Posts filed under “Philosophy”
“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.”
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:
* 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.
Holy Snikes, this is HUGE, from Mike Konczal: “In 2010, economists Carmen Reinhart and Kenneth Rogoff released a paper, “Growth in a Time of Debt.” Their “main result is that…median growth rates for countries with public debt over 90 percent of GDP are roughly one percent lower than otherwise; average (mean) growth rates are several…Read More
Don’t just do something, sit there! I love that purposefully juxtaposed Yogi Berra-ism. I have been thinking about nothing on this lovely Friday morning. More precisely, why doing nothing — or at least much less — is better for your long term investing outcomes than doing something, also known as more. Don’t. Don’t…Read More
Regular readers know I am a fan of Scott Adams, creator of the comic Dilbert and occasional commentator on a variety of matters. He has a somewhat odd blog post up, titled, Here Come the Market Manipulators. In it, he makes two interesting suggestions: The first is to decry “market manipulators,” who do what they…Read More
I’m a researcher. Let me give you the latest example… My headphones broke. You know, the connection, by the plug, so that one ear goes in and out. In the seventies, you’d get this fixed. Today, it costs more to repair than to rebuy, and the art of repair seems to have gone by the…Read More
Since it is a Friday (following Valentine’s Day), I want to step back from the usual market gyrations to discuss a broader topic: The pursuit of Alpha, where it goes wrong, and the actual cost in Beta. For those of you unfamiliar with the Wall Street’s Greek nomenclature, a quick (and oversimplified) primer: When we…Read More
Every year in January, I look back at the prior year to assess the various errors, mistakes and bad calls that I made in the course of running an asset management business. I make a list of these mistakes, analyze why they occurred, and what I can do to avoid similar errors in the future….Read More
Last year, I noted in the Price of Paying Attention that listening to all of the noise out there hurts your investing returns. If you digest a lot separate sources, if you crave input, if you are entertained by current events, you run the risk of getting distracted by a huge amount of meaningless junk….Read More