back in these days, interest rates are like a short sale. I gotta took out a discussion not here today, somewhere else maybe about the interest rates. Remember they can't go lower than zero?

Oh yes they did. I know, I know we negative rates, yes, yes, yes, yes, yes, But you're not talking about something where it's four and it's got you know, hundred basis points to go before it might hit zero. And this was not overly difficult for an open mind to accept that there was something happening. But the rubber band just kind of added a little fun to the whole thing. So are you seeing the bond bull market that began in the eighties. Are you ready to say it's over? Or you looking that it's

coming to an end? Um? Well, I think I'd say. I'd say that the the the decline and interest rates, um, it would be over. So therefore the bull marketing bonds would be over. Yes, I guess that's the guess. That's the position that we take the evidence that's unfolding. If you're having a business dispute, the process can be slow and drawn out, especially if you rely on litigation. In the courts, you can wait for years before your case is resolved, and the longer your case proceeds, the more

your case can cost. Not with the American Arbitration Association. Arbitration or mediation with the American Arbitration Association is faster. In fact, nearly fifty of our cases settled prior to hearings. Ad R dot org resolve faster. So the bullmarket and bonds is over? Can we say a bear marketing bonds has begun? Or is it too soon to say that? Oh? It's very too soon? Yea and release? What was it that you pointed out that the tops were shop and

the bottoms were curved? So you retired officially in two thousand and four, and then the market peaks in oh seven. Over the next eighteen months we see a fifty seven percent drop in the SMP. Were you watching not thinking? Man? I could be making a killing now if I was still working. What were you thinking when you were watched? I'll tell you this, and this is again a little

confessions of the soul. I'm not in the booth. But anyway, I was on bended knees a lot of my colleagues to sell their City Group stock at fifty five dollars, which the price it was the day I retired. I'm just backing up a little bit to the deeps that you've got. Uh, this stock, to me was forming an incredible reversal. Did I see it going to two? Of course not? Which it did, of course not. But I sold all my holdings, which were rather large thanks to

Sandy and his profit sharing plans. And uh, I wasn't there going down to two. I was out, But I saw some of my colleagues with even more time at the firm than me, wiped out. It was. It was a horrible feeling to see because they just, you know, the dividend that cause was the yield, you know, the dividends as good as the next director's meeting. Come on. Uh. Anyway, that was so, that was so sorrowful to see. So

what's your question? So, so, as as a retiree watching a major negative trend unfold, were you looking at it? Aside from the obvious My former colleagues hopefully they followed my advice and sold, But were you looking at it as there is a huge trade to be made here or how did you see I I although thought my best my last best call was on gold in the early eighties, um, and my my favorite stock was Newmont Mining, and I used to push the heck out of it,

particularly to our private client. And I got the Investment Policy Committee to actually allocate part of the you know, the portfolio strategist to to the metal itself and and the stocks themselves. And that was a tremendous Gold had and Newmont had and some of the others. And I walked away from all that four just before I tied, I retired, and those were the last point in figure shots I still have at home. That was my gold

chairs two thousand four or two thou four. And I, frankly in the ensuing fifteen ensuing ten years, don't even turn on the Cartoon Network anymore. I mean, you know, that's why I used to cost the NBC. I did. I used to Cartoon Network. Can entertainment go watch these characters try to explain what's happening. So so, prior to the financial crisis, hedge funds had been doing really well, capturing a lot of assets and doing well for clients. For the past decade, hedge funds can't seem to get

out of their own way. What do you attribute that to? Uh, the door has to be opened bigger, meaning there's too many trades trying to get through the same or so they're all doing it's they're all crowded trade. I think so, I think so, I mean and and and I don't know, frankly, if I was practicing today really like we used to, I have no idea even if there are price change services available, like our point in figure service was to keep charts like that up to date. So I'm so,

I'm so out of it. They're at out of business. And I was talking briefly before too, uh president about how they took over the R. W. Mansfield Company and keeping that service alive, which is gratifying. That was one of my favorite I'd had that to the house of the weekends and spent two hours every Sunday pouring through the Mansfield sorts. It was really that simple. I mean, you didn't have to have complicated al Graham's or whatever they're called. And uh wise over two squad and x

y Z s um in a in a parentheses. Um God, I could never get through the Financial Analysts hand book were so difficult because I never took statistics of source. That's one of the reasons. But I don't do know the difference between many are and good blog. What about technology today? What what is the impact of massive computing power on on charted Well, I don't know the answer. I honestly don't know the answer. All I can all I can say is my one of my first trips

to Tokyo. We're incidentally technical analysis really got its birth, as you all know, back a few centuries ago in Japan.

Um I was taken to the Tokyo Stock Exchange and showed I was I showed show the road room where computers were trading with computers, and all I could see with these lights flashing, lights flashing, lights flashing, there were no people, nobody, just the computer is going back and forth, matching and selling and buy and selling, and and I'm sure that there was something I can stick chop makers somewhere, you know, trying to take this information and put it

on the pencil on a piece of paper that these computers were doing. I don't I don't know the answer to the question, because see if you can just take some other step further. We're not running those computers. They're running themselves. We're not the brains behind whatever trades they're making. So they are they are? They just playing their own emotions. Do the computers have emotions? Do they overheat an example, or they run out of power? Do they go through climaxes?

Selling climaxes, buying climaxes? I mean, I don't know, you know all that to answer your question. So, so now that you're retired, you you mentioned some media. When you're looking at the industry today, be at Wall Street or technicals or just trading in general, what what makes you crazy? What do you look at? And just do that with Oh, that's a good question. Because I came up before to the likely reporting I heard last night. I do that too.

The fact that you know you're talking about a twenty level and you're worried about forty um that and because because you know, the average person on the street who's listening to you doesn't put it in that perspective. They hear the forty points and they don't think of it on a twenty thou base. I have just one thing

I still may have here in this incredible pile of stuff. Incidentally, Hank, I've brought along something that you wrote, The twenty one Century Technician by Hank Prudent, and that's an incredible piece of artwork on there that was chosen for this piece. You remember that, Hank, when you wrote that, um, and that was the future of technical analysis and the academics ie of Golden State University looks pretty chaotic on it, that thing about what you were talking to me about there.

But once a month, um, this young lady up here puts out this piece of research. Uh, look at this, Look at this. Oh my god. I give her so much credit because I wouldn't even be able to get past the first ten pages, not sixty. Um. I'm probably listed on here as a consultant emeritus or is it emeritus emeritus. I don't know. I always feel like I have a problem with my right arm one. It's a little little mme ritis. But you know, to follow all that's going on and gets to can be concise and

it means something. I think it's really really today the challenge of the technical analysts. But Ralph's right, Ralph, do you know I would not in my discussions with a client I'd never talked about the shampoo. Okay, I never mentioned the term heads and shoulders, head and shoulders, top or bottom. I would told a top a distribution part of pattern, or an accumulation bottom or a reversal pattern. I'd never give them the opportunity to come back and

laugh at me. You know, you're the guy with all those wedges, triangles, shampoo products, um gaps, still aware of water gap, you know, all that kind of stuff. You never have to bring that up, just you know, bring up the reason that those patterns were forming as you're excused distribution, accumulations, supply demand. And I mean I used to show the point in figure talking to some people, and I never believed in myself, but I had. I had a report out on bowling when the twenty dollars stopped.

You know, I had price target for bowing, and I told the clients I honestly, I said, I don't believe it, but I'm showing it to you. The method is allowing me to you express this possibility. And I was long. I went to a bull market that was I'll never forget it times. So I know we only have about ten minutes and there's a handful of questions I want to get to. You mentioned some of your early mentors,

that people mentored you in the business problem. Who were the investors that you that influenced you, that you were impressed with, that you followed in the early days. Well, that's a good question. I went back and of course read all the major history books. I'm sorry Buddy has about Jesse Livermore and and I went back and studied entirelyly Harold Gottli series which was published in the nineteen twenties.

UM and I was. I was also uh Shabaka books that he was Tony Tabelle's uncle, you know, uh point and figure work and stuff back in the thirties. UM and my idols on Wall Street. To put let's put it this way, instead of investors ken Ward at Hayden Stone pointing figure shots, Edmund W. Tabell at Walston was son Tony pointing figure charts. I never knew what Bob Farrell practiced over at Mery Lynch. I only saw his written work. I never I never knew what went into it.

I don't know whether he kept pointing figure shots. But the three reel point you figure shot people were were Walston W. Harris Upham and and and and Hayden Stone and Ralph You never what happened to ken Woods charts. Oh that's right, Yeah, that's correct. Yeah, he was. He was a fascinating fellow. I got to know him, not for too many years. Unfortunately I got the nomen. He

was in his late seventies and he expired mazines. But and then ed to Bell Tony's father, Um, and then they actually computerized their pointing figure work and Ken Tower of course who's year there was one of Tony's right hand man and helped with all that process. Tony was our second president. Incidentally, let let me ask you a m a little bit of a trick question. You you've told us about a couple of outstanding calls. Tell us about a call that went wrong, a call that failed,

and what you might have learned from that. I assume once, at least once, not once, I had a curl a call that failed that I could not learn from. Really, yes, you'll have to explain. I will. I recommended selling short televine. The stock was and I was feeling fairly certain at the stock was from the process of our pretty big top well at least so it could sell off to eat. I recommended it, send out a wire, put it out there short sale, and that's kind of an interesting thing.

I had to check with my back office. Do we have shares to loan? I mean, there's no sense of doing something you can't do business. And you know, if we couldn't get to find the shares for the guy who wanted to sell it short, don't don't, don't bother with it. Well, two days after that recommendation went out, Mr Singleton announced a buy back, another thing I had a control over, but at ten points higher than way I recommended the shorts. Now I couldn't do anything about that.

I was really wrong on that one, but it was out of my control. You know. He came out and annouked the buyeback. Now did he know about this recommendation? Do you think? Do you think he did? I don't know. I mean there's a little Harris up I'm back then, you know, somehow probably could have triggered it down to him. Things that new topples fast, or that I think I mentioned it before. You want you want to get more involved in what you're doing, go back and read all

of Alvin Toffler's books. Start with Future Shock. Start with the understanding of the acceleration of the rate of change, because that's what the stock markets have been doing for years now and probably will continue thanks to the technology. Um, but do read these books are incredible. Let's start with the Wheel and Fire and all that marvelous book readings. Let's talk more about books. What the single by the way, the single most ask question I get about any guests

they have is always what are their favorite books? So Toffler's Future Shock, well that was that was from my macro perspective. How Charts can help You in the stock Market by William Giler, very simple published back in the sixties, finn little volume. Oh I guess it might be now Technical Analysis of Stock Trends by Edwards and McGee um way out of date. But nevertheless, if you want to see a chartist to bake a packet, what it looked like back in those days, it you know, it's in

the book. Um. Let's see. I read all of Grandville books. I knew Joe, not personally, but enough that he had let me know if he was in town or something. He was a character, God bless him. He was a showman. Let's face it, but but he he put on a damn good show. Um, let's see who else was in there. Well, all the books you're all familiar with. I'm sure I've read Garfield Drew's books on odd lot theory. It's an odd lot? Do you ever hear about it anymore? Did

they trade odd lots anymore? God? You see, there's not an example of how we moved along that was followed every single day. Um, on the assumption that it was the small buyer was always wrong when the odd light on cell on by on selling got high, you should be buying when it got low. And of course Bob Farrell had proprietary work with the size of Merrill Lynches buy sell trades every day. He was right on top of all that stuff. What what indicators no longer have validity?

What what indicators have faded from from usefulness? And and what does it an analyst do when they're starting to suspect one of their favorite tools no longer works very

That's that's a wonderful question. I'm glad at both of these and Ralpher here with me today because in our chart room we had a wall as long as that wall back there on one side of the room, which was all sliding colkboard and had ten square of the inch chopped paper pasted together from top to bottom, which daily work was posted, so that side there would have been about eight or nine years of daily indicators that

size of the wall. And it was set in such a way that we wouldn't walk up to the wall to look at it. We would stand twenty feet back and stare and see what was going on. And one of the things that was driven home to me is never listened to people who tell you they embarrassed on the market that's overboard, or the bulls on the market because it's oversold. You all know how those indicators are calculated. You all know the data go into those indicators. So

think about it. An over bolt market is bullish, an oversoul market is bearish. You don't buy because it's oversold. You're wait until it comes out of the oversouled condition. You're wait until the oversouled condition alleviates itself. And that's the market telling you. The selling pressure, which is what costs it to get oversold is easy. I mean, I'll never forget in the market went oversold on Thursday before Monday in October. It came out of the oversold in November.

Now one would have been a better time to buy the Friday before the Bundey crashed, or in November when it was all over and was starting to recover. And we could see that just by standing and looking at the wall. It was amazing. Well, those the girl days. So you so what other books besides um, the classic technical analysis books. Toffler is so off the beaten path,

that's what? What other books along those lines stay with you that may not be pure t a but have something to teach and an oh, oh good you got The Bandess of Crowds helped me along? Yes, uh, popular delusions and the Madness of crowds? Is that it right by who McKay? Yes, that's a good one. Crowd psychology. Do you read Humphrey nils Reminiscence of a stock market Operator?

He was the creator of contrary Opinion? Um, that kind of stuff is is helpful again and everything at Bob Prector writes read carefully actor's perspective that I have the greatest respect for that young man m his behavioral finance that he's coming out with now on the work that he's doing. I mean, he's so on and he's such a pleasant person past present. The m T a to talk with and listen to. And he's a member of Mensie. You know, it's extremely intelligent. Any anywhere Bob does pay

attention to. And also Ned Davis, Ned's a fan. I'm a fan of Ned Davis too. Everybody started working for Weak Securities in Tennessee. He used to have a little hay seed coming out of his mouth. What a powerful operation today. All right, so we're down to our last two questions. If if if some youngster came to you and said I'm thinking about going into research, I want to become a technical analyst, what sort of advice would you give them? Punch, Oh, Barry, I don't know, hard question.

M oh I thought you were giving them the advice to punch you want to punch on the question. No. I was listening to the talk yesterday and I couldn't agree more with what Frank and everybody was saying about

the difference between the buy and the south sides. I mean, in my day, remember I said I went to do the technical work because nobody had hires upon was doing it, and there was technical work coming out of Hayden Stone Walston, Merrill, lynch By, W press Prett's, Joseph Fallen Company, and Reynolds and Company. They're right above me. For above me, they all had somebody doing some sort of chalt reading or or a daily you know, tip sheet or whatever you

want to call it. Um, you don't have that today. I mean, do you have many cell sides? Do you have left? Even when I told you how I did my family tree one day, I sat down and doodled and and I mean Colin loewb Robe, Chifs and Hammel, Harris, Upham, Smith, Bonnie, I mean, they're all. They're all. I came up with so many firms E F W E. Hutton's there all and then my firm. I mean, so look at all the firm just disappeared. Hutton used to have, of course,

phil roth Ian Newton, Cinda, a lot of people. There were. All those positions were there, so you had an at least your way to answer that question, you know, and make a decision if you want to. You can always switch, I would say, if we're back in those days, get a job on the cell side. You can always switch to the bye side. Maybe. But and I think that these guys hit it on the nose yesterday too. I think Frank said it. I forget now about uh maybe more opportunity on the bye side than the cell side

for this, for this, for this discipline. And my last question, what is it that you know about technicals and investing in trading today that you wish you knew forty five years ago when you began. UM, I never took myself seriously. I took my work seriously. I was never afraid to make a fool out of myself. Robber band thesis was a good example of that. I mean, somebody would have looked at that and said, what child play? Maybe, But I told the story you say that was the main

point to get that across. Open the mind. Technical analysis is a mindset unless you explore gives you the ability and the freedom to do so. Um. And then the other thing that's great about is that it can you can set risk points in a k A stop losses. You can do things that will help you understand that maybe you made the wrong call and not let the loss run and let the profit run. Three major outcomes they brought it up yesterday, small losses, large losses, small profits,

big profits. We're in we're in for the big profits and the small losses as possible. Um. But I think I said this earlier and I'll say it again. I'm very humbled to be here again. But I'm so happy that I'm not practicing today, knowing what I went through and how easy it was compared to the challenge and shore today. I mean, you know, my that was my first computer. Then I went to a Monroe calculator. We had to pull the handle and the numbers would spin.

And then I had an Apple and then ms doss uh and we went to all through that learned XCEL and Lotus and all that stuff you know today. It's just so incredible what you've got at your fingertips as you can do. But I also have a firm believer of the kiss syndrome. You all know that one. Keep it simple, stupid, um, try not to get too oldly involved, and especially if you're on the cell side, to avoid

those shampoo ad terms and things like that. When you talk to a client, you don't need to tell him as I had to show at the top, tell him it's the top um. And you don't ope yourself to the ridicule or or criticism or that that stuff, the wedges, the gaps, dependance, the flags, etcetera, etcetera. It's all what it is. Well, thank you, Allen. It's been my privilege to be able to sit up here and ask you these questions, and I'm sure everybody in the room appreciate

your your time and your wisdom. Thank you so much. Masters in Business is brought to you by the American Arbitration Association. Business disputes are inevitable, resolve faster with the American Arbitration Association, the global leader in alternative dispute resolution for over ninety years. Learn more at a d R dot org.