“We are in the business of making mistakes. The only difference between the winners and the losers is that the winners make small mistakes, while the losers make big mistakes.”

-Ned Davis

 

If you are a regular main street investor, you may never heard of Ned Davis.

If you are a market technician, however, you certainly have –  Ned Davis may be the single most highly respected Technical Analyst working today.

The 67 year old Davis began Ned Davis Research (NDR*) in 1980. The firm quickly developed a reputation as independent, institutional research company by offering unbiased, in-depth financial analysis. Compared to compromised wirehouse research, NDR was driven instead by sophisticated analytic tools and data integrity. (See this year 2,000 article for a deep dive into the firm).

Ned was a regular on Louis Rukeyserer, and frequently graces the pages of Barron’s. Typical observations: In October 2012, Davis said the data suggested Gold was Facing ‘Excessive Optimism’.

If you want to know if its worth your time to spend an hour with this legendary technician, consider what Ned calls the four basic traits of successful investors:

1. They look at objective indicators. Removing the emotions from the investing process, they focus on data instead of reacting to events;
2. They are Disciplined:  The data drives decision making with pre-established rules. External factors do not influence them;
3. They have Flexibility:  The best investors are open-minded to new ideas, or revisiting previous thoughts;
4. They are Risk adverse: Not always obvious to investors, it is a crucial part of successful investing.

Ned has also written a few books over the years:

The Triumph of Contrarian Investing: Crowds, Manias, and Beating the Market by Going Against the Grain
Markets in Motion
Being Right or Making Money  I referenced this book a few years ago — its out of print and goes for $432 on Amazon for the hardcover, but the soft cover is a bargain at $250.

Kevin Lane and I spent an hour with Ned — here is that conversation:

 

 

 

 

 

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* NDR has clients in over 30 countries, serves over 5,000 users worldwide at investment firms, banks, insurance companies, mutual funds, hedge funds, pension and endowment funds, registered investment advisors, equity research departments, and othe major financial institutions.

Category: Philosophy, Psychology, Sentiment, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

22 Responses to “Interview: Ned Davis, NDR”

  1. Special thanks to Joe Dedona for setting this up !

  2. DasKapitalist says:

    I’m only hearing this in left channel (headphones). Is that intentional? Thanks!

  3. rp says:

    The first rule of market crashes: Don’t Panic! You’re not losing anything. But the whole world is changing in the most incredible way, and it is very very good. I will explain mathematically what is happening to the prices, so you can see what you had and what you’ve lost, and what you’ll have now.

    The numbers are all going to go way down. But that is just the price. The value of what you own is not going to change. You are simply going to lose something bad and get something good as the prices change.

    Once we all understand what is happening there will be great changes in the world for the better. Don’t Panic!

    http://www.cecm.sfu.ca/~rpearcea/dontpanic.pdf

  4. HububBub says:

    Any way to download this? Be a great listen for the subway/train. Thnx.

  5. Tacomaman says:

    Fascinating interview w/ Ned Davis. The reference to Louis Ruykeyser took me down memory lane. Thanks BR and KL for sharing. Looking forward to the transcript. Worth saving for another listen.

  6. [...] Ritholtz and I spent an hour with Ned — here is that conversation: Fatal error: Allowed memory size of 67108864 bytes exhausted (tried to allocate 16000 [...]

  7. thenoz says:

    I thought that the first rule of panic is to panic before everyone else does.

    Also, technical analysis shows you when the fundamentalists put their money where their mouths are.

    These are the main rules of trading.

  8. [...] some of the most interesting data and analysis you’ll find in the stock market, and in a recent interview with The Big Picture’s Barry Ritholtz, Ned Davis talked about some of the keys to his [...]

  9. milkman says:

    Fascinating…thanks to Mr Davis and you Barry

  10. thenoz says:

    Sorry, floor trader humor. I only care about marginal money if it affects my oscillators and confirmed by price action. It is all bound up in one indicator. I may trade 3 times or 6 times as much much but I am able to control risk, stay with trends and isn’t that the key. I believe in FIFO but I have only been doing this for 34 years.

    I understand that your business requires longer term trading.

  11. [...] can take a listen to this interview with Davis by Barry Ritholtz and a colleague. Read Barry’s introduction, and you’ll [...]

  12. Darris7777 says:

    Barry, wanted to thank you and your team for coordinating the opportunity to hear from Ned Davis. Thank you. I have one follow up question for you and or Ned. Over the years, since you have followed Ned more closely than I, do you have some descriptions of what he means by “the tape breaking down”? Just wondering if there have been some price parameters mentioned over the years. Thanks again, Darris

  13. Disinfectant says:

    In 2006, I went through their research website and put together a back-test of their asset allocation recommendations over whatever history I could find (maybe a decade?). It turned out that you would have been better off just sticking your money in the Vanguard Balanced Index; NDR had lower returns, same volatility, yet created a huge amount of work due to frequent trading and resulted in terrible tax efficiency for your clients. NDR actually had a mutual fund for a couple years last decade and it was a colossal failure, ranking pretty much last in its peer group before it was liquidated.

    I think Ned Davis, like many other “legends” in this industry, is just another guy who sounds really smart but doesn’t actually have a track record to back it up.

    ~~~
    BR: I reached out to you and asked for either the research or your excel spreadsheet, and you could provide neither.

    If you are going to disparage someone online, you should at least have the goods, and not an unsupported claim. That is, in my opinion a giant fail.

  14. i.pagnottella says:

    I’d love to buy the book, but on amazon used i found it for 500$ 2000 edition! Is there anyway to find it for less?

  15. [...] must listen that I finally caught: Ritholtz interviewing Ned Davis and a must watch of a guy that leads by example Paul Tudor Jones on 60 [...]

  16. [...] Click Here to See Barry Ritholtz Blog on Ned Davis Be Sociable, Share! [...]