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Interview: Ned Davis, NDR

Posted By Barry Ritholtz On April 18, 2013 @ 7:00 am In Philosophy,Psychology,Sentiment,Technical Analysis | Comments Disabled

 

“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 [1] 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’ [2].

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 [3] 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 [4]
Markets in Motion [5]
Being Right or Making Money [6]  I referenced this book a few years ago [7] — 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.


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2013/04/interview-ned-davis/

URLs in this post:

[1] article: http://www.accessmylibrary.com/coms2/summary_0286-27746933_ITM

[2] Gold was Facing ‘Excessive Optimism’: http://blogs.barrons.com/focusonfunds/2012/10/12/gold-facing-excessive-optimism-ned-davis/

[3] four basic traits: http://randomglenings.blogspot.com/2012/03/four-traits-of-successful-investors.html

[4] The Triumph of Contrarian Investing: Crowds, Manias, and Beating the Market by Going Against the Grain: http://www.amazon.com/exec/obidos/ASIN/007143240X/thebigpictu09-20

[5] Markets in Motion: http://www.amazon.com/exec/obidos/ASIN/0471732818/thebigpictu09-20

[6] Being Right or Making Money: http://www.amazon.com/exec/obidos/ASIN/0970265107/thebigpictu09-20

[7] few years ago: http://www.ritholtz.com/blog/2010/10/do-you-wanna-be-right-or-do-you-wanna-make-money/

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