1 00:00:03,240 --> 00:00:07,560 Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio. 2 00:00:08,640 --> 00:00:11,200 Speaker 1: This week on the podcast, I have a special guest. 3 00:00:11,840 --> 00:00:15,760 Speaker 1: His name is Paul Desmond. He is the president of 4 00:00:15,840 --> 00:00:21,920 Speaker 1: Lowry's Research and an extremely highly regarded market technician known 5 00:00:21,960 --> 00:00:26,960 Speaker 1: as a technicians technician. And quick funny story about Paul. 6 00:00:27,360 --> 00:00:30,880 Speaker 1: I know him, I don't know fifteen years fourteen years. 7 00:00:31,040 --> 00:00:35,240 Speaker 1: And Paul and I had a conversation a dozen years 8 00:00:35,320 --> 00:00:41,559 Speaker 1: ago that essentially was the forerunner of these podcasts. He 9 00:00:41,640 --> 00:00:47,840 Speaker 1: had just won the Charles Dow Market Technicians Award for 10 00:00:47,880 --> 00:00:54,120 Speaker 1: the most significant uh technical paper looking at bear markets 11 00:00:54,160 --> 00:00:57,840 Speaker 1: and and how bottoms are formed. And I started a 12 00:00:57,880 --> 00:01:01,400 Speaker 1: correspondence with him on email and he got back to 13 00:01:01,440 --> 00:01:03,520 Speaker 1: me and said, oh, that paper was really interesting, but 14 00:01:03,560 --> 00:01:06,440 Speaker 1: now I'm working on this new paper on how market 15 00:01:06,560 --> 00:01:09,440 Speaker 1: tops are formed, and it's really fascinating. We had to 16 00:01:09,480 --> 00:01:11,840 Speaker 1: go back and re create all this data from the 17 00:01:11,840 --> 00:01:15,200 Speaker 1: twenties that didn't exist, and he was just really enthusiastic, 18 00:01:15,240 --> 00:01:18,120 Speaker 1: and so we ended up um through a series of 19 00:01:18,280 --> 00:01:24,080 Speaker 1: phone calls that were recorded and transcribed, created these these 20 00:01:24,120 --> 00:01:29,120 Speaker 1: long conversations which became A Q and A with Paul 21 00:01:29,160 --> 00:01:32,520 Speaker 1: Desmond Part one and two. Originally it ran on the 22 00:01:32,840 --> 00:01:35,800 Speaker 1: On the Street dot com and and now it's a 23 00:01:35,840 --> 00:01:39,160 Speaker 1: little difficult to find there. I know it's buried somewhere 24 00:01:39,200 --> 00:01:43,000 Speaker 1: in there, but I reproduced it on my blog, The 25 00:01:43,000 --> 00:01:45,800 Speaker 1: Big Picture, which is results dot com. I'll put a 26 00:01:45,880 --> 00:01:50,560 Speaker 1: link in uh the page I I do on this 27 00:01:50,680 --> 00:01:53,920 Speaker 1: podcast to those original um Q and A s if 28 00:01:53,960 --> 00:01:55,680 Speaker 1: you want to uh, if you want to see them. 29 00:01:55,720 --> 00:01:57,560 Speaker 1: I actually just reread them the other day and they're 30 00:01:58,080 --> 00:02:04,280 Speaker 1: really really good. But at Conversation was really the first 31 00:02:04,320 --> 00:02:07,440 Speaker 1: time it popped into my head. Hey, I could find 32 00:02:07,480 --> 00:02:12,120 Speaker 1: these really smart guys with really really interesting experiences and 33 00:02:12,160 --> 00:02:15,400 Speaker 1: get them to speak about that, and maybe someone would 34 00:02:15,520 --> 00:02:18,880 Speaker 1: want to pay attention and and and listen to it 35 00:02:19,360 --> 00:02:23,200 Speaker 1: or read it. And um really, Paul Desmond was the 36 00:02:23,240 --> 00:02:27,680 Speaker 1: first Masters in Business we've ever done before we were 37 00:02:27,680 --> 00:02:30,960 Speaker 1: doing radio, by the way, he be. This is a 38 00:02:31,000 --> 00:02:34,760 Speaker 1: long podcast, but he tells some fascinating stories about how 39 00:02:34,800 --> 00:02:39,560 Speaker 1: he met Mr Lowry and and some anecdotes about Joe 40 00:02:39,600 --> 00:02:42,880 Speaker 1: Granville that I find to be hilarious if you know 41 00:02:42,880 --> 00:02:46,200 Speaker 1: who Joe Granville is. But um really an unusual and 42 00:02:46,280 --> 00:02:50,399 Speaker 1: interesting conversation with a lot of of details. If you're 43 00:02:50,440 --> 00:02:55,720 Speaker 1: a technician. If you're a chartist, this is the podcast 44 00:02:56,240 --> 00:02:59,120 Speaker 1: for you. So, without any further ado, here is my 45 00:02:59,280 --> 00:03:06,880 Speaker 1: conversation in with Lowry's Paul Desmond. This is Masters in 46 00:03:06,960 --> 00:03:11,200 Speaker 1: Business with Barry Ridholts on Bloomberg Radio. This week on 47 00:03:11,400 --> 00:03:15,400 Speaker 1: Masters in Business on Bloomberg Radio, my guest is Paul Desmond. 48 00:03:15,760 --> 00:03:18,280 Speaker 1: For those of you who may not know who Paul is. No, 49 00:03:18,520 --> 00:03:22,679 Speaker 1: he is not a member of Dave Brubeck's quartet. He 50 00:03:22,960 --> 00:03:26,600 Speaker 1: is president of Lowry's Research, which is the oldest advisory 51 00:03:26,639 --> 00:03:30,600 Speaker 1: firm in the United States. Paul joined Lowry's as Director 52 00:03:30,600 --> 00:03:34,160 Speaker 1: of Research in nine four, meaning you just had your 53 00:03:34,160 --> 00:03:39,160 Speaker 1: fiftieth anniversary last year. UM. The vast majority of Lowry's 54 00:03:39,200 --> 00:03:43,720 Speaker 1: subscribers or professional investors, including many of the largest hedge 55 00:03:43,720 --> 00:03:46,880 Speaker 1: funds in the world. Paul was the president of the 56 00:03:46,920 --> 00:03:51,480 Speaker 1: Market Technicians Association and the recipients of the Charles H. 57 00:03:51,640 --> 00:03:56,520 Speaker 1: Dow Award given for original and groundbreaking research. And the 58 00:03:56,560 --> 00:03:59,920 Speaker 1: piece that you won that award for was called Identify 59 00:04:00,200 --> 00:04:03,520 Speaker 1: bear market Bottoms and New bull Markets. We'll talk about 60 00:04:03,600 --> 00:04:06,960 Speaker 1: that a little while, um. Speaking of bear market bottoms. 61 00:04:07,000 --> 00:04:10,240 Speaker 1: In two thousand nine, you were honored by the Technical 62 00:04:10,760 --> 00:04:13,360 Speaker 1: and you were honored as Technical Analysts of the Year 63 00:04:13,400 --> 00:04:17,720 Speaker 1: by Technical Analysts magazine. Bull Desmond, Welcome to Bloomberg. Thank 64 00:04:17,760 --> 00:04:21,520 Speaker 1: you very much. I'm delighted to be here. So people 65 00:04:21,640 --> 00:04:24,960 Speaker 1: who um are not in the industry may not have 66 00:04:25,160 --> 00:04:28,760 Speaker 1: heard of you, but I found you a long time 67 00:04:28,800 --> 00:04:32,680 Speaker 1: ago when you had won that Dow Award for that paper, 68 00:04:32,720 --> 00:04:35,360 Speaker 1: and you and I actually had, I want to say, 69 00:04:35,360 --> 00:04:39,560 Speaker 1: it's about a dozen years ago, an extensive conversation about 70 00:04:39,800 --> 00:04:43,560 Speaker 1: how market bottoms are formed. And at the time a 71 00:04:43,640 --> 00:04:46,320 Speaker 1: paper you were working on which was called how Market 72 00:04:46,360 --> 00:04:49,039 Speaker 1: Tops Are Formed, and we I ended up writing that 73 00:04:49,120 --> 00:04:52,360 Speaker 1: up that got published. It's actually still on the block side. 74 00:04:52,400 --> 00:04:55,760 Speaker 1: If anyone wants to read this one from oh four 75 00:04:56,000 --> 00:04:58,520 Speaker 1: or five something like that, it's called uh it just 76 00:04:58,520 --> 00:05:00,520 Speaker 1: searched for Riholts and Desmond and that will come up. 77 00:05:00,800 --> 00:05:04,520 Speaker 1: And that's a really a fascinating conversation. Um, but let's 78 00:05:04,560 --> 00:05:08,000 Speaker 1: jump right into this. What did you do before you 79 00:05:08,040 --> 00:05:13,200 Speaker 1: were working at Lowry's. I was in the army, So 80 00:05:13,240 --> 00:05:16,200 Speaker 1: I went from college to the Army to Lowry just 81 00:05:16,320 --> 00:05:18,840 Speaker 1: like that. Yeah, I've got the shortest resume animals. There 82 00:05:18,839 --> 00:05:22,360 Speaker 1: you go one job years. That's that's a little unusual. 83 00:05:22,720 --> 00:05:25,719 Speaker 1: So that naturally leads to the next question, which is, 84 00:05:26,160 --> 00:05:29,920 Speaker 1: how did you become a technician right out of the army? Well, 85 00:05:30,000 --> 00:05:33,840 Speaker 1: I my my my father was an investor of some 86 00:05:33,960 --> 00:05:37,800 Speaker 1: size and UH and suffered a series of heart attacks 87 00:05:37,839 --> 00:05:42,760 Speaker 1: and and UH couldn't handle the portfolio anymore, and so 88 00:05:42,880 --> 00:05:47,599 Speaker 1: I took over for a short term, short time, and 89 00:05:47,600 --> 00:05:50,000 Speaker 1: and I knew nothing about what I was doing. So 90 00:05:50,040 --> 00:05:51,920 Speaker 1: I spent a great deal of time at the public 91 00:05:51,960 --> 00:05:55,480 Speaker 1: library trying to try to figure out what made sense 92 00:05:56,279 --> 00:05:59,800 Speaker 1: and would you learn? In the library, I saw a 93 00:06:00,080 --> 00:06:03,240 Speaker 1: lot of things that did not work, that I did 94 00:06:03,240 --> 00:06:06,599 Speaker 1: not enjoy or did not feel what it was the 95 00:06:06,680 --> 00:06:09,360 Speaker 1: right way to go. But but I did run into 96 00:06:10,040 --> 00:06:13,480 Speaker 1: I had. I had a major economics in college, and 97 00:06:13,560 --> 00:06:16,440 Speaker 1: so I was very familiar with the laws supply and demand, 98 00:06:16,600 --> 00:06:19,880 Speaker 1: and believed in the law supplying the man very much. 99 00:06:20,040 --> 00:06:24,720 Speaker 1: And I started looking for things that fit along with 100 00:06:24,760 --> 00:06:27,800 Speaker 1: the law supplying the man. Finally got down to the 101 00:06:27,839 --> 00:06:30,600 Speaker 1: point where I was doing some point in figure charting. 102 00:06:31,600 --> 00:06:35,400 Speaker 1: I was looking at value line and then all of 103 00:06:35,480 --> 00:06:38,920 Speaker 1: a sudden I ran across the lowry material. And I 104 00:06:39,000 --> 00:06:42,159 Speaker 1: was in the Miami Library at the time, and saw 105 00:06:42,240 --> 00:06:48,680 Speaker 1: that the Lowry's had a Miami address, and so so 106 00:06:49,120 --> 00:06:52,559 Speaker 1: I read a lot of their material and and felt 107 00:06:52,680 --> 00:06:55,680 Speaker 1: this was exactly what I was looking for because it 108 00:06:55,720 --> 00:06:58,440 Speaker 1: was based on the law of supplying demand. So how 109 00:06:58,440 --> 00:07:04,000 Speaker 1: do you go from research markets to manager Dad's portfolio 110 00:07:04,480 --> 00:07:07,560 Speaker 1: to applying for the job as had of research. I 111 00:07:07,640 --> 00:07:10,520 Speaker 1: really wasn't applying for the job. I was trying to 112 00:07:10,600 --> 00:07:14,320 Speaker 1: learn more about the stock market, and so with the 113 00:07:14,360 --> 00:07:17,120 Speaker 1: Miami address, I thought, well, this is a chance to 114 00:07:17,360 --> 00:07:19,920 Speaker 1: just go over there and maybe get a chance to 115 00:07:20,000 --> 00:07:23,280 Speaker 1: learn more. Serendipitous right there, Yes, I was, I was 116 00:07:23,280 --> 00:07:26,480 Speaker 1: put together. I went over to the address that was 117 00:07:26,560 --> 00:07:29,280 Speaker 1: on the reports, and instead of an office building, what 118 00:07:29,360 --> 00:07:34,160 Speaker 1: I found was I was. I was in the State 119 00:07:34,280 --> 00:07:40,360 Speaker 1: area of Miami and right along the Brickle Avenue estates 120 00:07:40,640 --> 00:07:45,680 Speaker 1: and I got to a gate. UH went through the 121 00:07:45,720 --> 00:07:49,760 Speaker 1: gate and at the at the end of the property 122 00:07:49,960 --> 00:07:56,000 Speaker 1: was three or four story brick colonial homes, incredibly unusual 123 00:07:56,040 --> 00:08:01,240 Speaker 1: in Miami, and Uh, I pulled over. They had a 124 00:08:01,320 --> 00:08:08,920 Speaker 1: separate garage and I guess mads quarters. And I pulled 125 00:08:09,000 --> 00:08:12,080 Speaker 1: in there and there was a there was a man 126 00:08:12,440 --> 00:08:16,360 Speaker 1: in the bushes tending to the flowers, and I said 127 00:08:17,400 --> 00:08:19,560 Speaker 1: I said to him, is there anybody around here from 128 00:08:19,600 --> 00:08:23,800 Speaker 1: the Lowry organization? This is actually on a Saturday. And 129 00:08:23,880 --> 00:08:25,920 Speaker 1: he came up out of the bushes with an old 130 00:08:26,840 --> 00:08:29,679 Speaker 1: head on, you know, dirt all over his fingernails, and said, 131 00:08:30,160 --> 00:08:32,360 Speaker 1: I think we can find somebody around here. And his 132 00:08:32,440 --> 00:08:37,679 Speaker 1: name was L. M. Lowry, the founder of Larry Research. 133 00:08:37,800 --> 00:08:41,200 Speaker 1: And so we we went into actually the major quarters 134 00:08:41,200 --> 00:08:45,000 Speaker 1: have been converted into his private office and so we 135 00:08:45,040 --> 00:08:48,280 Speaker 1: sat went in and sat down and I just said, 136 00:08:48,480 --> 00:08:51,040 Speaker 1: you know, I've seen your material in the library and 137 00:08:51,160 --> 00:08:54,480 Speaker 1: like to learn more about it. And we sat and 138 00:08:54,520 --> 00:08:57,800 Speaker 1: talked for oh, I think three hours. The first time 139 00:08:57,840 --> 00:09:00,640 Speaker 1: you're meeting him, just come on into my lair and 140 00:09:00,679 --> 00:09:03,920 Speaker 1: talk to me. Yeah. I always thought in college that 141 00:09:03,960 --> 00:09:06,160 Speaker 1: there must be some place in the world that you 142 00:09:06,160 --> 00:09:09,400 Speaker 1: could go to get a master's degree or PhD in 143 00:09:09,640 --> 00:09:14,160 Speaker 1: stock market analysis, and I think this is it. And 144 00:09:14,200 --> 00:09:16,959 Speaker 1: he said, well you can learn you know, I think 145 00:09:17,360 --> 00:09:21,240 Speaker 1: I think you can learn a few things here. And um, 146 00:09:21,440 --> 00:09:24,400 Speaker 1: did he offer you a job? Well, yeah, sort of 147 00:09:24,559 --> 00:09:29,040 Speaker 1: sort of a sort of a job at a phenominal 148 00:09:29,800 --> 00:09:33,880 Speaker 1: again as an intern it was almost almost an internship. 149 00:09:34,080 --> 00:09:38,040 Speaker 1: Is this is masters in business on Bloomberg Radio. I'm 150 00:09:38,120 --> 00:09:41,360 Speaker 1: Barry Ridholtz. My guest this week on Masters in Business 151 00:09:41,480 --> 00:09:45,720 Speaker 1: is technical analyst Paul Desmond of Lowry's. You've been called 152 00:09:45,800 --> 00:09:50,320 Speaker 1: the technicians technician, which is a term I I really like. 153 00:09:50,880 --> 00:09:53,559 Speaker 1: Before we start talking about market bottoms, I have to 154 00:09:53,559 --> 00:09:57,280 Speaker 1: ask one question, which is a quote of yours. You said, 155 00:09:57,880 --> 00:10:02,160 Speaker 1: if you're looking at fundamentals, you're already too late. Explain 156 00:10:02,200 --> 00:10:06,000 Speaker 1: what you meant by that, Well, the fundamentals are are delayed. 157 00:10:06,640 --> 00:10:09,320 Speaker 1: People buy and sell stocks not because of what they 158 00:10:09,400 --> 00:10:13,360 Speaker 1: know today, but what they think is going to happen 159 00:10:13,400 --> 00:10:16,640 Speaker 1: in the future. So they look at today's or rings 160 00:10:16,720 --> 00:10:19,360 Speaker 1: reports and they say, I can see the ear rings 161 00:10:19,440 --> 00:10:23,120 Speaker 1: are positive now, but I just don't think they're going 162 00:10:23,160 --> 00:10:25,800 Speaker 1: to be that positive six months from now, and therefore 163 00:10:25,800 --> 00:10:29,000 Speaker 1: the market starts to turn down because of that change 164 00:10:29,040 --> 00:10:35,520 Speaker 1: in psychology, and um the ear rings reports are still positive, 165 00:10:35,600 --> 00:10:37,880 Speaker 1: but the but the market turns out the same thing. 166 00:10:37,920 --> 00:10:42,840 Speaker 1: At market bottoms, the market traditionally turns up because investors 167 00:10:42,840 --> 00:10:45,439 Speaker 1: are saying, yeah, I can see how bad things are 168 00:10:45,559 --> 00:10:48,280 Speaker 1: right now, but I think in the next six months 169 00:10:48,320 --> 00:10:50,400 Speaker 1: things are going to get better. So so let's talk 170 00:10:50,440 --> 00:10:53,640 Speaker 1: a little bit about that. Let's talk about market bottoms. 171 00:10:53,720 --> 00:10:56,800 Speaker 1: This is the piece that you won the Charles Dowe 172 00:10:56,880 --> 00:11:00,640 Speaker 1: Award for um how how bare market bought ms are made. 173 00:11:01,200 --> 00:11:03,240 Speaker 1: Let's talk a little bit about the oh seven o 174 00:11:03,480 --> 00:11:08,200 Speaker 1: nine financial crisis and market bottom. How did that compare 175 00:11:08,280 --> 00:11:11,160 Speaker 1: to prior bear markets? Was that typical or was that 176 00:11:11,240 --> 00:11:15,600 Speaker 1: an a typical bottom? No, it was it was rather 177 00:11:16,080 --> 00:11:23,640 Speaker 1: rather typical bottom. We we we saw. The conditions that 178 00:11:23,679 --> 00:11:28,280 Speaker 1: are necessary for a bottom are twofold number number one. 179 00:11:28,400 --> 00:11:34,800 Speaker 1: You have to see the the selling exhausted. In other words, 180 00:11:34,920 --> 00:11:38,480 Speaker 1: people have to capitulate, dump stock and just give up exactly. 181 00:11:38,520 --> 00:11:41,160 Speaker 1: You have. It has to reach the point where people say, 182 00:11:41,240 --> 00:11:43,040 Speaker 1: just get me out of the stock market. I don't 183 00:11:43,080 --> 00:11:45,240 Speaker 1: ever want to see his stock again in my life. 184 00:11:46,000 --> 00:11:49,839 Speaker 1: And at that point there's no more sellers to drive 185 00:11:49,960 --> 00:11:55,719 Speaker 1: prices down. That's what you mean by exhausting, exhausted exactly. Now. 186 00:11:55,760 --> 00:11:58,120 Speaker 1: The second part of it which has to be there 187 00:11:59,200 --> 00:12:02,680 Speaker 1: is uh that the buyers who are sitting on the 188 00:12:02,720 --> 00:12:06,679 Speaker 1: sidelines have to look at the bargains that are available 189 00:12:06,720 --> 00:12:09,880 Speaker 1: at that point and say, boy, this is an opportunity 190 00:12:09,920 --> 00:12:13,000 Speaker 1: that I haven't seen in a dozen years, and they 191 00:12:13,040 --> 00:12:16,360 Speaker 1: come running back in with great enthusiasm to grab up 192 00:12:16,360 --> 00:12:19,600 Speaker 1: all these bargains. So it's a one two punch. You 193 00:12:19,679 --> 00:12:22,800 Speaker 1: have to exhaust the sellers and then you have to 194 00:12:22,840 --> 00:12:25,960 Speaker 1: bring the bring the buyers back in again. That's interesting 195 00:12:26,000 --> 00:12:30,920 Speaker 1: that simultaneously you have the psychology of some people I'm 196 00:12:30,920 --> 00:12:34,280 Speaker 1: going to describe it as reacting emotionally, Hey, just make 197 00:12:34,320 --> 00:12:37,400 Speaker 1: the pain stop, do whatever you have to do, versus 198 00:12:37,480 --> 00:12:41,240 Speaker 1: the more objective, value oriented people who say, well, it 199 00:12:41,280 --> 00:12:43,920 Speaker 1: may feel terrible, but look how reasonable these things are. 200 00:12:44,080 --> 00:12:47,280 Speaker 1: That's right. And what you find generally is that the 201 00:12:48,320 --> 00:12:52,880 Speaker 1: average investor is panicking right at the bottom. They're saying, 202 00:12:52,880 --> 00:12:54,720 Speaker 1: oh my goodness, I you know, I have to sell 203 00:12:54,800 --> 00:12:57,920 Speaker 1: now because I'm gonna lose. If I don't, I'm gonna 204 00:12:57,920 --> 00:13:00,520 Speaker 1: lose everything I've got. I remember, and we were at 205 00:13:00,559 --> 00:13:06,240 Speaker 1: Dow or so during the O nine bottom, and all 206 00:13:06,320 --> 00:13:08,240 Speaker 1: of a sudden, out of the woodworks, we were getting 207 00:13:08,280 --> 00:13:12,880 Speaker 1: forecast for Dow five thousand, Dow three thousand, Dow one thousand, 208 00:13:13,000 --> 00:13:16,400 Speaker 1: and that sort of background noise I think really scared 209 00:13:16,480 --> 00:13:19,640 Speaker 1: the living daylights out of people. Absolutely did. And and 210 00:13:19,679 --> 00:13:23,360 Speaker 1: that those are the conditions that typically invest occur at 211 00:13:23,520 --> 00:13:26,360 Speaker 1: a market bottom. So let's talk a little bit about 212 00:13:26,360 --> 00:13:30,319 Speaker 1: that bottom in your um white paper that won the 213 00:13:30,400 --> 00:13:36,600 Speaker 1: dowt Ward. You talk about down days and days. Describe 214 00:13:36,679 --> 00:13:39,600 Speaker 1: what that is and tell us what it means. Well, 215 00:13:39,400 --> 00:13:42,280 Speaker 1: we were looking for some way to to to to 216 00:13:43,240 --> 00:13:47,520 Speaker 1: indicate that we reached a market bottom, and a lot 217 00:13:47,559 --> 00:13:52,320 Speaker 1: of writers have talked about capitulation and uh and in 218 00:13:52,360 --> 00:13:56,079 Speaker 1: a in a very vague general sense, but nobody had 219 00:13:56,120 --> 00:13:59,920 Speaker 1: come up with a way to specifically identify the kind 220 00:14:00,120 --> 00:14:03,200 Speaker 1: capitulation that occurs at market bottoms. So we went back 221 00:14:03,240 --> 00:14:05,840 Speaker 1: and looked at the amount of volume that was traded 222 00:14:06,880 --> 00:14:10,160 Speaker 1: on the downside during periods of the market decline. And 223 00:14:10,240 --> 00:14:12,920 Speaker 1: there's the sellers volume, how much how much of the 224 00:14:13,040 --> 00:14:15,679 Speaker 1: volume was due to sellers and how much of it 225 00:14:15,720 --> 00:14:19,080 Speaker 1: was due to buyers? And what we found that when 226 00:14:19,080 --> 00:14:23,600 Speaker 1: you get into the point where investors are panicking, uh 227 00:14:24,840 --> 00:14:27,440 Speaker 1: or more of all of the volume traded on the 228 00:14:27,480 --> 00:14:30,880 Speaker 1: market that day is traded on the downside, meaning it's 229 00:14:30,920 --> 00:14:33,680 Speaker 1: at a price lower than the previous price. Exactly, because 230 00:14:33,760 --> 00:14:36,200 Speaker 1: whenever I've brought this up to people, one of the 231 00:14:36,200 --> 00:14:38,520 Speaker 1: comments I often hear is, well, what do you mean 232 00:14:38,600 --> 00:14:41,560 Speaker 1: more sellers and buyers? Every share that's sold someone's buying 233 00:14:41,560 --> 00:14:44,080 Speaker 1: it shouldn't there be an equal amount. But you're really 234 00:14:44,120 --> 00:14:48,640 Speaker 1: talking about are these shares sold um sold lower or 235 00:14:48,640 --> 00:14:51,360 Speaker 1: are they bought higher? Yeah? Yeah, which you have to 236 00:14:51,400 --> 00:14:54,120 Speaker 1: look at. The stock market is a double auction system 237 00:14:54,320 --> 00:14:58,040 Speaker 1: where the buyers can raise or lower their prices and 238 00:14:58,080 --> 00:15:02,040 Speaker 1: the sellers can lower or raise their prices. And so 239 00:15:02,160 --> 00:15:06,400 Speaker 1: what you're constantly watching for is to say, um is 240 00:15:06,440 --> 00:15:12,720 Speaker 1: the mood of investors towards selling more than towards buying. Uh. 241 00:15:12,880 --> 00:15:16,440 Speaker 1: So there's always a buyer, always a seller. But the 242 00:15:16,560 --> 00:15:19,200 Speaker 1: question is who is the most anxious to do business, 243 00:15:19,280 --> 00:15:23,680 Speaker 1: who's driving the actions. If the seller is anxious, then 244 00:15:23,720 --> 00:15:27,280 Speaker 1: the price will go down. If the buyer is anxious, 245 00:15:27,320 --> 00:15:29,120 Speaker 1: the only way he's going to get that stock away 246 00:15:29,160 --> 00:15:31,440 Speaker 1: from the seller is to raise the price. So it's 247 00:15:31,480 --> 00:15:34,640 Speaker 1: who's impatience and just wants either in or out at 248 00:15:34,640 --> 00:15:37,360 Speaker 1: that moment's right, and and at the at these at 249 00:15:37,560 --> 00:15:41,680 Speaker 1: near these major market bottoms, the impatience is all on 250 00:15:41,720 --> 00:15:43,880 Speaker 1: the downside. Just get me out of this place. I 251 00:15:43,920 --> 00:15:45,880 Speaker 1: don't I don't want to ever see a stock again. 252 00:15:46,160 --> 00:15:50,720 Speaker 1: So we talked about down days when the vast majority 253 00:15:50,760 --> 00:15:54,400 Speaker 1: of the trading volume is to the downside, but surprisingly 254 00:15:54,640 --> 00:15:58,000 Speaker 1: right around bottoms you also end up, as you've written, 255 00:15:58,440 --> 00:16:02,240 Speaker 1: with an update, explain what happens. You don't always and 256 00:16:02,280 --> 00:16:05,640 Speaker 1: that's the that's the important point is you can have 257 00:16:05,680 --> 00:16:09,320 Speaker 1: a series of these ninety percent downside days where investors 258 00:16:09,360 --> 00:16:12,440 Speaker 1: are are panicking, but the buyers are sitting on the 259 00:16:12,480 --> 00:16:16,520 Speaker 1: sidelines saying, you know, prices just don't look that good 260 00:16:16,520 --> 00:16:19,600 Speaker 1: to me. I really can't get too enthusiastic about buying here. 261 00:16:20,360 --> 00:16:24,920 Speaker 1: If that, if that's the way they view the bargain prices, 262 00:16:25,000 --> 00:16:28,280 Speaker 1: that there will be more sellers, there will be more 263 00:16:29,160 --> 00:16:33,160 Speaker 1: downside days, and so you don't you can't just view 264 00:16:33,240 --> 00:16:37,520 Speaker 1: the selling as being the key to the market bottom. 265 00:16:37,640 --> 00:16:39,920 Speaker 1: It's it's a one two punch of you need to 266 00:16:39,920 --> 00:16:43,080 Speaker 1: see the sellers panic and then you need to see 267 00:16:43,120 --> 00:16:45,440 Speaker 1: the buyers come rushing back in. If the buyers won't 268 00:16:45,480 --> 00:16:48,560 Speaker 1: rush back any and then the market decline will continue 269 00:16:49,080 --> 00:16:52,360 Speaker 1: until prices eventually reach the point where the buyers are 270 00:16:52,400 --> 00:16:55,240 Speaker 1: really enthusiastic about coming back into the mark. And that's 271 00:16:55,240 --> 00:16:59,320 Speaker 1: when we get that's what is upside day so and 272 00:16:59,400 --> 00:17:03,080 Speaker 1: others in nineties, in the nineteen seventy nine seventy four 273 00:17:03,120 --> 00:17:09,679 Speaker 1: market decline. We saw sixteen downside days without ever seeing 274 00:17:09,680 --> 00:17:12,440 Speaker 1: and until we finally saw a ninety percent ups a day. 275 00:17:12,440 --> 00:17:15,760 Speaker 1: And what year was that? When seventy three and nineteen 276 00:17:15,800 --> 00:17:19,520 Speaker 1: seventy four was two year two year bear market? Amazing. 277 00:17:19,680 --> 00:17:23,680 Speaker 1: This is Masters in Business on Bloomberg Radio. I'm Barry Ridalts. 278 00:17:23,960 --> 00:17:27,320 Speaker 1: Our guest this week on Masters in Business is Paul Desmond, 279 00:17:27,640 --> 00:17:31,560 Speaker 1: President of Lowry's and a gentleman known as a technicians 280 00:17:31,600 --> 00:17:36,520 Speaker 1: technician UH, an award winning analyst of stock market history. 281 00:17:36,680 --> 00:17:40,800 Speaker 1: Let's talk a little bit about a fairly interesting problem 282 00:17:40,880 --> 00:17:42,840 Speaker 1: which I think a lot of people are unaware of, 283 00:17:43,320 --> 00:17:48,640 Speaker 1: and that's what happens when we market cap weight various industries. 284 00:17:48,720 --> 00:17:51,760 Speaker 1: The SMP five hundred is cap weighted, many of the 285 00:17:51,760 --> 00:17:56,440 Speaker 1: other industries are also. Other indusicries are also cap weighted. 286 00:17:57,280 --> 00:17:59,840 Speaker 1: What you've been critical about this, what's the problem with 287 00:18:00,119 --> 00:18:03,920 Speaker 1: cap waiting market in disease, well, particularly in particularly in 288 00:18:04,080 --> 00:18:10,360 Speaker 1: old bull markets, the camp being late in the cycle, 289 00:18:10,560 --> 00:18:16,080 Speaker 1: not not not nineteenth century bull markets liked or something 290 00:18:16,119 --> 00:18:19,480 Speaker 1: along those lines, and where you're transitioning from from an 291 00:18:19,520 --> 00:18:24,320 Speaker 1: old bull market into a bearer market in that period, 292 00:18:24,840 --> 00:18:33,080 Speaker 1: the big cap price indexes are incredibly deceptive, and we're 293 00:18:33,080 --> 00:18:36,240 Speaker 1: in that kind of stage right now in two thousand 294 00:18:36,320 --> 00:18:39,400 Speaker 1: and fifteen. This is now an old six years old 295 00:18:39,400 --> 00:18:42,040 Speaker 1: bull market exactly. And what what you're seeing is that 296 00:18:42,840 --> 00:18:47,159 Speaker 1: is that the small camp segment of the market was 297 00:18:47,240 --> 00:18:51,160 Speaker 1: the first part to begin to turn down, most sensitive 298 00:18:51,200 --> 00:18:55,000 Speaker 1: to economic conditions, or just the first thing that sellers 299 00:18:55,040 --> 00:18:57,800 Speaker 1: started dump. Well, I think they're the most speculative stocks 300 00:18:57,840 --> 00:19:01,080 Speaker 1: that they tend to be overpriced more than more than 301 00:19:01,160 --> 00:19:07,600 Speaker 1: most stocks. They're they're the the most uh a liquid, 302 00:19:08,480 --> 00:19:12,680 Speaker 1: least amount of coverage, not much about there. They're kind 303 00:19:12,680 --> 00:19:15,760 Speaker 1: of one trick ponies. If if, if there, if their 304 00:19:15,760 --> 00:19:19,160 Speaker 1: companies don't if their company's product does not do well, 305 00:19:19,240 --> 00:19:22,479 Speaker 1: that you know they're pretty much gone. So anyway, what 306 00:19:22,520 --> 00:19:27,400 Speaker 1: we've seen is that the market does not always move 307 00:19:27,480 --> 00:19:31,640 Speaker 1: in tandem and knows it's not a single entity. It's 308 00:19:31,680 --> 00:19:36,800 Speaker 1: a series of of areas of strength and weakness. And 309 00:19:36,880 --> 00:19:40,679 Speaker 1: so the first stage of of a transition from a 310 00:19:40,720 --> 00:19:44,360 Speaker 1: bowl market to a bearer market is weakness in small caps. 311 00:19:45,040 --> 00:19:48,320 Speaker 1: Then at the later point, maybe several months later, you 312 00:19:48,520 --> 00:19:51,600 Speaker 1: see the deteriorations start to occur in the mid cap stocks. 313 00:19:52,280 --> 00:19:55,200 Speaker 1: And then later than that it occurs in the big 314 00:19:55,240 --> 00:19:58,639 Speaker 1: cap stocks. So if you're watching the big cap indexes 315 00:19:58,720 --> 00:20:03,320 Speaker 1: like the SMP five index, you're missing out on all 316 00:20:03,440 --> 00:20:07,639 Speaker 1: the weakness that has already occurred in the um, in 317 00:20:07,680 --> 00:20:10,400 Speaker 1: the small cap, in the mid cap and Nicklas. Example, 318 00:20:11,040 --> 00:20:14,360 Speaker 1: at the top on the top day in two thousand, 319 00:20:14,520 --> 00:20:19,159 Speaker 1: which I think was January twelve, or this is the 320 00:20:19,320 --> 00:20:22,280 Speaker 1: this is the absolute top day of the of the 321 00:20:22,400 --> 00:20:26,879 Speaker 1: SMP five index. If you look to inter inside the market, 322 00:20:26,920 --> 00:20:29,960 Speaker 1: you'd see the fifty five percent of all of the 323 00:20:30,040 --> 00:20:32,920 Speaker 1: stocks listed on the New York Stock is Change were 324 00:20:33,000 --> 00:20:36,880 Speaker 1: already down by twenty or more from there from their high. 325 00:20:37,040 --> 00:20:39,159 Speaker 1: So more than more than half of the index is 326 00:20:39,200 --> 00:20:42,199 Speaker 1: already in a bullmarket. Yeah, but you can't tell that 327 00:20:42,240 --> 00:20:45,840 Speaker 1: because the leaders are still going higher. Absolutely, because the 328 00:20:45,840 --> 00:20:48,639 Speaker 1: big caps are the last thing to turn down, and 329 00:20:48,680 --> 00:20:51,960 Speaker 1: therefore they hide all of the weaknesses occurring in the 330 00:20:52,040 --> 00:20:54,959 Speaker 1: small cap and mid cap stop. So we saw that 331 00:20:55,040 --> 00:20:58,399 Speaker 1: in two thousand with what people called the Horsemen of 332 00:20:58,520 --> 00:21:02,760 Speaker 1: the Technology index. We saw that in the late sixties 333 00:21:02,840 --> 00:21:05,840 Speaker 1: or mid sixties, we had a twenty year bull market 334 00:21:06,040 --> 00:21:10,280 Speaker 1: after the World War two ended, and that narrowed to 335 00:21:10,359 --> 00:21:13,840 Speaker 1: the nifty fifty similar concept. Those were the best known 336 00:21:13,880 --> 00:21:16,840 Speaker 1: biggest gap stocks. Yeah, that wasn't That was in seventy, 337 00:21:17,280 --> 00:21:21,560 Speaker 1: seventy two and seventy three, so really forty years into uh, 338 00:21:21,720 --> 00:21:24,879 Speaker 1: twenty years into a huge post war rally. Yeah, and 339 00:21:25,359 --> 00:21:29,200 Speaker 1: you and you see other You see other situations in 340 00:21:29,240 --> 00:21:33,399 Speaker 1: which a part portion of the market is going in 341 00:21:33,480 --> 00:21:36,000 Speaker 1: one direction and a portion of the market is going 342 00:21:36,040 --> 00:21:40,240 Speaker 1: in another direction. For example, in seventy seven, the Dow 343 00:21:40,400 --> 00:21:44,080 Speaker 1: Jones Industrial Average was down almost all year long. They 344 00:21:44,200 --> 00:21:49,119 Speaker 1: was down from his highs. At the same time, the 345 00:21:49,200 --> 00:21:52,600 Speaker 1: small caps and mid caps were making new bull market highs. 346 00:21:53,320 --> 00:21:57,520 Speaker 1: You saw the same pattern in two thousand. Actually, what 347 00:21:57,680 --> 00:22:00,760 Speaker 1: was happening in two thousand was the technology stocks were 348 00:22:00,800 --> 00:22:05,880 Speaker 1: extremely weak. They were probably down. The big caps were 349 00:22:05,920 --> 00:22:10,080 Speaker 1: down maybe thirty five, and the mid caps and small 350 00:22:10,160 --> 00:22:15,439 Speaker 1: caps we're making new highs. The SMP mid cap and 351 00:22:15,480 --> 00:22:21,280 Speaker 1: the SMP small cap indexes made their highs in UM 352 00:22:21,359 --> 00:22:26,720 Speaker 1: April of two thousand two. Most people say, well, the 353 00:22:26,760 --> 00:22:30,000 Speaker 1: bear markets started in early two thousand and lasted until 354 00:22:30,119 --> 00:22:35,399 Speaker 1: March of two thousand three. UM. But first big for 355 00:22:35,520 --> 00:22:38,720 Speaker 1: mid caps and small caps, they were actually going in 356 00:22:38,760 --> 00:22:43,280 Speaker 1: the opposite direction from the big caps. Again, if an 357 00:22:43,280 --> 00:22:48,000 Speaker 1: investor can't couldn't see that that condition, they missed a 358 00:22:48,160 --> 00:22:52,600 Speaker 1: huge opportunity. This is Masters in Business on Bloomberg Radio. 359 00:22:52,800 --> 00:22:57,159 Speaker 1: I'm Barry Ridholtz. We're speaking with Paul Desmond, technical analysts 360 00:22:57,240 --> 00:23:02,040 Speaker 1: at Lowry's also president, and he has been either working 361 00:23:02,080 --> 00:23:07,240 Speaker 1: there or running the place since nineteen sixt you. Um, 362 00:23:07,400 --> 00:23:09,880 Speaker 1: last time we spoke, you were working on a paper 363 00:23:10,119 --> 00:23:14,080 Speaker 1: about how market tops were formed. What you subsequently put 364 00:23:14,080 --> 00:23:17,920 Speaker 1: out and has become a widely acclaimed piece of research. 365 00:23:18,800 --> 00:23:22,360 Speaker 1: Let's talk about a data point that I pulled from 366 00:23:22,400 --> 00:23:26,560 Speaker 1: your research that I find absolutely fascinating. Of the fourteen 367 00:23:26,680 --> 00:23:31,760 Speaker 1: major market tops from ninety nine to two thousand, the 368 00:23:31,840 --> 00:23:35,359 Speaker 1: average percentage of stocks making new highs for the day 369 00:23:36,160 --> 00:23:40,360 Speaker 1: was only six percent. Explain how that happens and and 370 00:23:40,400 --> 00:23:46,520 Speaker 1: what that means? Well, uh uh what? What? What occurs 371 00:23:46,640 --> 00:23:51,040 Speaker 1: is that in the past, people used to think of 372 00:23:51,080 --> 00:23:55,240 Speaker 1: the market as a single entity. The market goes up 373 00:23:55,400 --> 00:23:59,760 Speaker 1: and it goes down, all in unison, that that stocks 374 00:24:00,040 --> 00:24:05,000 Speaker 1: moved together. That's true at market bottoms, but it's far 375 00:24:05,160 --> 00:24:08,960 Speaker 1: from true at market tops. Market tops are very much 376 00:24:09,040 --> 00:24:13,080 Speaker 1: like the autumn season, which is what we are right 377 00:24:13,119 --> 00:24:17,800 Speaker 1: in the middle of now. And and in the autumn, 378 00:24:18,280 --> 00:24:21,760 Speaker 1: what's happening is the leaves are changing color, and everybody's saying, oh, 379 00:24:21,920 --> 00:24:24,879 Speaker 1: isn't that isn't that beautiful? But the if the leaves 380 00:24:24,920 --> 00:24:28,399 Speaker 1: could talk, they'd be screaming out to you saying, winner's coming, 381 00:24:28,480 --> 00:24:32,359 Speaker 1: winner's coming, winners coming. You better get prepared because winners coming. 382 00:24:33,000 --> 00:24:35,119 Speaker 1: And nobody's paying any sense to it, all say, oh, 383 00:24:35,160 --> 00:24:39,119 Speaker 1: are there the leaves? Pretty well, the same thing happens 384 00:24:39,160 --> 00:24:42,720 Speaker 1: in the stock market is that individual stocks drop out 385 00:24:42,760 --> 00:24:46,440 Speaker 1: of the bull market one by one by one, very 386 00:24:46,480 --> 00:24:49,800 Speaker 1: much like the leaves falling off the trees. That the 387 00:24:49,840 --> 00:24:54,520 Speaker 1: process starts with the small caps. Almost always starts with 388 00:24:54,600 --> 00:24:59,080 Speaker 1: the small caps. Then it moves to the mid caps. Uh. 389 00:24:59,119 --> 00:25:01,800 Speaker 1: In those are area is the few people are looking at. 390 00:25:02,320 --> 00:25:04,160 Speaker 1: You know, if you said, when was the last time 391 00:25:04,160 --> 00:25:07,400 Speaker 1: you saw open the paper or a magazine and saw 392 00:25:07,480 --> 00:25:12,080 Speaker 1: a picture of the chart of the small cap Price INDEXUS, 393 00:25:12,160 --> 00:25:14,480 Speaker 1: it's you never see it. You see the SMP five. 394 00:25:15,800 --> 00:25:21,240 Speaker 1: So so those are stocks that you don't even know exists. Um, 395 00:25:21,320 --> 00:25:24,080 Speaker 1: so they start to roll over. First, they're the first 396 00:25:24,160 --> 00:25:26,840 Speaker 1: leaves to fall off the trees. Then the mid caps 397 00:25:26,840 --> 00:25:29,720 Speaker 1: start to fall off the trees. And that process is 398 00:25:29,760 --> 00:25:32,399 Speaker 1: all taking place while the s m P five hundred 399 00:25:32,520 --> 00:25:36,679 Speaker 1: is still in a rising pattern, because the big caps 400 00:25:36,720 --> 00:25:40,000 Speaker 1: are the last thing to turn down. So the what 401 00:25:40,160 --> 00:25:45,400 Speaker 1: you typically find is the this This study started with 402 00:25:45,480 --> 00:25:47,720 Speaker 1: us going back and looking at at what was going 403 00:25:47,760 --> 00:25:52,280 Speaker 1: on in I've I've always been fascinated with the idea 404 00:25:52,359 --> 00:25:56,120 Speaker 1: that I've had a number of people who a number 405 00:25:56,119 --> 00:25:59,919 Speaker 1: of our clients who were actually at in the market 406 00:26:00,040 --> 00:26:03,639 Speaker 1: in nineteen say to me, you know, the market was 407 00:26:03,720 --> 00:26:06,800 Speaker 1: just going up in and then it just crashed. There 408 00:26:06,880 --> 00:26:10,280 Speaker 1: was no warnings, there was no nothing, And I thought, 409 00:26:10,320 --> 00:26:13,600 Speaker 1: that just doesn't make any sense to me. Nothing happens 410 00:26:14,480 --> 00:26:17,680 Speaker 1: without some warning signs around it. That you can't think 411 00:26:17,680 --> 00:26:23,080 Speaker 1: of anything in life that doesn't have warning signs. Lightning 412 00:26:23,320 --> 00:26:27,720 Speaker 1: can't occur without white clouds turning the dark clouds turning 413 00:26:27,800 --> 00:26:31,000 Speaker 1: to black clouds. At least in hindsight, you should be 414 00:26:31,000 --> 00:26:34,040 Speaker 1: able to say, oh, this was the warning sign we missed. Sure, 415 00:26:34,119 --> 00:26:37,040 Speaker 1: if you know what to look for, then it's pretty 416 00:26:37,080 --> 00:26:39,320 Speaker 1: simple to see. If you don't know what to look for, 417 00:26:40,080 --> 00:26:42,159 Speaker 1: then you're gonna miss it almost every time. So so 418 00:26:42,200 --> 00:26:44,960 Speaker 1: what did you find in ninety nine? We found that 419 00:26:45,080 --> 00:26:48,440 Speaker 1: when the when the Doal Jones Industrial Average reached its 420 00:26:48,480 --> 00:26:55,679 Speaker 1: peak in on September three, only two point three percent 421 00:26:55,840 --> 00:26:57,680 Speaker 1: of the stocks on the New York Stock and Change 422 00:26:57,680 --> 00:26:59,919 Speaker 1: we're making new highs that day. Now, that was supposed 423 00:26:59,960 --> 00:27:04,000 Speaker 1: to be the market high. How could only two point 424 00:27:04,040 --> 00:27:08,920 Speaker 1: three percent be making new highs? There be six making 425 00:27:08,960 --> 00:27:14,760 Speaker 1: new highs in actuality, thirty thirty or thirty five percent 426 00:27:15,000 --> 00:27:17,160 Speaker 1: of the stocks on the New York Stock Exchange, we're 427 00:27:17,200 --> 00:27:21,359 Speaker 1: already down by or more from their highs. So we 428 00:27:21,400 --> 00:27:24,280 Speaker 1: went back and we created an advanced decline line. That's 429 00:27:24,320 --> 00:27:26,479 Speaker 1: a simple way of just saying how many stocks are 430 00:27:26,920 --> 00:27:29,720 Speaker 1: participating in the up trend, how many stocks are not 431 00:27:29,920 --> 00:27:32,719 Speaker 1: participating in the up trind. And what we found was 432 00:27:32,760 --> 00:27:38,200 Speaker 1: the advanced decline line was in a steep decline from 433 00:27:38,240 --> 00:27:44,040 Speaker 1: September two years, two years prior to the to the top. 434 00:27:44,200 --> 00:27:47,440 Speaker 1: And each day, what that was saying was there are 435 00:27:47,480 --> 00:27:50,520 Speaker 1: more more and more leaves falling off the trees and 436 00:27:50,600 --> 00:27:54,360 Speaker 1: winters coming u So it was constantly warning you that 437 00:27:54,640 --> 00:27:57,280 Speaker 1: the market was becoming thinner. There were fewer and fewer 438 00:27:57,320 --> 00:28:01,280 Speaker 1: stocks that were producing profits for portfolio. It was it 439 00:28:01,359 --> 00:28:06,600 Speaker 1: was encouraging portfolio managers to get rid of all of 440 00:28:06,640 --> 00:28:09,160 Speaker 1: the dead wood that was in their portfolios and start 441 00:28:09,400 --> 00:28:12,480 Speaker 1: start calling out stocks that were no longer in the 442 00:28:12,520 --> 00:28:16,400 Speaker 1: bull market and therefore moving towards a more defensive position 443 00:28:17,080 --> 00:28:21,119 Speaker 1: for the coming winter. So let's stay with that full 444 00:28:21,200 --> 00:28:25,000 Speaker 1: foliage metaphor that that you use so well. If I 445 00:28:25,080 --> 00:28:30,040 Speaker 1: recall what you had said previously, at the average market peak, 446 00:28:30,359 --> 00:28:33,639 Speaker 1: at least of the stocks and the brought in the 447 00:28:33,760 --> 00:28:39,280 Speaker 1: seas are already down. Is that a rough number the 448 00:28:39,320 --> 00:28:43,880 Speaker 1: equivalent of at the peak of full foliage leaves have 449 00:28:43,920 --> 00:28:48,320 Speaker 1: already fallen off the trees, exactly. And those are the 450 00:28:48,400 --> 00:28:52,800 Speaker 1: stocks that have already dropped off are almost always initially 451 00:28:52,840 --> 00:28:56,680 Speaker 1: in the small cap segment and in the mid cap segment. 452 00:28:57,520 --> 00:29:01,680 Speaker 1: So again, very different called for the average investor to see, 453 00:29:01,720 --> 00:29:05,440 Speaker 1: and so you need the tools to say, I can 454 00:29:05,480 --> 00:29:08,200 Speaker 1: see that, I can see that stocks are falling off 455 00:29:08,240 --> 00:29:10,840 Speaker 1: the trees. I can see that I can see that 456 00:29:10,920 --> 00:29:13,480 Speaker 1: it's the small caps that are rolling first, and that's 457 00:29:13,720 --> 00:29:17,400 Speaker 1: a warning sign of a coming bearer market. Let's talk 458 00:29:17,400 --> 00:29:21,280 Speaker 1: a little bit about something related, which is uh something 459 00:29:21,320 --> 00:29:24,600 Speaker 1: you had written about the New York Stock Exchange, which 460 00:29:24,720 --> 00:29:27,640 Speaker 1: you had termed as really not much of a stock 461 00:29:27,720 --> 00:29:30,960 Speaker 1: exchange because more than half of the issues on it 462 00:29:31,320 --> 00:29:35,720 Speaker 1: are on stocks. UM. So, so describe what's actually on 463 00:29:35,760 --> 00:29:38,040 Speaker 1: the New York Stock Exchange, and then we'll talk a 464 00:29:38,080 --> 00:29:42,640 Speaker 1: little bit about your operating company only index. Well, if 465 00:29:42,680 --> 00:29:46,520 Speaker 1: you if you go back in time and and let's 466 00:29:46,520 --> 00:29:49,120 Speaker 1: say you went back to the forties or the even 467 00:29:49,120 --> 00:29:52,640 Speaker 1: the fifties and looked at what was registered on the 468 00:29:52,640 --> 00:29:55,160 Speaker 1: New York Stock Exchange. At the time, it was all 469 00:29:55,320 --> 00:29:59,440 Speaker 1: common stocks, and then it was preferred stocks that were 470 00:29:59,600 --> 00:30:07,200 Speaker 1: general convertible into common stocks UM also operating common stock 471 00:30:07,360 --> 00:30:14,040 Speaker 1: companies and preferred and and and and convertible preferred So 472 00:30:14,520 --> 00:30:18,160 Speaker 1: the convertible preferreds because they were tied to the common 473 00:30:18,200 --> 00:30:23,040 Speaker 1: stock through the through the conversion process, they moved like 474 00:30:23,280 --> 00:30:30,880 Speaker 1: common stocks. What happened in was there were products around, 475 00:30:31,360 --> 00:30:37,360 Speaker 1: particularly particularly from the developer called neuven Nouvene had developed 476 00:30:37,680 --> 00:30:41,080 Speaker 1: a number of products that were primarily for the retirement community, 477 00:30:41,240 --> 00:30:44,960 Speaker 1: mostly bonds and interest issuing. Yeah, they were. They were. 478 00:30:45,000 --> 00:30:50,720 Speaker 1: They were essentially portfolios of of individual bonds, all with 479 00:30:50,800 --> 00:30:57,479 Speaker 1: an approximately same maturity date. And UM they didn't have 480 00:30:57,600 --> 00:31:00,960 Speaker 1: an aftermarket. They had no way to sell if somebody 481 00:31:01,000 --> 00:31:04,560 Speaker 1: wanted to sell the shares for any reason in between 482 00:31:04,600 --> 00:31:08,960 Speaker 1: the maturity dates. There was no market. So Nouvene and 483 00:31:09,000 --> 00:31:10,960 Speaker 1: a number of products like that went to the New 484 00:31:11,040 --> 00:31:15,840 Speaker 1: York Stock Exchange and said, we need we need an 485 00:31:15,840 --> 00:31:19,720 Speaker 1: aftermarket and you need more volume on the on the exchange, 486 00:31:20,320 --> 00:31:24,840 Speaker 1: and so they made a deal, uh that that essentially 487 00:31:24,880 --> 00:31:29,080 Speaker 1: said the place should have been renamed the New York 488 00:31:29,200 --> 00:31:32,800 Speaker 1: Stock and Bond Market, but they didn't do it. That 489 00:31:33,000 --> 00:31:35,960 Speaker 1: was still called the New York Stock Market. But investors 490 00:31:36,040 --> 00:31:41,440 Speaker 1: were not aware of the distortions that were occurring because 491 00:31:41,440 --> 00:31:44,600 Speaker 1: of the fact that so many bonds were now listed 492 00:31:44,600 --> 00:31:46,880 Speaker 1: on the New York Stock Exchange. So so you mentioned 493 00:31:46,880 --> 00:31:50,080 Speaker 1: it's bonds, it's closed in funds, it's reads. But more 494 00:31:50,120 --> 00:31:52,800 Speaker 1: than half is that still true today? More than half 495 00:31:52,800 --> 00:31:57,760 Speaker 1: of the NYC is not operating company domestic common stock. Yeah, 496 00:31:57,760 --> 00:32:01,560 Speaker 1: it's actually about fift and and another part of it's 497 00:32:01,600 --> 00:32:05,040 Speaker 1: in there that is that instead of convertible preferred stocks, 498 00:32:05,480 --> 00:32:09,520 Speaker 1: we now just have preferred stocks, and those stocks trade 499 00:32:09,640 --> 00:32:12,840 Speaker 1: more like bonds than they do like stocks. So in 500 00:32:12,960 --> 00:32:17,760 Speaker 1: order to in order to eliminate all these potential distortions, 501 00:32:18,000 --> 00:32:21,360 Speaker 1: we simply said what what investors wanted to know is 502 00:32:21,680 --> 00:32:27,480 Speaker 1: how are common stocks domestic common stocks moving on the exchange. 503 00:32:27,760 --> 00:32:34,280 Speaker 1: And so we created a new universe called the operating 504 00:32:34,480 --> 00:32:38,320 Speaker 1: Companies only, and the only thing that's in that group 505 00:32:38,480 --> 00:32:43,200 Speaker 1: is is is domestic common stocks. So let's let's go 506 00:32:43,280 --> 00:32:46,600 Speaker 1: back to how market tops were formed. Then I want 507 00:32:46,600 --> 00:32:49,560 Speaker 1: to talk about specific market tops. So what do your 508 00:32:49,560 --> 00:32:52,400 Speaker 1: clients said? Nine? There was no warning, but you went 509 00:32:52,480 --> 00:32:55,680 Speaker 1: back and there was plenty of warnings warning what about 510 00:32:56,360 --> 00:32:59,080 Speaker 1: which a lot of people look at the black Monday 511 00:33:00,040 --> 00:33:03,000 Speaker 1: van as having no warning. It just came out of 512 00:33:03,040 --> 00:33:06,760 Speaker 1: no act. Now the same same thing again. You need 513 00:33:06,760 --> 00:33:08,880 Speaker 1: to know where to look and you need to have 514 00:33:09,000 --> 00:33:11,880 Speaker 1: the indicators to be able to see it. The advanced 515 00:33:11,880 --> 00:33:15,680 Speaker 1: decline line that we were talking about in nine in 516 00:33:15,720 --> 00:33:21,680 Speaker 1: the seven case topped out in March of Night seven 517 00:33:22,320 --> 00:33:25,600 Speaker 1: and was in a significant decline by the time that 518 00:33:25,680 --> 00:33:30,560 Speaker 1: the break occurred in October. We've been speaking with Paul Desmond. 519 00:33:30,880 --> 00:33:33,720 Speaker 1: He is the president and had to research at Lowry's 520 00:33:34,160 --> 00:33:36,560 Speaker 1: Market Research. You can you can hang around and continue 521 00:33:36,600 --> 00:33:40,120 Speaker 1: chatting for a while. So if you enjoy this conversation, 522 00:33:40,200 --> 00:33:42,480 Speaker 1: be sure and check out our podcast extras where we 523 00:33:42,560 --> 00:33:46,320 Speaker 1: keep the tape rolling and continue speaking. Be sure and 524 00:33:46,400 --> 00:33:48,960 Speaker 1: check out my daily column. You can see that at 525 00:33:49,000 --> 00:33:52,880 Speaker 1: Bloomberg View dot com. Follow me on Twitter at rid Halts. 526 00:33:53,320 --> 00:33:56,440 Speaker 1: I'm Barry Ridults. You're listening to Masters in Business on 527 00:33:56,600 --> 00:34:00,600 Speaker 1: Bloomberg Radio. You're listening to the podcast portion. I don't 528 00:34:00,640 --> 00:34:02,080 Speaker 1: know why I do this with my arms. I do 529 00:34:02,200 --> 00:34:04,760 Speaker 1: that every uh every time. Paul, thank you so much 530 00:34:04,800 --> 00:34:08,280 Speaker 1: for for coming by today. I've been looking forward to 531 00:34:08,280 --> 00:34:13,400 Speaker 1: to revisiting this conversation. I still get emails about that 532 00:34:13,520 --> 00:34:17,520 Speaker 1: earlier conversation we had. I actually had someone at the 533 00:34:17,560 --> 00:34:21,920 Speaker 1: Street dot com transcribe it and we published it in 534 00:34:21,960 --> 00:34:25,160 Speaker 1: two parts the Street dot com. It's somewhere on the 535 00:34:25,200 --> 00:34:28,560 Speaker 1: side it's buried, but I I took the original text 536 00:34:28,760 --> 00:34:31,680 Speaker 1: and and reposted it on my blog it hilts dot 537 00:34:31,719 --> 00:34:36,160 Speaker 1: com years ago. I still get emails about that, and 538 00:34:36,200 --> 00:34:38,719 Speaker 1: people ask me about lowry Is. I'm like, hey, they're 539 00:34:38,800 --> 00:34:41,799 Speaker 1: an operating company. You have questions, contact them. I know 540 00:34:41,920 --> 00:34:45,320 Speaker 1: you could download all of your white papers at Lowriies 541 00:34:45,360 --> 00:34:48,680 Speaker 1: dot com and order reprints of all sorts of stuff. 542 00:34:49,560 --> 00:34:51,840 Speaker 1: So let's let's talk about some of the questions and 543 00:34:51,880 --> 00:34:55,120 Speaker 1: some of the things um we missed. Before I get 544 00:34:55,160 --> 00:34:59,239 Speaker 1: into some of my regular questions, and these are these 545 00:34:59,239 --> 00:35:04,040 Speaker 1: are actually real questions. I'm not just making this stuff up. Um, 546 00:35:04,080 --> 00:35:06,800 Speaker 1: So let's talk a little bit about technical analysis, which 547 00:35:07,239 --> 00:35:09,680 Speaker 1: some of my friends think of as voodoo, and I 548 00:35:09,920 --> 00:35:14,759 Speaker 1: always have looked at it as really, let's think of 549 00:35:14,800 --> 00:35:17,880 Speaker 1: this as a measure of psychology and as the battle 550 00:35:17,960 --> 00:35:21,280 Speaker 1: between supply and demand for market shares. And I found 551 00:35:21,320 --> 00:35:24,840 Speaker 1: that has always been a helpful way to to frame 552 00:35:25,000 --> 00:35:31,799 Speaker 1: technical analysis. What do most people misunderstand about about technicals? Oh, 553 00:35:32,200 --> 00:35:36,520 Speaker 1: you know, it's a broad, uh broad category, and there 554 00:35:36,560 --> 00:35:40,840 Speaker 1: are a lot of different approaches to the stock market 555 00:35:40,920 --> 00:35:44,080 Speaker 1: that all kind of fit within the in the category 556 00:35:44,160 --> 00:35:48,440 Speaker 1: of technical. Now, O, if it's not fundamental, then it 557 00:35:48,480 --> 00:35:51,640 Speaker 1: fits into the category of of of technical. So if 558 00:35:51,640 --> 00:35:54,040 Speaker 1: you're not looking at earnings and value and price, then 559 00:35:54,080 --> 00:35:58,279 Speaker 1: you're you're it's a big umbrella. And that's everything from 560 00:35:58,680 --> 00:36:04,040 Speaker 1: charts to momentum to fib cycles. It's it's the moon, 561 00:36:04,360 --> 00:36:07,200 Speaker 1: the tides of the moon. Well, we're trying to keep 562 00:36:07,280 --> 00:36:10,359 Speaker 1: it serious, like when I and I know there are 563 00:36:10,400 --> 00:36:13,439 Speaker 1: people who and I apologize to those of you who 564 00:36:13,480 --> 00:36:16,000 Speaker 1: follow astrology as a way to invest your money, and 565 00:36:16,040 --> 00:36:20,520 Speaker 1: I apologize for you essentially being broke. But um, but 566 00:36:21,560 --> 00:36:27,040 Speaker 1: within the realm of quasi, I don't even know the 567 00:36:27,120 --> 00:36:31,440 Speaker 1: right words. Let's hold tides and and astrology aside. But 568 00:36:32,560 --> 00:36:35,480 Speaker 1: when we look at things like Fibonacci and Elliott wave. 569 00:36:35,800 --> 00:36:38,000 Speaker 1: So I'm gonna ask you the same question in two 570 00:36:38,000 --> 00:36:41,160 Speaker 1: different ways. The first, let me ask you this, what 571 00:36:41,239 --> 00:36:45,640 Speaker 1: are your favorite indicators, favorite technico indicators that you use 572 00:36:46,239 --> 00:36:49,759 Speaker 1: to help form your view of the market. Well, let 573 00:36:49,239 --> 00:36:52,799 Speaker 1: me go back just the second. Nobody knows where the 574 00:36:52,840 --> 00:36:58,000 Speaker 1: word technical came from, right, other than it's different than fundamental. Yeah, 575 00:36:59,560 --> 00:37:02,520 Speaker 1: when I when I was president of the Market Technicians Association, 576 00:37:02,640 --> 00:37:05,879 Speaker 1: we made an effort to try to go back and 577 00:37:05,920 --> 00:37:09,719 Speaker 1: find out who first used the word technical. Couldn't figure 578 00:37:09,760 --> 00:37:13,920 Speaker 1: it out, and what you know, in my in my estimation, 579 00:37:15,080 --> 00:37:17,440 Speaker 1: we should not use the word technical. We should be 580 00:37:17,520 --> 00:37:20,200 Speaker 1: using the word supply and demand. Right, how do you 581 00:37:20,280 --> 00:37:22,080 Speaker 1: how would you call that it? So I'm not a 582 00:37:22,120 --> 00:37:26,880 Speaker 1: fundamental analyst, I'm a supply demand That's very interesting. You 583 00:37:26,920 --> 00:37:32,600 Speaker 1: think that more accurately describes what the so called technicians do. Yes, 584 00:37:32,680 --> 00:37:36,200 Speaker 1: it's it's the it's the foundation of everything that that 585 00:37:36,920 --> 00:37:40,919 Speaker 1: people in the general category of technical analys so when 586 00:37:40,920 --> 00:37:43,480 Speaker 1: when you're looking at a chart, what you're really seeing 587 00:37:43,800 --> 00:37:47,799 Speaker 1: is the daily battle of demand versus supply. Exactly as 588 00:37:47,840 --> 00:37:51,520 Speaker 1: prices rise is because the buyers were more anxious to 589 00:37:51,520 --> 00:37:54,720 Speaker 1: do business than the sellers. Or if prices are dropping, 590 00:37:54,880 --> 00:37:57,560 Speaker 1: is because the sellers are trying to get rid of 591 00:37:57,600 --> 00:37:59,800 Speaker 1: their stocks and they're lowering the price in order to 592 00:37:59,840 --> 00:38:03,560 Speaker 1: get rid of it. And the important point is that 593 00:38:03,600 --> 00:38:07,000 Speaker 1: if you if you go back to every economic textbook 594 00:38:07,719 --> 00:38:12,360 Speaker 1: that's probably that's ever been published, in turn to chapter one, 595 00:38:12,560 --> 00:38:16,960 Speaker 1: maybe chapter two, it's about the law supplying demand, and 596 00:38:17,000 --> 00:38:20,120 Speaker 1: it says the law supply demand is the foundation is 597 00:38:20,160 --> 00:38:27,120 Speaker 1: the starting point of all all economic analysis. MM. So 598 00:38:27,280 --> 00:38:31,920 Speaker 1: it makes sense that that we would look at that, 599 00:38:32,080 --> 00:38:35,520 Speaker 1: at those at that chapter and say, okay, now what 600 00:38:35,560 --> 00:38:37,880 Speaker 1: we need to be doing is because they're saying this 601 00:38:37,960 --> 00:38:41,480 Speaker 1: is the foundation, this is the starting point. We need 602 00:38:41,520 --> 00:38:45,080 Speaker 1: to be looking at supply and demand. But somehow the 603 00:38:45,120 --> 00:38:48,920 Speaker 1: Fundamental school says, well, we look at supply and demand 604 00:38:49,000 --> 00:38:51,560 Speaker 1: for loyal we look at it for real estate, we 605 00:38:51,600 --> 00:38:53,360 Speaker 1: look at it for gold, we look at it for 606 00:38:53,400 --> 00:38:56,440 Speaker 1: orange juice, we look at it for qualities, but not 607 00:38:56,600 --> 00:39:03,200 Speaker 1: the stock market. For some reason, some and they exclude uh, 608 00:39:03,360 --> 00:39:07,520 Speaker 1: the laws supplying demand from from the analysis of the 609 00:39:07,560 --> 00:39:11,360 Speaker 1: stock market. That's a fascinating thing. How the how the 610 00:39:11,360 --> 00:39:15,920 Speaker 1: stock market is all of a sudden excluded or supplying 611 00:39:16,000 --> 00:39:19,719 Speaker 1: demand is excluded from the stock market. It's almost you know, 612 00:39:19,760 --> 00:39:23,799 Speaker 1: it's almost the same as saying, um, we all recognize 613 00:39:23,840 --> 00:39:26,680 Speaker 1: that at night when they get start out, you tend 614 00:39:26,719 --> 00:39:29,920 Speaker 1: to come in the house, and when the sun is up, 615 00:39:30,000 --> 00:39:33,239 Speaker 1: it's it's tend to get outside and and and uh 616 00:39:33,600 --> 00:39:37,040 Speaker 1: go about your business. In the wintertime, we wear heavy 617 00:39:37,080 --> 00:39:40,440 Speaker 1: clothes and we turn on a heater. Uh. In the summertime, 618 00:39:40,560 --> 00:39:42,799 Speaker 1: we turn on an air condition here, and we're light clothes. 619 00:39:42,840 --> 00:39:48,520 Speaker 1: So we're constantly adapting. We're changing as conditions are around us. Change. 620 00:39:48,960 --> 00:39:52,280 Speaker 1: But then the fundamental school says, well, that all applies 621 00:39:52,360 --> 00:39:54,760 Speaker 1: to everything else in life, but not the stock market. 622 00:39:55,239 --> 00:39:58,520 Speaker 1: The stock market, we just stay fully invested. We always 623 00:39:58,520 --> 00:40:03,160 Speaker 1: stay invested. We wear this same clothes all year round. Uh, 624 00:40:03,320 --> 00:40:06,759 Speaker 1: we were if we're wearing bathing suits when winner comes, 625 00:40:06,840 --> 00:40:10,440 Speaker 1: we just keep wearing bathing suits. Makes no sense at all. 626 00:40:10,600 --> 00:40:13,680 Speaker 1: That's a fascinating way to look at it. Well. Supply 627 00:40:13,800 --> 00:40:18,680 Speaker 1: demand approach simply says the supply the changes in the 628 00:40:18,760 --> 00:40:23,680 Speaker 1: forces of supplying demand will warn you of the changes 629 00:40:23,880 --> 00:40:30,280 Speaker 1: in investor psychology, so that when uh summer in place, 630 00:40:30,360 --> 00:40:34,560 Speaker 1: or when we go back earlier, and when when springtime comes, 631 00:40:35,239 --> 00:40:38,360 Speaker 1: you're aware that this is a wonderful opportunity to plant 632 00:40:38,400 --> 00:40:41,760 Speaker 1: your money in in common stocks and and see it grow. 633 00:40:42,840 --> 00:40:46,680 Speaker 1: But it also shows you the erosion that takes place 634 00:40:47,560 --> 00:40:50,279 Speaker 1: in autumn, in the autumn of the stock market, and 635 00:40:50,400 --> 00:40:54,360 Speaker 1: allows you to to recognize that a lot of stocks 636 00:40:54,360 --> 00:40:57,200 Speaker 1: are not not not going up anymore. And if they're 637 00:40:57,200 --> 00:41:00,080 Speaker 1: not going up, then you then you are exposed to 638 00:41:00,120 --> 00:41:02,880 Speaker 1: the risk without any of the reward, and the better, 639 00:41:03,280 --> 00:41:07,120 Speaker 1: more logical thing to do is to to go to cash. 640 00:41:07,800 --> 00:41:12,399 Speaker 1: So let's talk a little bit about the psychology of this. 641 00:41:13,000 --> 00:41:17,080 Speaker 1: How much of what technicals are so called technicals, I 642 00:41:17,280 --> 00:41:20,080 Speaker 1: shouldn't really use that that tim around you. How much 643 00:41:20,080 --> 00:41:23,840 Speaker 1: of that is really just a measure of psychology. It's 644 00:41:23,920 --> 00:41:27,680 Speaker 1: it's it's it's exactly what you're doing. And then that's 645 00:41:27,719 --> 00:41:34,160 Speaker 1: exactly why the fundamental school doesn't like us technical analysis, 646 00:41:34,239 --> 00:41:37,759 Speaker 1: because they're saying psychology is is an art form, it's 647 00:41:37,800 --> 00:41:42,200 Speaker 1: not a it's not a science. And um, but but 648 00:41:42,560 --> 00:41:46,600 Speaker 1: prices go up and down because buyers are more anxious 649 00:41:46,600 --> 00:41:51,000 Speaker 1: to buy than sellers are to sell. And so what 650 00:41:51,080 --> 00:41:56,200 Speaker 1: you find is that the major turning points in the 651 00:41:56,239 --> 00:42:02,800 Speaker 1: stock market occur because of psychology, not because of evidence 652 00:42:02,920 --> 00:42:07,560 Speaker 1: provided by fund the fundamental school. In other words, at 653 00:42:07,480 --> 00:42:12,040 Speaker 1: a major market bottom when you should be buying, the 654 00:42:12,080 --> 00:42:17,200 Speaker 1: economic news is all bad. Earnings are horrible, corporations are 655 00:42:17,200 --> 00:42:21,480 Speaker 1: going bankrupts. Uh, you know, everything is bad. I think 656 00:42:21,600 --> 00:42:26,720 Speaker 1: think back to March o nine, earnings had plummeted almost 657 00:42:26,719 --> 00:42:30,840 Speaker 1: a hundred percent. That we're still doing four hundred thousand 658 00:42:31,320 --> 00:42:35,520 Speaker 1: job losses a month. GDP was still contracting. If if 659 00:42:35,560 --> 00:42:38,319 Speaker 1: you were looking at the economic fundamentals, the last thing 660 00:42:38,320 --> 00:42:40,960 Speaker 1: you would want to do is put money into stocks 661 00:42:41,000 --> 00:42:44,600 Speaker 1: in March o nine. And yet there's no better time 662 00:42:44,640 --> 00:42:46,680 Speaker 1: in the past decade to have put money into the 663 00:42:46,719 --> 00:42:51,120 Speaker 1: equity market, exactly. And so and so an intelligent investor 664 00:42:51,440 --> 00:42:55,799 Speaker 1: has to learn that they need to be a contrarian 665 00:42:55,880 --> 00:43:00,759 Speaker 1: investor and they need to view major mark at declines 666 00:43:01,239 --> 00:43:04,400 Speaker 1: as as an opportunity to make profit. Is that the 667 00:43:04,440 --> 00:43:09,640 Speaker 1: decline is producing the opportunity to buy it extremely low prices. 668 00:43:09,840 --> 00:43:13,920 Speaker 1: The bowl market as it goes higher and higher and 669 00:43:14,000 --> 00:43:17,920 Speaker 1: higher is creating an opportunity for people to be caught 670 00:43:18,000 --> 00:43:20,520 Speaker 1: in that in the in the in the coming bear 671 00:43:20,680 --> 00:43:25,520 Speaker 1: market and um and suffer those losses. So so you 672 00:43:25,560 --> 00:43:28,960 Speaker 1: need you need to be able to see whether buyers 673 00:43:29,320 --> 00:43:34,680 Speaker 1: and sellers are gaining control of the markets so that 674 00:43:34,760 --> 00:43:40,480 Speaker 1: you can change as market conditions change. So, so let's 675 00:43:40,520 --> 00:43:45,120 Speaker 1: stick with various technical indicators. Um, what are your favorite 676 00:43:45,120 --> 00:43:48,840 Speaker 1: things to look at? Obviously market breath one of the 677 00:43:48,840 --> 00:43:52,319 Speaker 1: most important things. Yeah, it's it's it's all subsets of 678 00:43:52,440 --> 00:43:55,840 Speaker 1: supply and demand. So its case to say, how, how 679 00:43:55,880 --> 00:43:58,200 Speaker 1: in what ways can you measure your supply and demand. 680 00:43:58,239 --> 00:44:00,759 Speaker 1: While you can measure it in terms of value, you 681 00:44:00,800 --> 00:44:05,000 Speaker 1: can measure it in terms of momentum. Do you find volume? 682 00:44:05,120 --> 00:44:10,439 Speaker 1: Is um worthwhile to to analyze or it's extremely important? Sure, 683 00:44:10,520 --> 00:44:16,560 Speaker 1: Let's let's say that. Let's say that you're there, Uh, 684 00:44:16,719 --> 00:44:19,239 Speaker 1: let's say that you're thinking about buying a piece of 685 00:44:19,280 --> 00:44:21,960 Speaker 1: real estate and you're you're saying, I'm looking for a 686 00:44:22,040 --> 00:44:24,280 Speaker 1: piece of real estates are going to appreciate in value. 687 00:44:25,000 --> 00:44:27,360 Speaker 1: So I'm going to go over to this new development 688 00:44:27,440 --> 00:44:32,560 Speaker 1: that's down down the street and I'm going to say, um, uh, 689 00:44:32,840 --> 00:44:35,000 Speaker 1: if I bought one of these houses, do you think 690 00:44:35,080 --> 00:44:38,600 Speaker 1: that would appreciate and value and the and the answer 691 00:44:38,640 --> 00:44:41,880 Speaker 1: to that is the case of saying, uh, well, here's 692 00:44:42,000 --> 00:44:45,680 Speaker 1: one development where where the buyers are lined up around 693 00:44:45,680 --> 00:44:49,240 Speaker 1: the block trying to get in, trying and have money 694 00:44:49,239 --> 00:44:52,919 Speaker 1: in their hand, trying to trying to buy these buy 695 00:44:52,960 --> 00:44:58,799 Speaker 1: these buildings. Here's another development mile away where there's two 696 00:44:58,880 --> 00:45:02,960 Speaker 1: or three people looking at the properties, which one do 697 00:45:03,000 --> 00:45:05,920 Speaker 1: you think is going to appreciate in value? So the 698 00:45:06,080 --> 00:45:11,840 Speaker 1: volume of transactions simply tells you the strength of buyers 699 00:45:11,960 --> 00:45:14,880 Speaker 1: or the strength of the lack of lack of strength. 700 00:45:15,600 --> 00:45:18,400 Speaker 1: And if if there's only a few people interested in 701 00:45:18,440 --> 00:45:21,480 Speaker 1: a particular piece of property, then the chances are the 702 00:45:22,280 --> 00:45:25,360 Speaker 1: value of those pieces of property are not going to 703 00:45:25,480 --> 00:45:29,600 Speaker 1: increase very much. Whereas where the line that around the block, 704 00:45:30,640 --> 00:45:32,880 Speaker 1: the prices are probably gonna go up is because people 705 00:45:32,920 --> 00:45:36,160 Speaker 1: want that that particular kind of house. So it's it's 706 00:45:36,200 --> 00:45:40,759 Speaker 1: Brooklyn versus Staten Island. Is really the housing market in 707 00:45:40,760 --> 00:45:44,520 Speaker 1: Brooklyn is on fire. Other borrows not not as much, 708 00:45:44,520 --> 00:45:46,640 Speaker 1: although I'm sure someone's gonna email me and say no, 709 00:45:46,800 --> 00:45:51,279 Speaker 1: everything's gone crazy. And Staten Island also starting to pick 710 00:45:51,400 --> 00:45:54,800 Speaker 1: up in Queens and the Bronx now is just really 711 00:45:55,400 --> 00:45:57,640 Speaker 1: there's not enough land and they're not building a whole 712 00:45:57,640 --> 00:46:01,080 Speaker 1: lot more and it's gone, it's going crazy. So when 713 00:46:01,160 --> 00:46:04,279 Speaker 1: you use the real estate metaphor, I'm just thinking the 714 00:46:04,320 --> 00:46:08,480 Speaker 1: prices of apartments in Brooklyn, you go to Park Slope 715 00:46:08,719 --> 00:46:12,399 Speaker 1: or Brooklyn Heights or cal Gun, they're just off the chart. 716 00:46:12,440 --> 00:46:15,240 Speaker 1: It's amazing, And well, let's in this process. Is supplying 717 00:46:15,280 --> 00:46:18,960 Speaker 1: demand works not only in real estate, not only on 718 00:46:20,440 --> 00:46:23,160 Speaker 1: For example, if everybody knows if you want to buy 719 00:46:23,160 --> 00:46:27,520 Speaker 1: a car, uh, you buy a car when there are 720 00:46:27,560 --> 00:46:31,360 Speaker 1: no buyers around, and there's a huge inventory of cars 721 00:46:31,400 --> 00:46:34,200 Speaker 1: on the on the dealer's lot, and end of the 722 00:46:34,239 --> 00:46:36,520 Speaker 1: month or end of the year, the last week between 723 00:46:36,600 --> 00:46:39,120 Speaker 1: Christmas and New Year's those are your best deals exactly. 724 00:46:39,120 --> 00:46:41,400 Speaker 1: And that that's simply a case of saying you're you're 725 00:46:41,440 --> 00:46:44,520 Speaker 1: you are going to buy when the forces of supplying 726 00:46:44,520 --> 00:46:46,640 Speaker 1: demand are at their worst for the for the dealer. 727 00:46:47,360 --> 00:46:48,640 Speaker 1: The same thing with if you want to buy an 728 00:46:48,640 --> 00:46:52,160 Speaker 1: air conditioner, you better buy it in the wintertime. They'll 729 00:46:52,200 --> 00:46:54,799 Speaker 1: buy it in July. That's a mistake where there are 730 00:46:54,800 --> 00:46:56,920 Speaker 1: no buyers lined up in the middle of winter to 731 00:46:57,040 --> 00:46:59,400 Speaker 1: buy air conditioning units, and so you get a you 732 00:46:59,440 --> 00:47:02,359 Speaker 1: get a drum antically better deal. That's using the law 733 00:47:02,440 --> 00:47:06,120 Speaker 1: supply and demand in in a smart fashion to to 734 00:47:06,200 --> 00:47:10,920 Speaker 1: take advantage of the changes in in the forces of 735 00:47:11,000 --> 00:47:13,719 Speaker 1: supplying demand. So, so we mentioned some of your your 736 00:47:13,760 --> 00:47:18,480 Speaker 1: favorite indicators. What sort of approaches the technico analysis do 737 00:47:18,600 --> 00:47:21,360 Speaker 1: you think the jury is still out on or or 738 00:47:21,440 --> 00:47:25,400 Speaker 1: you don't think really is provides a whole lot of insight. 739 00:47:26,200 --> 00:47:29,680 Speaker 1: Anything stand out that you don't understand why people deploy 740 00:47:29,760 --> 00:47:34,359 Speaker 1: that astrology aside? Yeah, what what's interesting is there? There 741 00:47:34,040 --> 00:47:41,000 Speaker 1: there too two areas of UH interest in technical analysis. 742 00:47:41,080 --> 00:47:46,360 Speaker 1: One one is the UH psychology side of it. The 743 00:47:46,440 --> 00:47:52,240 Speaker 1: other side of it is are things like fibonacci um 744 00:47:52,360 --> 00:47:57,040 Speaker 1: on my list and UH game and some of some 745 00:47:57,080 --> 00:48:04,320 Speaker 1: of these UH And what's fascinating is that a number 746 00:48:04,320 --> 00:48:09,200 Speaker 1: of these approaches are based upon the physical world. In 747 00:48:09,239 --> 00:48:13,120 Speaker 1: other words, we've all seen that picture of that Leonardo 748 00:48:13,239 --> 00:48:17,399 Speaker 1: da Vinci creative, a man standing with his arms spread out, 749 00:48:18,200 --> 00:48:23,160 Speaker 1: And what that's demonstrating is what is called the golden measurement, 750 00:48:23,360 --> 00:48:26,960 Speaker 1: golden ratio, golden ratio, that the length of your arm 751 00:48:27,040 --> 00:48:30,200 Speaker 1: is the same as the length of your leg. Or whatever. 752 00:48:31,120 --> 00:48:33,520 Speaker 1: And and it's a is a physical thing that says, 753 00:48:33,600 --> 00:48:35,960 Speaker 1: no matter who you are, no matter when you're born, 754 00:48:36,120 --> 00:48:38,560 Speaker 1: where where, where you are in the world, that measurement 755 00:48:38,600 --> 00:48:43,120 Speaker 1: is always the same. Uh. Fibonacci is much the same 756 00:48:43,200 --> 00:48:47,600 Speaker 1: as as simply says that there there's a there's a 757 00:48:47,719 --> 00:48:51,960 Speaker 1: natural ratio that exists in nature. They've seen that the 758 00:48:52,040 --> 00:48:56,640 Speaker 1: nut shell with the declining spiral, And the problem with 759 00:48:56,680 --> 00:49:00,600 Speaker 1: that is there from the physical world. And what controls 760 00:49:00,680 --> 00:49:03,600 Speaker 1: the stock market is not the physical world. It's the 761 00:49:03,640 --> 00:49:07,800 Speaker 1: emotional world. It's a buyers versus sellers. So I'm always 762 00:49:07,840 --> 00:49:11,360 Speaker 1: skeptical of those things that come from the natural world 763 00:49:11,920 --> 00:49:17,400 Speaker 1: that say there's only so far that that stock can move. Uh. 764 00:49:18,000 --> 00:49:21,760 Speaker 1: You know, if you if you think of the range 765 00:49:21,960 --> 00:49:27,359 Speaker 1: of human emotion has almost no limit to it. And 766 00:49:27,400 --> 00:49:30,279 Speaker 1: so to say that, you know, that's a certain things 767 00:49:30,320 --> 00:49:34,200 Speaker 1: you can only go so far is a naive So 768 00:49:34,280 --> 00:49:38,879 Speaker 1: I know Elliott wave is the three count five count three, 769 00:49:38,960 --> 00:49:42,000 Speaker 1: and for some reason that's supposed to be magic. Feminacci 770 00:49:42,200 --> 00:49:46,000 Speaker 1: is the retracement on the golden ratio. I'm trying to 771 00:49:46,000 --> 00:49:49,040 Speaker 1: remember again, was gaining something with nine. It was a 772 00:49:49,080 --> 00:49:52,440 Speaker 1: box that people would draw dots on. And that's another 773 00:49:52,440 --> 00:49:54,400 Speaker 1: one that I just never was able to wrap my 774 00:49:54,440 --> 00:49:57,719 Speaker 1: head around. No, nobody fully understands game. Well, that makes 775 00:49:57,719 --> 00:50:01,120 Speaker 1: it easier to sell sell a newsletter if nobody understands it. 776 00:50:01,160 --> 00:50:03,960 Speaker 1: But you have the magic uh, we have the magic secret. 777 00:50:04,040 --> 00:50:07,960 Speaker 1: Here send us four nine your first years uh subscription. 778 00:50:08,000 --> 00:50:12,279 Speaker 1: So it's interesting you you said that, UM, tell me 779 00:50:12,320 --> 00:50:16,880 Speaker 1: about some of the technicians that you've um followed in 780 00:50:16,920 --> 00:50:20,000 Speaker 1: the past. Who who's always stood out to you as Wow, 781 00:50:20,040 --> 00:50:24,240 Speaker 1: that guy really understands charts and supplying the man and 782 00:50:25,160 --> 00:50:28,759 Speaker 1: is value added. Well, uh, you know, I have to 783 00:50:28,800 --> 00:50:32,600 Speaker 1: start with L. M. Lowery. Sure he was. He was 784 00:50:32,640 --> 00:50:37,520 Speaker 1: a genius. I've I really felt very privileged to spend 785 00:50:37,600 --> 00:50:40,319 Speaker 1: time with him. He was he was not only a 786 00:50:40,320 --> 00:50:44,320 Speaker 1: good analyst, but he was a good philosopher. He understood 787 00:50:44,360 --> 00:50:48,520 Speaker 1: he understood human nature, and having a having an understanding 788 00:50:48,560 --> 00:50:53,160 Speaker 1: of psychology and human nature is a very valuable tool 789 00:50:53,280 --> 00:50:55,759 Speaker 1: when you're trying to deal with the changes in the 790 00:50:55,800 --> 00:50:58,960 Speaker 1: trends of the start market. So so I'm gonna interrupt 791 00:50:59,000 --> 00:51:01,360 Speaker 1: you there before we talk about and I'm writing down 792 00:51:01,440 --> 00:51:04,839 Speaker 1: this down so I don't forget about it. I never 793 00:51:04,880 --> 00:51:09,360 Speaker 1: heard that story you told earlier, which sounds fascinating than 794 00:51:09,440 --> 00:51:15,080 Speaker 1: in en four. You're researching in the library in Miami 795 00:51:15,120 --> 00:51:18,600 Speaker 1: to try and get a handle on your dad's portfolio 796 00:51:18,719 --> 00:51:22,160 Speaker 1: after he has a heart attack. You find Lowry's and 797 00:51:22,719 --> 00:51:26,720 Speaker 1: just on a lark some Saturday, you drive to the address. 798 00:51:26,840 --> 00:51:29,919 Speaker 1: What were you expecting, like an office park, and you're 799 00:51:29,920 --> 00:51:32,759 Speaker 1: gonna pull in and and let me go see what 800 00:51:32,920 --> 00:51:36,279 Speaker 1: this brokerage like firm is gonna have. What what was 801 00:51:36,320 --> 00:51:40,920 Speaker 1: your thinking to say, let's go visit Lowry's. Uh, you know, 802 00:51:41,000 --> 00:51:47,960 Speaker 1: the Mimi Library um is four or five miles away 803 00:51:48,000 --> 00:51:51,759 Speaker 1: from the address that was on the on the on 804 00:51:51,840 --> 00:51:56,120 Speaker 1: these reports. So that's that's just so coincidental. And see 805 00:51:56,160 --> 00:52:00,160 Speaker 1: what's going on? How how serendipitous is that that you're 806 00:52:00,200 --> 00:52:04,600 Speaker 1: in Miami you look at this and it's five miles away. Yeah. Well, 807 00:52:04,640 --> 00:52:06,560 Speaker 1: a lot of life, a lot of good things in 808 00:52:06,600 --> 00:52:11,040 Speaker 1: life occur because of serendipitous theme on this show. I 809 00:52:11,080 --> 00:52:13,439 Speaker 1: can't tell you how many people have said that over 810 00:52:13,440 --> 00:52:16,120 Speaker 1: and over again. Hey, you gotta get lucky. So well, 811 00:52:16,160 --> 00:52:18,799 Speaker 1: you know, this whole study in nineteen nine was the 812 00:52:18,920 --> 00:52:21,760 Speaker 1: same kind of a thing. We were doing this study 813 00:52:21,800 --> 00:52:24,400 Speaker 1: in nineteen twenty nine. We were collecting this data and 814 00:52:24,520 --> 00:52:30,160 Speaker 1: a very boring process, and it occurred to me, you know, 815 00:52:30,239 --> 00:52:33,920 Speaker 1: I wonder what was going on in people's minds in 816 00:52:34,000 --> 00:52:37,160 Speaker 1: September of ninety nine. What what do you suppose the 817 00:52:37,200 --> 00:52:40,160 Speaker 1: news stories were that were in the journal? And what 818 00:52:40,680 --> 00:52:43,640 Speaker 1: what was the thinking of the day and so on 819 00:52:43,640 --> 00:52:46,960 Speaker 1: and so forth. So I got out the micro film 820 00:52:47,120 --> 00:52:49,960 Speaker 1: for September third nine, put it up on the machine, 821 00:52:50,760 --> 00:52:53,640 Speaker 1: and there wasn't much commentary in the Wall Street Journal 822 00:52:53,640 --> 00:52:56,400 Speaker 1: in those days, and so I quickly ended up on 823 00:52:56,440 --> 00:53:02,440 Speaker 1: the trading page. And I I started looking down the 824 00:53:02,520 --> 00:53:04,879 Speaker 1: trading page, and what obviously is over on the left 825 00:53:04,920 --> 00:53:10,400 Speaker 1: hand side is always the same thing today. The high 826 00:53:10,800 --> 00:53:13,520 Speaker 1: for for each stock was over on the left hand column, 827 00:53:14,160 --> 00:53:17,920 Speaker 1: and then over on the right side was the clothes 828 00:53:18,360 --> 00:53:23,840 Speaker 1: for for for that day. And the first stock on 829 00:53:23,880 --> 00:53:28,400 Speaker 1: the list was not a New Highs. And the second 830 00:53:28,440 --> 00:53:30,719 Speaker 1: stock on the list was not a New Highs. And 831 00:53:30,760 --> 00:53:33,080 Speaker 1: the third stock on the list was down about twenty 832 00:53:35,239 --> 00:53:38,400 Speaker 1: And I thought, something's wrong here, because this is supposed 833 00:53:38,440 --> 00:53:41,960 Speaker 1: to be the high for the market. And that was 834 00:53:42,080 --> 00:53:49,520 Speaker 1: part of the the recognition that the market is doesn't 835 00:53:49,560 --> 00:53:54,320 Speaker 1: exist at major market tops. It's all about individual stocks, 836 00:53:55,160 --> 00:53:59,000 Speaker 1: and so what we what we found from from just 837 00:53:59,120 --> 00:54:02,919 Speaker 1: that serendiper us, the question is, you don't wonder what 838 00:54:02,960 --> 00:54:06,080 Speaker 1: was going on in the day we we we found 839 00:54:06,080 --> 00:54:08,640 Speaker 1: out that two point three percent of all the stocks 840 00:54:08,640 --> 00:54:10,720 Speaker 1: on the New York Stock Exchange were at new highs 841 00:54:10,760 --> 00:54:13,799 Speaker 1: that day, meaning nine seven point seven percent of all 842 00:54:13,840 --> 00:54:17,040 Speaker 1: stocks were not at recognized when the market is at 843 00:54:17,040 --> 00:54:21,840 Speaker 1: a record exactly and and at the same time, thirty 844 00:54:21,960 --> 00:54:25,120 Speaker 1: around thirty five of all the stocks on the New 845 00:54:25,200 --> 00:54:29,239 Speaker 1: York Stock Exchange we're already down by or more from 846 00:54:29,239 --> 00:54:32,080 Speaker 1: their highs. So so so on the top day of 847 00:54:32,120 --> 00:54:36,800 Speaker 1: the doal Jones Industrial lanverage of the stocks were already 848 00:54:36,840 --> 00:54:40,520 Speaker 1: in bear markets. And what was was interesting about it 849 00:54:40,560 --> 00:54:43,719 Speaker 1: is what we now know is that it was it 850 00:54:43,840 --> 00:54:47,919 Speaker 1: was the small caps and the mid caps that had 851 00:54:47,960 --> 00:54:52,120 Speaker 1: been rolling over for some time that caused that particular situation. 852 00:54:52,760 --> 00:54:55,000 Speaker 1: But if you were simply looking at the doal Jones 853 00:54:55,000 --> 00:54:58,439 Speaker 1: Industrial Average, which is a big cap index, you could 854 00:54:58,440 --> 00:55:00,440 Speaker 1: never see the weakness that was a ring in the 855 00:55:00,480 --> 00:55:03,919 Speaker 1: small caps or the manicamps. So the big caps camouflage 856 00:55:03,960 --> 00:55:07,839 Speaker 1: what's happening. They completely completely hit it. And the doal 857 00:55:07,960 --> 00:55:12,399 Speaker 1: Jones Nostra language was actually deceptive in holding people into 858 00:55:12,440 --> 00:55:14,279 Speaker 1: the market when they should have been looking at the 859 00:55:14,320 --> 00:55:16,960 Speaker 1: individual stocks. Although who knew back then? Who had the 860 00:55:17,000 --> 00:55:19,919 Speaker 1: faintest idea, Hey, the mids small caps are rolling over, 861 00:55:19,960 --> 00:55:23,759 Speaker 1: I better sell in September twenty nine. Let me bring 862 00:55:23,800 --> 00:55:28,200 Speaker 1: you back to that day, that Saturday when you decide 863 00:55:28,239 --> 00:55:32,000 Speaker 1: to leave the Miami Library and drive over. So was 864 00:55:32,040 --> 00:55:36,840 Speaker 1: that Mr Lowry's home, the big man right on It 865 00:55:36,960 --> 00:55:42,000 Speaker 1: was right on Biscayne Bay. So he obviously was very successful. 866 00:55:42,120 --> 00:55:44,520 Speaker 1: Was that as an investor? Or? Was that? As How 867 00:55:44,560 --> 00:55:48,840 Speaker 1: did he become so successful and sitting with such a 868 00:55:48,960 --> 00:55:53,560 Speaker 1: huge homestead. He had a strong understanding of supplying the man, 869 00:55:53,760 --> 00:55:55,480 Speaker 1: So you can make money with that in the market, 870 00:55:55,600 --> 00:55:59,160 Speaker 1: in real estate, in in buying and selling cars, and 871 00:55:59,160 --> 00:56:03,959 Speaker 1: in iron is selling oil. He made his He made 872 00:56:04,040 --> 00:56:08,439 Speaker 1: a variety of fortunes in a number of areas really well, 873 00:56:08,640 --> 00:56:11,400 Speaker 1: by recognizing the changes that we're going on in the 874 00:56:11,440 --> 00:56:14,280 Speaker 1: economy and saying now is a good time to invest 875 00:56:14,320 --> 00:56:17,240 Speaker 1: in oil. Now is not a good time to invest 876 00:56:17,239 --> 00:56:19,000 Speaker 1: in oil, but it is a good time to invest 877 00:56:19,080 --> 00:56:22,400 Speaker 1: in real estate. Uh, it's not good to invest in 878 00:56:22,600 --> 00:56:24,799 Speaker 1: real estate in one area of the country, but it 879 00:56:24,920 --> 00:56:27,080 Speaker 1: is good to do it in another So you you 880 00:56:27,160 --> 00:56:30,640 Speaker 1: pull up, you're you're on Biscayne Bay. Is this like 881 00:56:30,680 --> 00:56:33,360 Speaker 1: a big gated property. I'm trying to ualize, you know. 882 00:56:33,440 --> 00:56:37,080 Speaker 1: I started to drive in, and I was I was 883 00:56:37,800 --> 00:56:41,520 Speaker 1: in my late twenties, and I had, you know, I 884 00:56:41,719 --> 00:56:44,800 Speaker 1: had what were you driving? Oh? So this is sixty 885 00:56:44,840 --> 00:56:50,840 Speaker 1: three sixty four a little sports car. Um not a 886 00:56:51,840 --> 00:56:53,759 Speaker 1: didn't belong in that area of the city, you know. 887 00:56:54,719 --> 00:56:57,440 Speaker 1: And I actually I drove in the gate and there 888 00:56:57,960 --> 00:57:01,600 Speaker 1: was a line of royal palms going down the driveway 889 00:57:01,680 --> 00:57:05,440 Speaker 1: to leading to the house. And my first thought was 890 00:57:06,080 --> 00:57:09,520 Speaker 1: I'm going to get arrested. He really And I turned 891 00:57:09,520 --> 00:57:13,400 Speaker 1: around and left, No kidding, yeah, because I thought, you know, 892 00:57:13,800 --> 00:57:16,000 Speaker 1: I don't belong in this. I don't belong in this area. 893 00:57:16,080 --> 00:57:20,240 Speaker 1: This this was the prime pieces of real estate in 894 00:57:20,360 --> 00:57:24,560 Speaker 1: all of South Florida, And um, what made you turn 895 00:57:24,600 --> 00:57:28,400 Speaker 1: around and go back? I thought, what are they gonna 896 00:57:28,440 --> 00:57:31,520 Speaker 1: arrest me for? I'm not doing anything wrong? You have 897 00:57:31,560 --> 00:57:33,560 Speaker 1: the I'm here, I'm looking for this. The people who 898 00:57:33,600 --> 00:57:36,439 Speaker 1: put this out. You gotta take some risks in life, 899 00:57:36,440 --> 00:57:38,920 Speaker 1: you know. So I just thought, you know, what are 900 00:57:38,960 --> 00:57:41,240 Speaker 1: they gonna do to me? So you turned around you 901 00:57:41,280 --> 00:57:46,520 Speaker 1: went back down down this driveway with centuries of royal 902 00:57:46,520 --> 00:57:49,200 Speaker 1: palms on either side. Yeah, and then and and there 903 00:57:49,320 --> 00:57:54,320 Speaker 1: was there was this elderly man in the bushes, picking flower, 904 00:57:54,480 --> 00:57:57,560 Speaker 1: tending to a bunch of flowers. Did you assume this 905 00:57:57,640 --> 00:58:02,600 Speaker 1: was the gardener? Oh? Sure, you had no idea straw 906 00:58:02,720 --> 00:58:07,320 Speaker 1: hat overalls, absolutely governed in soil and who knows what 907 00:58:08,040 --> 00:58:11,680 Speaker 1: notn on his knees. That's that's some some picture, some 908 00:58:11,960 --> 00:58:16,760 Speaker 1: picture you're painting. So so this is the the garage 909 00:58:16,960 --> 00:58:21,800 Speaker 1: slash maid's quarters away from the main It was a 910 00:58:21,880 --> 00:58:25,000 Speaker 1: house I think there were four or five uh for 911 00:58:25,360 --> 00:58:29,600 Speaker 1: you know, area for four or five cars, and then 912 00:58:29,720 --> 00:58:32,480 Speaker 1: and then a two story building attached to that that 913 00:58:32,680 --> 00:58:37,760 Speaker 1: was I think originally it was maid's quarters, smaller obviously 914 00:58:37,800 --> 00:58:41,840 Speaker 1: than the main the main house, dramatically small y. Yeah, 915 00:58:42,000 --> 00:58:45,320 Speaker 1: and uh he converted it into his office and so, 916 00:58:45,800 --> 00:58:49,760 Speaker 1: uh it fits very nicely for these roles will be 917 00:58:49,800 --> 00:58:52,760 Speaker 1: small operation that he was running at that point. So 918 00:58:53,960 --> 00:58:56,520 Speaker 1: you see the gardener on his knees, playing in the dirt. 919 00:58:57,640 --> 00:58:59,520 Speaker 1: How do you what do you say to him? Said? 920 00:58:59,600 --> 00:59:02,320 Speaker 1: Is there in anybody around here from the lowry organization? 921 00:59:03,240 --> 00:59:05,280 Speaker 1: And he said, yeah, I think we could find somebody. 922 00:59:05,400 --> 00:59:07,280 Speaker 1: And he got up, he got up all of his knees, 923 00:59:07,320 --> 00:59:10,840 Speaker 1: and he took me into the into the office, and 924 00:59:10,840 --> 00:59:14,160 Speaker 1: and I thought he was just leading me, you know, 925 00:59:14,280 --> 00:59:17,280 Speaker 1: somewhere where there'd be somebody to talk to. And uh, 926 00:59:17,400 --> 00:59:22,880 Speaker 1: and all of a sudden we were in in an office. Um, 927 00:59:23,000 --> 00:59:26,480 Speaker 1: and he was sitting in a big chair. And how 928 00:59:26,480 --> 00:59:30,000 Speaker 1: did that conversation progress? That sounds like that's just one 929 00:59:30,000 --> 00:59:33,280 Speaker 1: of those stories, uh, that you couldn't make up if 930 00:59:33,320 --> 00:59:36,280 Speaker 1: you tried. Yeah, it was simply case to saying, you know, 931 00:59:36,320 --> 00:59:39,160 Speaker 1: I was at the public library. I saw little Harry material. 932 00:59:39,320 --> 00:59:44,720 Speaker 1: I was really enthused and attracted to it. I went 933 00:59:44,720 --> 00:59:47,800 Speaker 1: through a lot of it and and UH found it, 934 00:59:49,160 --> 00:59:52,480 Speaker 1: uh that I was drawn to it, that it had 935 00:59:52,480 --> 00:59:56,080 Speaker 1: a natural, natural draw to it. It was based on 936 00:59:56,120 --> 00:59:58,320 Speaker 1: a little law supplying to me, and I've never seen 937 00:59:58,360 --> 01:00:01,600 Speaker 1: anything else that it was really focused on supplying demand. 938 01:00:02,040 --> 01:00:06,000 Speaker 1: How long had he been running Lowry's research at that 939 01:00:06,040 --> 01:00:08,800 Speaker 1: point in time. Oh, he started the company in nineteen 940 01:00:10,640 --> 01:00:15,040 Speaker 1: and he he created a five year history going back 941 01:00:15,120 --> 01:00:19,720 Speaker 1: to ninety three. So our history had always been from 942 01:00:19,800 --> 01:00:23,640 Speaker 1: nineteen thirty three to the present time. And it wasn't 943 01:00:23,720 --> 01:00:29,800 Speaker 1: until uh, nineteen, we finished a study that that we 944 01:00:29,840 --> 01:00:34,240 Speaker 1: started in the mid seventies that covered the period from 945 01:00:34,320 --> 01:00:37,560 Speaker 1: nineteen twenty five to nineteen thirty two. So now our 946 01:00:37,600 --> 01:00:41,560 Speaker 1: history goes from to the present time, eighty eight years. 947 01:00:41,640 --> 01:00:44,840 Speaker 1: Where did you find the data for five to thirty two? 948 01:00:45,240 --> 01:00:48,280 Speaker 1: The Wall Street Journal on microfilm? So you're looking at 949 01:00:48,400 --> 01:00:51,520 Speaker 1: daily stock prices in order to figure out what was 950 01:00:51,560 --> 01:00:56,280 Speaker 1: going on. Yeah, and it's a horrendously difficult job. I 951 01:00:56,360 --> 01:00:59,640 Speaker 1: can image so, because you have to not only pull 952 01:00:59,680 --> 01:01:01,760 Speaker 1: that ada, but then you have to verify it and 953 01:01:02,000 --> 01:01:05,400 Speaker 1: second check it in. But I'm still entranced by the 954 01:01:05,440 --> 01:01:10,000 Speaker 1: story of you in Mr Lowry's office. So you start 955 01:01:10,040 --> 01:01:16,240 Speaker 1: speaking with the gardener slash owner of the place. Give 956 01:01:16,280 --> 01:01:18,960 Speaker 1: me a little color on on that conversation. How did 957 01:01:18,960 --> 01:01:22,240 Speaker 1: that progress? Well, I just told him I think I 958 01:01:22,280 --> 01:01:26,480 Speaker 1: think he was impressed that there was a young man 959 01:01:26,640 --> 01:01:29,400 Speaker 1: sitting there that that had an interest in the same 960 01:01:29,440 --> 01:01:31,600 Speaker 1: things that he had an interest in. Who were his 961 01:01:31,680 --> 01:01:35,600 Speaker 1: clients at the time they were The clientele has always 962 01:01:35,680 --> 01:01:41,960 Speaker 1: been primarily professional investors institutions. That's where we've always aimed 963 01:01:41,960 --> 01:01:45,680 Speaker 1: at work. We don't really make any attempt to go 964 01:01:45,720 --> 01:01:49,320 Speaker 1: after the general public. Our stuff is a little too 965 01:01:49,480 --> 01:01:53,920 Speaker 1: esoter for most of most investors, so he's surprised that 966 01:01:54,080 --> 01:01:56,480 Speaker 1: some twenty year old kid pulls up in a sports 967 01:01:56,520 --> 01:01:59,760 Speaker 1: car wants to talk about his work, not the you 968 01:02:00,200 --> 01:02:05,120 Speaker 1: conversation he has. You said, you spoke for three hours. Yeah. 969 01:02:05,240 --> 01:02:07,840 Speaker 1: Finally his wife called him on the phone and said, 970 01:02:07,920 --> 01:02:10,440 Speaker 1: we're in a world, are you? Said, I was afraid that, 971 01:02:10,520 --> 01:02:12,600 Speaker 1: you know, you got bit by a snake or something, 972 01:02:13,240 --> 01:02:16,760 Speaker 1: and she she said, you know, I can't imagine what 973 01:02:16,840 --> 01:02:19,560 Speaker 1: was taking you so long? And he said, oh, having, 974 01:02:19,720 --> 01:02:22,680 Speaker 1: we're having a good time here. And uh so I 975 01:02:22,680 --> 01:02:24,760 Speaker 1: think we went on for maybe another half an hour 976 01:02:24,880 --> 01:02:28,400 Speaker 1: or so, and finally she, I think she called again 977 01:02:28,440 --> 01:02:31,760 Speaker 1: and said the dinners ready, you know, get up here. So, so, 978 01:02:31,800 --> 01:02:33,880 Speaker 1: when did he offer you a job? There? Was it 979 01:02:33,960 --> 01:02:39,960 Speaker 1: that conversation or subsequence of it? Um? Uh? I said 980 01:02:39,960 --> 01:02:44,400 Speaker 1: to him. I said to him, uh, you know, all 981 01:02:44,440 --> 01:02:47,680 Speaker 1: the time that I was in college, I was interested. 982 01:02:48,400 --> 01:02:52,960 Speaker 1: My interest was not in banking and economics. My interest 983 01:02:53,160 --> 01:02:55,360 Speaker 1: was how do you make money in the stock market? 984 01:02:56,400 --> 01:02:59,120 Speaker 1: And I never had a course in that, and I 985 01:02:59,160 --> 01:03:01,960 Speaker 1: didn't teach that, and I kept thinking there must be 986 01:03:02,040 --> 01:03:04,520 Speaker 1: some place in the world you can go and take 987 01:03:04,560 --> 01:03:07,360 Speaker 1: a course and how to make money in the stock market. 988 01:03:08,240 --> 01:03:10,720 Speaker 1: And I told him, I said, you know, I'm sitting 989 01:03:10,760 --> 01:03:15,560 Speaker 1: here talking to you. This is the place to come 990 01:03:15,800 --> 01:03:19,320 Speaker 1: to get a PhD and how to make money in 991 01:03:19,360 --> 01:03:21,760 Speaker 1: the stock market. And I want to I want to 992 01:03:21,800 --> 01:03:25,840 Speaker 1: be around here. I'm willing to work for nothing. I 993 01:03:25,920 --> 01:03:28,200 Speaker 1: just and he said, well, we can work that out, 994 01:03:30,200 --> 01:03:33,800 Speaker 1: and we almost did. Um. So when did you start 995 01:03:33,840 --> 01:03:38,400 Speaker 1: working for them? That's less than ten days later, And 996 01:03:38,680 --> 01:03:42,440 Speaker 1: that was so you essentially asked for a job. The 997 01:03:42,520 --> 01:03:45,000 Speaker 1: job was created for you looking for a job, you know, 998 01:03:45,080 --> 01:03:49,720 Speaker 1: I was. I was looking for education. That's an amazing thing. 999 01:03:49,800 --> 01:03:53,200 Speaker 1: How many people were actually working for him at the time, Oh, 1000 01:03:53,280 --> 01:03:56,440 Speaker 1: I think four or five? So it was a small 1001 01:03:56,480 --> 01:04:00,280 Speaker 1: research shop and institutional client base. Was he sending a 1002 01:04:00,280 --> 01:04:04,520 Speaker 1: written newsletter or how was he? Well? Everything everything? Pretty much? 1003 01:04:04,520 --> 01:04:06,400 Speaker 1: When I got there, everything that we did was on 1004 01:04:06,440 --> 01:04:11,200 Speaker 1: a weekly basis um. Because there wasn't no internet, no computers, 1005 01:04:11,360 --> 01:04:15,600 Speaker 1: no technology like the telephones were all long distance calls 1006 01:04:15,680 --> 01:04:18,440 Speaker 1: and nobody nobody made long distance calls that they could 1007 01:04:18,440 --> 01:04:22,160 Speaker 1: avoid it, um. And so everything that we did was 1008 01:04:22,280 --> 01:04:27,360 Speaker 1: mailed out on Fridays and we did it. We did 1009 01:04:27,360 --> 01:04:30,360 Speaker 1: an analysis of the general market as a as a 1010 01:04:30,400 --> 01:04:34,000 Speaker 1: separate product, and then we had a an analysis of 1011 01:04:34,040 --> 01:04:38,920 Speaker 1: about oh maybe four or five individual stocks that we 1012 01:04:38,960 --> 01:04:42,040 Speaker 1: put out in uh and uh you know, we had 1013 01:04:42,040 --> 01:04:45,200 Speaker 1: a printing press and used a backup of a memeorgraph. 1014 01:04:45,360 --> 01:04:49,160 Speaker 1: So that's how rough, how rough things were in those days. 1015 01:04:49,160 --> 01:04:51,200 Speaker 1: And so that would get stuffed in an envelope and 1016 01:04:51,240 --> 01:04:53,680 Speaker 1: sent out the clients. Yeah, we have that. We had 1017 01:04:53,880 --> 01:04:55,560 Speaker 1: we had to beg all that stuff up and take 1018 01:04:55,600 --> 01:04:59,280 Speaker 1: it to the post office and in the get a processed. 1019 01:04:59,800 --> 01:05:01,840 Speaker 1: We take it to the Miami Airport just to try 1020 01:05:01,880 --> 01:05:03,800 Speaker 1: and speed up the process and get it to him, 1021 01:05:03,960 --> 01:05:06,680 Speaker 1: get it to much as soon as we could. So 1022 01:05:06,720 --> 01:05:08,720 Speaker 1: you mail that on a Friday afternoon. When does that 1023 01:05:08,760 --> 01:05:12,520 Speaker 1: show up in investors homes or offices? Well, you know, 1024 01:05:12,600 --> 01:05:17,480 Speaker 1: in those days, uh, even even in Los Angeles, you'd 1025 01:05:17,480 --> 01:05:21,040 Speaker 1: pretty much have it on Monday morning. Oh yeah, post office. 1026 01:05:21,320 --> 01:05:24,000 Speaker 1: Post office was a you know, a different entity than 1027 01:05:24,040 --> 01:05:27,200 Speaker 1: it is today. Just to say the least. Um. So 1028 01:05:27,480 --> 01:05:31,440 Speaker 1: you had mentioned obviously Lowry, I don't know it does 1029 01:05:31,680 --> 01:05:33,400 Speaker 1: what did he always go by initials or is there 1030 01:05:33,400 --> 01:05:36,920 Speaker 1: a first name there? Uh? He he always he always 1031 01:05:36,920 --> 01:05:39,800 Speaker 1: went by initials, that there was a there was a 1032 01:05:39,840 --> 01:05:46,640 Speaker 1: tendency in those days to be more formal and uh. 1033 01:05:46,920 --> 01:05:52,640 Speaker 1: For example, uh uh, the founder of Fidelity phones, Mr Johnson, 1034 01:05:54,720 --> 01:05:58,760 Speaker 1: no one, no one would dare to call him by 1035 01:05:58,800 --> 01:06:04,600 Speaker 1: his first name. It's always Mr Johnson and uh. And 1036 01:06:04,680 --> 01:06:09,000 Speaker 1: so Mr lur felt very much and he was in 1037 01:06:09,440 --> 01:06:12,840 Speaker 1: he was in that same era and you just you 1038 01:06:13,000 --> 01:06:18,080 Speaker 1: just didn't use first names until until you were engaged. Quick, 1039 01:06:18,520 --> 01:06:24,000 Speaker 1: quick digression. I know there's a formal protocol around Bloomberg, 1040 01:06:24,600 --> 01:06:28,479 Speaker 1: what you say and do around Mr Bloomberg, But I'm 1041 01:06:28,520 --> 01:06:31,160 Speaker 1: a high functioning idiot and I don't know these things, 1042 01:06:31,240 --> 01:06:33,840 Speaker 1: and I have, Um who was it? Oh? Is Professor 1043 01:06:33,880 --> 01:06:38,480 Speaker 1: Taylor from Chicago? And sometimes your mouth operates before your 1044 01:06:38,520 --> 01:06:42,560 Speaker 1: brain has an opportunity to to engage. We walk out 1045 01:06:42,560 --> 01:06:46,080 Speaker 1: of the studio and literally as we're walking out, Michael 1046 01:06:46,080 --> 01:06:49,160 Speaker 1: Bloomberg is walking by, and like in the idiot that 1047 01:06:49,240 --> 01:06:52,360 Speaker 1: I am, I just blurred out, Hey, Mike, do you 1048 01:06:52,560 --> 01:06:55,800 Speaker 1: do you know Professor Taylor? And the second it comes 1049 01:06:55,800 --> 01:06:58,320 Speaker 1: out of my mouth, I'm thinking, well, this was a 1050 01:06:58,320 --> 01:07:02,520 Speaker 1: good run, thanks for coming by. You're done, and um, 1051 01:07:02,560 --> 01:07:06,080 Speaker 1: he turns around Andy Chicago, Right, He's got an amazing 1052 01:07:06,120 --> 01:07:08,920 Speaker 1: memory's great with names and faces. And he turns around 1053 01:07:08,920 --> 01:07:10,440 Speaker 1: it and so the two of them start having a 1054 01:07:10,480 --> 01:07:13,800 Speaker 1: conversation and I'm like, wow, that I dodged a bullet there. 1055 01:07:13,840 --> 01:07:18,080 Speaker 1: And every time I've interacted with him, it's always been 1056 01:07:18,120 --> 01:07:21,200 Speaker 1: me speaking before the brain has a chance to get 1057 01:07:21,240 --> 01:07:22,840 Speaker 1: in the way, and it's always hey, Mike, And I 1058 01:07:23,280 --> 01:07:27,160 Speaker 1: know that's the wrong, wrong thing to say, but well 1059 01:07:27,160 --> 01:07:29,280 Speaker 1: he seems to be very good natured about it. You know. 1060 01:07:29,520 --> 01:07:33,760 Speaker 1: I think everybody goes a little bit of that. Uh. 1061 01:07:33,840 --> 01:07:40,040 Speaker 1: One of one of our employees introduced me to somebody 1062 01:07:40,320 --> 01:07:44,040 Speaker 1: last week is this is my boss. And I took 1063 01:07:44,080 --> 01:07:46,760 Speaker 1: him aside afterwards and I said, you know, I just 1064 01:07:46,800 --> 01:07:49,840 Speaker 1: don't like that term. I don't like to be called that. 1065 01:07:50,040 --> 01:07:54,600 Speaker 1: It has a negative implication. It feels weird. It's it's 1066 01:07:54,880 --> 01:07:57,600 Speaker 1: not negative, but it feels like saying this is the man, 1067 01:07:57,880 --> 01:08:01,320 Speaker 1: this is the man who can who can ruined my life, 1068 01:08:01,360 --> 01:08:03,360 Speaker 1: throw me out on the street any time that he 1069 01:08:03,880 --> 01:08:07,520 Speaker 1: chooses to. You know. So, so you mentioned Lowry's and 1070 01:08:07,560 --> 01:08:10,600 Speaker 1: then in some of your writings you've mentioned gould Is 1071 01:08:10,640 --> 01:08:15,320 Speaker 1: that I'm getting the name rights. It's in Goold was 1072 01:08:15,360 --> 01:08:21,960 Speaker 1: an early, early technician, Um, who did fabulously well. Right, 1073 01:08:22,000 --> 01:08:27,160 Speaker 1: he was incredibly successful if if memory serves, yes, he did. 1074 01:08:27,240 --> 01:08:29,599 Speaker 1: He did do quite well. He was an interesting character 1075 01:08:29,800 --> 01:08:33,720 Speaker 1: and I think he I think he drew a lot 1076 01:08:33,760 --> 01:08:36,920 Speaker 1: of people to him because he because he was he 1077 01:08:37,040 --> 01:08:40,519 Speaker 1: was a fabulous character as well as a as a 1078 01:08:40,560 --> 01:08:46,280 Speaker 1: good analyst. But but uh, one of the areas that 1079 01:08:46,439 --> 01:08:49,360 Speaker 1: Edson Coold did a lot of work in talking about 1080 01:08:50,120 --> 01:08:56,200 Speaker 1: the nature of market bottoms. But it was all vague, 1081 01:08:57,000 --> 01:09:01,400 Speaker 1: you know, as he'd say, there's there's there's dramatic Uh, 1082 01:09:01,720 --> 01:09:09,479 Speaker 1: there's dramatic panic and volume tends to expand And you'd say, well, 1083 01:09:09,479 --> 01:09:11,840 Speaker 1: it tends to expand. What what does that mean? What 1084 01:09:11,920 --> 01:09:16,880 Speaker 1: does tend to expand mean? And um? When you when 1085 01:09:16,920 --> 01:09:22,360 Speaker 1: you'd go back and and and try to figure out 1086 01:09:22,400 --> 01:09:25,519 Speaker 1: exactly what he was talking about, what you realized was 1087 01:09:26,320 --> 01:09:30,320 Speaker 1: that these early technicians were working in an area where 1088 01:09:30,360 --> 01:09:34,200 Speaker 1: the the amount of information available to them was very, 1089 01:09:34,320 --> 01:09:37,960 Speaker 1: very small. We're so spoiled. We have access to infinite 1090 01:09:37,960 --> 01:09:40,600 Speaker 1: amounts of you can slice and dice the market a 1091 01:09:40,640 --> 01:09:45,519 Speaker 1: million ways today. They I when I took the technical 1092 01:09:46,040 --> 01:09:51,840 Speaker 1: analysis course way back when with Ralph Akimpora, the generation 1093 01:09:51,920 --> 01:09:56,679 Speaker 1: that was just behind me, told stories about they would 1094 01:09:56,720 --> 01:10:00,479 Speaker 1: do their charts by hands every day. I did charge 1095 01:10:00,520 --> 01:10:03,040 Speaker 1: my hand for how long did you do that? Well? 1096 01:10:03,240 --> 01:10:06,160 Speaker 1: This study on ninety percent days that we were talking 1097 01:10:06,200 --> 01:10:08,760 Speaker 1: about earlier, that was all done with a slide rule. 1098 01:10:08,960 --> 01:10:12,599 Speaker 1: A slide rule. Wow, yeah, I know I still got 1099 01:10:12,600 --> 01:10:17,000 Speaker 1: it today. I wonder how much we lose by all 1100 01:10:17,080 --> 01:10:21,040 Speaker 1: the computer power if you're not in the thick of it, 1101 01:10:21,200 --> 01:10:24,160 Speaker 1: seeing it from that angle, you could crunch a lot 1102 01:10:24,200 --> 01:10:27,840 Speaker 1: more numbers, but you might miss a little something. You 1103 01:10:27,880 --> 01:10:31,360 Speaker 1: know what's happening if you if you look at the 1104 01:10:31,400 --> 01:10:36,200 Speaker 1: medical profession and you go back a couple of hundred years, 1105 01:10:36,560 --> 01:10:39,679 Speaker 1: you say, in the late seventeen hundreds, early eighteen hundreds, 1106 01:10:40,840 --> 01:10:45,720 Speaker 1: the the place that medicine was at was that the 1107 01:10:45,800 --> 01:10:50,000 Speaker 1: body was a single entity, and if it got sick, 1108 01:10:50,680 --> 01:10:53,680 Speaker 1: if it was showing signs of sickness, you'd bleed it. 1109 01:10:54,000 --> 01:10:57,799 Speaker 1: You cut a vein open and let's let some blood 1110 01:10:57,800 --> 01:11:00,800 Speaker 1: out and get the bad blood out of the out 1111 01:11:00,840 --> 01:11:03,920 Speaker 1: of the body. That was what you do for cancer, 1112 01:11:04,120 --> 01:11:06,080 Speaker 1: what you do for a headache, for a cold, for 1113 01:11:07,320 --> 01:11:15,200 Speaker 1: a broken foot, You bleed um. And then the medical 1114 01:11:15,240 --> 01:11:20,320 Speaker 1: profession started saying, well, you know, it's it's not that simple. 1115 01:11:21,240 --> 01:11:23,960 Speaker 1: There's a thing called a kidney that, or there's a 1116 01:11:24,040 --> 01:11:29,280 Speaker 1: thing called a heart, or there's anything called uh, you 1117 01:11:29,320 --> 01:11:33,639 Speaker 1: know whatever, pancreas, whatever else, and there's still there's these 1118 01:11:33,680 --> 01:11:37,280 Speaker 1: individual organs. Well, then the next step was to say, 1119 01:11:37,680 --> 01:11:40,520 Speaker 1: it isn't really the organs, it's the it's the excels 1120 01:11:40,640 --> 01:11:44,800 Speaker 1: that make up the ris. Uh. And so now we're 1121 01:11:44,840 --> 01:11:47,600 Speaker 1: at the point where we're saying if you if you 1122 01:11:47,680 --> 01:11:49,800 Speaker 1: try to go back to a case of saying that 1123 01:11:49,840 --> 01:11:52,519 Speaker 1: the body is a single entity, they laugh you out 1124 01:11:52,520 --> 01:11:56,360 Speaker 1: of the room. It's it's a case the same. Getting 1125 01:11:56,400 --> 01:12:00,679 Speaker 1: down to the cellular part of the body opened up 1126 01:12:00,720 --> 01:12:04,439 Speaker 1: all kinds of things allowed us to see all kinds 1127 01:12:04,479 --> 01:12:07,680 Speaker 1: of things that we never could have seen before. The 1128 01:12:07,760 --> 01:12:12,040 Speaker 1: stock market is exactly the same thing. In the early days, 1129 01:12:12,479 --> 01:12:15,640 Speaker 1: everyone considered the market to be a single entity, that 1130 01:12:15,760 --> 01:12:20,519 Speaker 1: all stocks moved together. Uh. That that that all stocks 1131 01:12:20,800 --> 01:12:23,760 Speaker 1: made a high at the same time, they made it 1132 01:12:23,880 --> 01:12:25,920 Speaker 1: low at the same time, so on and so forth. 1133 01:12:26,439 --> 01:12:29,320 Speaker 1: That big camp made camp and small capital all moved 1134 01:12:29,520 --> 01:12:32,400 Speaker 1: in unison with each other. And now we know all 1135 01:12:32,640 --> 01:12:37,080 Speaker 1: that's wrong. And what we've done in order to learn 1136 01:12:37,120 --> 01:12:40,280 Speaker 1: that is that we're breaking down the market from a 1137 01:12:40,439 --> 01:12:44,880 Speaker 1: single entity approach to almost a cellular approach where we 1138 01:12:44,880 --> 01:12:50,080 Speaker 1: can see each an individual stock, and with that individual stock, 1139 01:12:50,160 --> 01:12:53,880 Speaker 1: we can see upside volume, downside volume points, gain points, 1140 01:12:53,920 --> 01:12:59,040 Speaker 1: loss advances, and declines for each individual stock. And in 1141 01:12:59,160 --> 01:13:01,400 Speaker 1: addition to that, we see momentum, and we see a 1142 01:13:01,400 --> 01:13:06,120 Speaker 1: whole bunch of other side issues. And so, uh, we're 1143 01:13:06,280 --> 01:13:08,920 Speaker 1: learning new things about the stock market that we've never 1144 01:13:08,960 --> 01:13:11,920 Speaker 1: seen before, and that is we're doing that right now. 1145 01:13:12,320 --> 01:13:19,480 Speaker 1: This this study of that we completed in is precisely 1146 01:13:19,600 --> 01:13:24,360 Speaker 1: that that people thought that the stock market in n 1147 01:13:25,880 --> 01:13:29,320 Speaker 1: was was a single entity, and that couldn't been further 1148 01:13:29,360 --> 01:13:35,439 Speaker 1: from the truth. So our knowledge of market trends and 1149 01:13:35,479 --> 01:13:39,520 Speaker 1: how to deal with the stock market is is expanding 1150 01:13:39,560 --> 01:13:42,720 Speaker 1: at a tremendous rate. And we are now in a 1151 01:13:42,800 --> 01:13:50,880 Speaker 1: position where where I strongly believe um that it is 1152 01:13:51,520 --> 01:13:59,639 Speaker 1: entirely possible likely that using the proper tools, bearer markets 1153 01:14:00,000 --> 01:14:03,519 Speaker 1: are a thing of the past, that that they exist, 1154 01:14:03,600 --> 01:14:07,720 Speaker 1: but our ability to sidestep those bear markets is a 1155 01:14:07,960 --> 01:14:13,479 Speaker 1: very uh valid concept and and in fact we we 1156 01:14:13,479 --> 01:14:15,879 Speaker 1: we have recently set up a new money management operation 1157 01:14:15,960 --> 01:14:19,160 Speaker 1: to prove it. We're taking a position of saying we're 1158 01:14:19,160 --> 01:14:25,280 Speaker 1: gonna put you and and you're gonna actually manage money 1159 01:14:25,479 --> 01:14:30,320 Speaker 1: using your methodology to participate in markets to the upside, 1160 01:14:30,360 --> 01:14:32,479 Speaker 1: get out of the way of the top, let the 1161 01:14:32,520 --> 01:14:35,360 Speaker 1: bear market play out, and get back in near the bottom. 1162 01:14:35,400 --> 01:14:37,680 Speaker 1: Is that the So what is what is the name 1163 01:14:37,720 --> 01:14:43,120 Speaker 1: of this money management entity going to be called called capital? Um? 1164 01:14:44,000 --> 01:14:47,880 Speaker 1: But the big thing is that the biggest problem that 1165 01:14:48,040 --> 01:14:52,799 Speaker 1: all investors have had, the very biggest problem, has always 1166 01:14:52,840 --> 01:14:56,840 Speaker 1: been bear markets. And what we wanted to do is 1167 01:14:56,880 --> 01:15:04,759 Speaker 1: demonstrate that that that uncertainty, that lack of knowledge about 1168 01:15:04,800 --> 01:15:08,720 Speaker 1: bearer markets has been overcome and we are in a 1169 01:15:08,800 --> 01:15:14,840 Speaker 1: position to sidestep versa of the entire bearer market. So so, 1170 01:15:14,880 --> 01:15:18,479 Speaker 1: who are the consistently, who are the investors in Lowry's 1171 01:15:18,520 --> 01:15:21,040 Speaker 1: capital going to be? Are these going to be institutions? Well, 1172 01:15:21,080 --> 01:15:25,200 Speaker 1: I'm the first one, so literally putting your money with 1173 01:15:25,439 --> 01:15:29,439 Speaker 1: putting my mouth money more mouth is And uh, I 1174 01:15:29,479 --> 01:15:31,960 Speaker 1: believe in this. You know I've spent you know, I've 1175 01:15:31,960 --> 01:15:36,320 Speaker 1: spent a good literally fifty years yeah, well plastically studying 1176 01:15:36,360 --> 01:15:39,599 Speaker 1: major market tops. I've probably put twenty years into it. 1177 01:15:39,760 --> 01:15:46,120 Speaker 1: And um, so we've we've we've attacked the major problem 1178 01:15:46,160 --> 01:15:50,200 Speaker 1: that all investors are facing, and we've we've conquered that 1179 01:15:50,360 --> 01:15:55,519 Speaker 1: issue and so everything else is small, small problems. Now, 1180 01:15:55,760 --> 01:15:58,000 Speaker 1: so let's let's talk about that a little bit and 1181 01:15:58,040 --> 01:16:02,080 Speaker 1: then we'll come back to any other analysts or mentors 1182 01:16:02,080 --> 01:16:06,280 Speaker 1: you've had. So we really just hinted at this earlier. 1183 01:16:06,960 --> 01:16:10,439 Speaker 1: So your studies that say we know how markets top, 1184 01:16:10,520 --> 01:16:13,320 Speaker 1: it's small caps, it's main caps, it's big caps, we 1185 01:16:13,400 --> 01:16:17,760 Speaker 1: actually run a tactical model that does something similar, and 1186 01:16:17,800 --> 01:16:21,480 Speaker 1: in August it moved to an all bond position from 1187 01:16:21,680 --> 01:16:26,520 Speaker 1: three different size caps. Positionings are in it and it generated. 1188 01:16:26,600 --> 01:16:30,360 Speaker 1: It's all quantitative, there's no chin stroking, but it's some 1189 01:16:30,520 --> 01:16:34,000 Speaker 1: of it is uses some of the theories and and 1190 01:16:34,080 --> 01:16:37,400 Speaker 1: research that you've put together. And this went to cash 1191 01:16:37,640 --> 01:16:42,400 Speaker 1: or bonds um in August, and we watched the market 1192 01:16:42,800 --> 01:16:45,920 Speaker 1: in September, you know, have a rough first half and 1193 01:16:46,840 --> 01:16:49,960 Speaker 1: started to recover in October. Where do you think we 1194 01:16:50,040 --> 01:16:56,240 Speaker 1: are in the topping process um of the bullmarket that 1195 01:16:56,320 --> 01:17:00,120 Speaker 1: began in March two thousand nine. Well, there's a P 1196 01:17:00,360 --> 01:17:05,120 Speaker 1: five for all practical purposes made high in in in 1197 01:17:05,280 --> 01:17:10,120 Speaker 1: like the late July, it was it was a little 1198 01:17:10,120 --> 01:17:13,200 Speaker 1: bit of the previous high, but by by by nickels 1199 01:17:13,240 --> 01:17:15,559 Speaker 1: and dimes, and previous high of a month or two 1200 01:17:15,600 --> 01:17:21,920 Speaker 1: of previous down about a couple of percent. Yeah and yeah, 1201 01:17:21,960 --> 01:17:25,400 Speaker 1: but what we're seeing in this small caps are dramatically 1202 01:17:25,680 --> 01:17:29,840 Speaker 1: off their much us on. So I think we're probably 1203 01:17:30,080 --> 01:17:34,160 Speaker 1: still in the relatively early stages. We're still at the 1204 01:17:34,240 --> 01:17:37,960 Speaker 1: point where where most of the investors that I talked 1205 01:17:38,000 --> 01:17:42,080 Speaker 1: to about bear markets are saying, oh, you know, there's 1206 01:17:42,080 --> 01:17:46,559 Speaker 1: no bear market. They don't see any bear market. Um. 1207 01:17:46,640 --> 01:17:49,240 Speaker 1: And part of that is because they're they're not looking. 1208 01:17:50,520 --> 01:17:54,120 Speaker 1: They're they're concentrating on corporate earnings, and corporate earnings will 1209 01:17:54,200 --> 01:17:58,040 Speaker 1: never never warn you of a bear market. Uh. That's 1210 01:17:58,120 --> 01:18:03,599 Speaker 1: simply what the history of the of corporate earning shows. Um. 1211 01:18:03,920 --> 01:18:07,639 Speaker 1: But to some extent, it's that investors are saying, well, 1212 01:18:07,840 --> 01:18:12,040 Speaker 1: the the SMP, it's worse than here, has been off 1213 01:18:12,080 --> 01:18:14,559 Speaker 1: twelve and a half percent from it's high. That's a 1214 01:18:15,040 --> 01:18:19,000 Speaker 1: that's a short term correction. Uh, and and it's gonna 1215 01:18:19,040 --> 01:18:22,240 Speaker 1: go back. I'm going to go back to new highs Now. Well, 1216 01:18:23,439 --> 01:18:27,960 Speaker 1: my answer to that is, um, Uh, with all the 1217 01:18:28,000 --> 01:18:31,800 Speaker 1: deterioration that has occurred behind the scenes, now there's if 1218 01:18:31,800 --> 01:18:35,479 Speaker 1: you say small cap, who cares about small caps? Small 1219 01:18:35,520 --> 01:18:39,080 Speaker 1: caps are about of all of the shares traded on 1220 01:18:39,200 --> 01:18:42,720 Speaker 1: the New York Stock They're really the canary in the 1221 01:18:42,760 --> 01:18:45,680 Speaker 1: coal mine. Yeah, that's right, and mid caps are in 1222 01:18:45,760 --> 01:18:50,120 Speaker 1: the same general range. Big caps are are something between 1223 01:18:50,120 --> 01:18:53,760 Speaker 1: twelve and so you really need to pay attention to 1224 01:18:53,800 --> 01:18:55,760 Speaker 1: what the what the small caps are doing in the 1225 01:18:55,800 --> 01:18:58,439 Speaker 1: mid caps are doing because they are the majority of 1226 01:18:58,479 --> 01:19:02,559 Speaker 1: stocks traded on the New York's Doctor. Actually, the SMP 1227 01:19:02,720 --> 01:19:07,639 Speaker 1: five hundred index is made up sixty five of mid 1228 01:19:07,680 --> 01:19:13,400 Speaker 1: cap stocks. Uh, and so so what you're really looking 1229 01:19:13,439 --> 01:19:15,880 Speaker 1: at when you look at the SMP is that is 1230 01:19:15,960 --> 01:19:20,599 Speaker 1: maybe twenty five or thirty or forty stocks there that 1231 01:19:20,600 --> 01:19:24,840 Speaker 1: that are capitalized the air heavy capitalis, but the bulk 1232 01:19:24,880 --> 01:19:28,559 Speaker 1: of by by numbers or mid cap capitals. So you're 1233 01:19:28,600 --> 01:19:30,600 Speaker 1: not looking at the full five hundred you're looking at 1234 01:19:30,800 --> 01:19:35,479 Speaker 1: you're looking at or less. And then what's driving the 1235 01:19:35,520 --> 01:19:38,200 Speaker 1: price of the index? Yeah, in at the top of 1236 01:19:38,200 --> 01:19:41,439 Speaker 1: the seven excuse me, in the top in two thousand 1237 01:19:41,479 --> 01:19:44,840 Speaker 1: and eight, two thousand and seven, they're in October of 1238 01:19:44,840 --> 01:19:48,759 Speaker 1: two thousand seven, there were eighteen stocks of the SMP 1239 01:19:48,840 --> 01:19:53,080 Speaker 1: five hundred making new highs that day? What's typical? What 1240 01:19:53,080 --> 01:19:57,240 Speaker 1: do you usually see? So, in other words, that's three 1241 01:19:57,320 --> 01:19:59,600 Speaker 1: and a half percent, is that right? Oh? Yeah? And 1242 01:20:00,080 --> 01:20:05,160 Speaker 1: and in early stage of renewable market, uh stocks making 1243 01:20:05,200 --> 01:20:08,479 Speaker 1: new highs on any single day would be in the range. 1244 01:20:08,560 --> 01:20:12,920 Speaker 1: Really wow, that's a huge that's a huge number. Um. 1245 01:20:13,000 --> 01:20:17,400 Speaker 1: So we mentioned Gould, we mentioned Lowry's. Any other um 1246 01:20:17,520 --> 01:20:21,439 Speaker 1: analysts or technicians that were influential to your thinking? Oh boy, 1247 01:20:21,760 --> 01:20:28,719 Speaker 1: um uh, you know there there there were other people 1248 01:20:28,720 --> 01:20:31,280 Speaker 1: that were contemporaries in mine and I thought, I thought, 1249 01:20:31,640 --> 01:20:35,759 Speaker 1: added to the edit to my knowledge, and well, Bob 1250 01:20:35,800 --> 01:20:39,680 Speaker 1: Farrell of Merrill Lynch would be number one, And a 1251 01:20:39,720 --> 01:20:43,280 Speaker 1: lot of people mentioned him. Dave Rosenberg of formerly of 1252 01:20:43,320 --> 01:20:45,760 Speaker 1: Meryl has has brought his name up. Other people that 1253 01:20:45,840 --> 01:20:49,559 Speaker 1: brought his name up repeatedly. He was a master and 1254 01:20:49,800 --> 01:20:52,840 Speaker 1: he's still He was a master at He was a 1255 01:20:52,840 --> 01:20:57,639 Speaker 1: master at training other people. He didn't keep it to himself. 1256 01:20:57,680 --> 01:21:02,719 Speaker 1: And what you find is dozens and dozens of people 1257 01:21:03,360 --> 01:21:07,120 Speaker 1: say I learned technical analysis at the at the knee 1258 01:21:07,120 --> 01:21:11,240 Speaker 1: of Bob Ferrell. Yes, he is still around. He's still 1259 01:21:11,240 --> 01:21:16,960 Speaker 1: serving a small group of of of institutional investors and 1260 01:21:17,640 --> 01:21:21,280 Speaker 1: very active, very very active in the market. Um. Anyone 1261 01:21:21,320 --> 01:21:24,960 Speaker 1: else Worth mentioned Allen Shaw, I knew you're gonna go there. 1262 01:21:25,200 --> 01:21:31,200 Speaker 1: Um well, Allen Allen was in charge of technical analysis 1263 01:21:31,360 --> 01:21:38,800 Speaker 1: for Smith Barney and um a legend amongst technicians. Yeah. 1264 01:21:36,960 --> 01:21:41,920 Speaker 1: He added to the He added a lot to the field, 1265 01:21:42,160 --> 01:21:47,640 Speaker 1: and he trained a lot of people. Luigia Mata is 1266 01:21:47,680 --> 01:21:53,719 Speaker 1: still active. Louise worked with with Allen for oh, probably 1267 01:21:53,720 --> 01:21:58,320 Speaker 1: twenty years or so. Um. You know those those are 1268 01:21:58,360 --> 01:22:00,920 Speaker 1: kind of people that really added to the added to 1269 01:22:01,000 --> 01:22:05,080 Speaker 1: the overall knowledge of technical analysis and and brought the 1270 01:22:05,760 --> 01:22:10,920 Speaker 1: brought the industry forward and brought some professionalism into it. 1271 01:22:11,960 --> 01:22:15,240 Speaker 1: But quite fasting. Anyone else, uh sticks out? Or is 1272 01:22:15,240 --> 01:22:17,439 Speaker 1: that is that a good enough list to Uh? Oh? 1273 01:22:17,640 --> 01:22:19,679 Speaker 1: Those are those are the people that you know, I think, 1274 01:22:20,160 --> 01:22:26,800 Speaker 1: I think I'm really important to my learning process. Um 1275 01:22:26,840 --> 01:22:31,360 Speaker 1: anyone you you you mentioned Luis Humana, anybody else who 1276 01:22:31,439 --> 01:22:36,719 Speaker 1: who is from the current generation of technicians stands out? Um? 1277 01:22:36,880 --> 01:22:40,360 Speaker 1: Well have you felt Phil Roth used to be with 1278 01:22:40,360 --> 01:22:46,840 Speaker 1: Morgan Stanley Fell. Roth is an incredible analyst. He is 1279 01:22:46,880 --> 01:22:54,679 Speaker 1: a is an incredible uh uh knowledge of the investor 1280 01:22:54,760 --> 01:23:01,240 Speaker 1: psychology and the application of that information. Um. You know 1281 01:23:01,320 --> 01:23:04,880 Speaker 1: there's there's a there's a dozen people that would be 1282 01:23:04,920 --> 01:23:07,599 Speaker 1: on the list that we have. We haven't got that much. 1283 01:23:07,600 --> 01:23:10,160 Speaker 1: So let's let's hold off with the list right there, 1284 01:23:10,320 --> 01:23:13,439 Speaker 1: and let me keep plowing through some of um, some 1285 01:23:13,600 --> 01:23:15,880 Speaker 1: of my favorite questions. I don't want to forget any 1286 01:23:15,880 --> 01:23:18,320 Speaker 1: of these. So we already talked about what you did 1287 01:23:18,360 --> 01:23:20,639 Speaker 1: before you worked on Wall Street, you were in the army, 1288 01:23:20,840 --> 01:23:25,440 Speaker 1: and we discussed your early mentors. Any other investors influence 1289 01:23:25,560 --> 01:23:28,680 Speaker 1: your your approach, anybody who was running a fund or 1290 01:23:28,840 --> 01:23:31,720 Speaker 1: managing money, or anyone along those lines. What are you 1291 01:23:31,760 --> 01:23:36,960 Speaker 1: really looking at the research and analysis side, For the 1292 01:23:37,080 --> 01:23:40,760 Speaker 1: most part, our relationships with our clients tends to be 1293 01:23:40,840 --> 01:23:44,920 Speaker 1: kind of one sided. UM. So it was that we 1294 01:23:44,960 --> 01:23:48,320 Speaker 1: don't we don't see we don't see the clients side 1295 01:23:48,320 --> 01:23:52,240 Speaker 1: of it very much. UM. In fact, many of our 1296 01:23:52,240 --> 01:23:56,440 Speaker 1: clients do not like anyone to know that they subscribe 1297 01:23:56,479 --> 01:24:00,800 Speaker 1: to lowry analysis. That's interesting. There's a very famous there's 1298 01:24:00,800 --> 01:24:04,599 Speaker 1: a very famous author who lives in New York. He's 1299 01:24:04,720 --> 01:24:06,760 Speaker 1: I don't know how many books he's written, but a 1300 01:24:06,800 --> 01:24:11,679 Speaker 1: lot of books, very well recognized, and he in every 1301 01:24:11,720 --> 01:24:14,120 Speaker 1: book that he writes, he has a chapter in there 1302 01:24:14,240 --> 01:24:19,800 Speaker 1: that says, whatever you do, do not ever use technical analysis. 1303 01:24:20,960 --> 01:24:24,080 Speaker 1: And I was sitting with him several years ago and 1304 01:24:24,160 --> 01:24:28,320 Speaker 1: I said to him, you know, I don't understand this. Uh. 1305 01:24:28,920 --> 01:24:32,000 Speaker 1: You in every one of your books you say, don't ever, 1306 01:24:32,240 --> 01:24:36,160 Speaker 1: don't ever use technical analysis. But he's a subscriber. He's 1307 01:24:36,200 --> 01:24:39,400 Speaker 1: been a subscriber to ours for before I got to Lowries, 1308 01:24:39,439 --> 01:24:46,920 Speaker 1: he was a subscriber. And I said, you know, why 1309 01:24:47,439 --> 01:24:50,400 Speaker 1: why you take this position when when you use our 1310 01:24:50,479 --> 01:24:54,400 Speaker 1: work regularly? He said, you don't do technical I mean 1311 01:24:54,400 --> 01:24:57,520 Speaker 1: you do. You don't do technical analysis. That's not technical analysis. 1312 01:24:57,520 --> 01:24:59,800 Speaker 1: You you know, you know that's what I'm talking about. 1313 01:25:00,920 --> 01:25:07,959 Speaker 1: So then he in his books he names three technicians. Uh, 1314 01:25:08,000 --> 01:25:13,599 Speaker 1: and uh, I can tell you now because uh one 1315 01:25:13,600 --> 01:25:20,439 Speaker 1: of the it's recently gone Joe Granville, of course. And 1316 01:25:20,479 --> 01:25:25,200 Speaker 1: what he's what he what he said was told the 1317 01:25:25,240 --> 01:25:28,920 Speaker 1: story about some of the mistakes that Joe Granville has 1318 01:25:29,000 --> 01:25:32,599 Speaker 1: made in calling market turns. So for people who don't 1319 01:25:32,640 --> 01:25:35,160 Speaker 1: know Joe Brandville, he was a guy who in the 1320 01:25:35,320 --> 01:25:40,439 Speaker 1: seventies was essentially about as good a market time or 1321 01:25:40,479 --> 01:25:45,120 Speaker 1: as there was. He caught every seemingly caught every twist 1322 01:25:45,120 --> 01:25:48,320 Speaker 1: and turn of that market that had huge moves up 1323 01:25:48,400 --> 01:25:51,600 Speaker 1: and huge moved down. And then in nineteen it was 1324 01:25:51,640 --> 01:25:54,759 Speaker 1: either eighty or eighty two the market made its final turn, 1325 01:25:55,479 --> 01:25:58,280 Speaker 1: and he never made that turn, and he could never 1326 01:25:58,400 --> 01:26:01,680 Speaker 1: get on the right side of the market after that. Yeah, 1327 01:26:01,760 --> 01:26:04,960 Speaker 1: and then there were there were at least two other 1328 01:26:05,920 --> 01:26:10,240 Speaker 1: technicians that are still still with us that i'll i'll, 1329 01:26:10,960 --> 01:26:16,360 Speaker 1: I'll not name, but he in those three cases, he 1330 01:26:16,400 --> 01:26:19,479 Speaker 1: went through a litany of all the mistakes that they 1331 01:26:19,680 --> 01:26:22,760 Speaker 1: that these three guys had made, and how you just 1332 01:26:22,800 --> 01:26:25,439 Speaker 1: don't want ever, you know, want ever give them a 1333 01:26:25,600 --> 01:26:30,600 Speaker 1: chance to to take your money away from you. And um, 1334 01:26:30,720 --> 01:26:34,240 Speaker 1: I said, do you know those three people? He said, no, 1335 01:26:34,360 --> 01:26:37,160 Speaker 1: I've never met any of them. And I said, well, 1336 01:26:37,200 --> 01:26:41,120 Speaker 1: I know all three of them, and they are the 1337 01:26:41,160 --> 01:26:45,040 Speaker 1: most egotistical human beings I've ever met in my life. 1338 01:26:45,240 --> 01:26:50,599 Speaker 1: Really well, Brandville used to be just larger than life 1339 01:26:50,600 --> 01:26:54,320 Speaker 1: guy who's supposed to be you know, moved markets and 1340 01:26:54,439 --> 01:26:56,479 Speaker 1: was proud of the fact that he moved mark when 1341 01:26:56,479 --> 01:26:59,080 Speaker 1: he would say sell and the market went down, and 1342 01:26:59,240 --> 01:27:03,280 Speaker 1: the Wall Street General would call he proud as a peacock. Right. Yeah, Well, 1343 01:27:03,439 --> 01:27:07,559 Speaker 1: when he was a child, there was an evangelist that 1344 01:27:07,640 --> 01:27:13,559 Speaker 1: traveled around the Midwest and um, every once in a 1345 01:27:13,560 --> 01:27:17,720 Speaker 1: while at the gatherings he is this evangelists would draw 1346 01:27:17,840 --> 01:27:21,599 Speaker 1: huge crowds, and every once in a while, I think 1347 01:27:21,640 --> 01:27:24,920 Speaker 1: maybe twelve or fourteen times during his career he would 1348 01:27:25,600 --> 01:27:28,680 Speaker 1: see a face in the in the crowd and he 1349 01:27:28,720 --> 01:27:31,000 Speaker 1: would call them up and he would put his hand 1350 01:27:31,080 --> 01:27:34,960 Speaker 1: on their head and he would say, this is a 1351 01:27:35,200 --> 01:27:40,320 Speaker 1: special person. This person is going to do incredible things 1352 01:27:40,400 --> 01:27:45,160 Speaker 1: in the World's going to have an incredible impact on life, 1353 01:27:45,240 --> 01:27:48,679 Speaker 1: as as it isn't. Joe Granville was one of those people. 1354 01:27:49,400 --> 01:27:51,599 Speaker 1: But meanwhile, this guy is doing this in every town 1355 01:27:51,640 --> 01:27:54,200 Speaker 1: he goes and every year, well, wow, the world is 1356 01:27:54,280 --> 01:27:59,320 Speaker 1: filled with special people. Well, actually, some somebody kept track 1357 01:27:59,479 --> 01:28:03,439 Speaker 1: of theirs. There several books ought about this evangelist call 1358 01:28:03,520 --> 01:28:06,400 Speaker 1: his name, no, I don't at the moment, but then 1359 01:28:06,920 --> 01:28:09,519 Speaker 1: a list of all the people he had put his 1360 01:28:09,760 --> 01:28:13,360 Speaker 1: put his hand on. He was also curing sickness and 1361 01:28:13,400 --> 01:28:18,559 Speaker 1: all that had those folks. Joe always felt as though 1362 01:28:18,640 --> 01:28:24,200 Speaker 1: he was this very special human being that had a 1363 01:28:24,400 --> 01:28:26,800 Speaker 1: special purpose on being on the face of the earth. 1364 01:28:27,560 --> 01:28:32,200 Speaker 1: So his ego, uh was, was at a completely different 1365 01:28:32,240 --> 01:28:34,519 Speaker 1: level than the rest of us. You know, that's the 1366 01:28:34,520 --> 01:28:37,479 Speaker 1: problem with getting a couple of big calls right, if 1367 01:28:37,520 --> 01:28:42,720 Speaker 1: you don't realize how rare and occasionally lucky those calls are. 1368 01:28:42,800 --> 01:28:47,160 Speaker 1: And by luck I mean somewhat random, even if if 1369 01:28:47,240 --> 01:28:50,640 Speaker 1: you have a methodology behind it, that could go to 1370 01:28:50,680 --> 01:28:55,320 Speaker 1: your head very easily and suddenly you're you think I 1371 01:28:55,360 --> 01:28:58,240 Speaker 1: love the line. Was a Peter Drucker who used to say, 1372 01:28:58,720 --> 01:29:01,600 Speaker 1: we use the word guru because the word Charlottean is 1373 01:29:01,640 --> 01:29:05,800 Speaker 1: too long to fit in the headline. Is Was it 1374 01:29:05,960 --> 01:29:08,960 Speaker 1: that sort of thing? I don't know if Granville was 1375 01:29:09,000 --> 01:29:13,120 Speaker 1: a Charlottean, because for a decade at least, going by 1376 01:29:13,160 --> 01:29:16,439 Speaker 1: the histories that I've read, he was I don't want 1377 01:29:16,439 --> 01:29:20,400 Speaker 1: to say infallible, but a whole lot more right than wrong. Well, Charlottan. 1378 01:29:21,080 --> 01:29:25,000 Speaker 1: The word Charlottan to me says, I know I'm a crook. 1379 01:29:26,800 --> 01:29:30,639 Speaker 1: So he ate his own cooking. He believed in himself. 1380 01:29:31,560 --> 01:29:34,600 Speaker 1: Uh I was in at a conference I think it was. 1381 01:29:35,880 --> 01:29:39,040 Speaker 1: It was in Miami Beach, and there used to be 1382 01:29:39,120 --> 01:29:44,120 Speaker 1: conferences back in this seventies and eighties. Uh I used 1383 01:29:44,120 --> 01:29:46,120 Speaker 1: to refer to him as a thousand experts from out 1384 01:29:46,160 --> 01:29:51,720 Speaker 1: of town, and and so the the people that were 1385 01:29:51,800 --> 01:29:55,600 Speaker 1: running this conference had a cocktail party for all the speakers, 1386 01:29:56,600 --> 01:30:01,000 Speaker 1: and so I made I I was sitting in the 1387 01:30:01,280 --> 01:30:06,439 Speaker 1: in the in the cocktail area, and this young man, 1388 01:30:06,640 --> 01:30:09,280 Speaker 1: this is just an example of the ego. Young man, 1389 01:30:09,840 --> 01:30:12,679 Speaker 1: all dressed up in a very nice suit, came over 1390 01:30:12,760 --> 01:30:15,599 Speaker 1: to my table where I was sitting and he said, 1391 01:30:16,520 --> 01:30:23,679 Speaker 1: excuse me, Mr Joseph P. Grenville, would like to join 1392 01:30:23,960 --> 01:30:29,800 Speaker 1: your grouping. Who would that be acceptable to you? And 1393 01:30:29,880 --> 01:30:32,000 Speaker 1: I turned around him and I said, if Joe wants 1394 01:30:32,000 --> 01:30:33,640 Speaker 1: to come and sit out over here, tell him to 1395 01:30:33,720 --> 01:30:37,519 Speaker 1: come on over. And then he walked out from behind 1396 01:30:37,880 --> 01:30:42,080 Speaker 1: a curtain like a grand entrance and grand entrance, and 1397 01:30:42,200 --> 01:30:46,040 Speaker 1: he was dressed in a white linen suit with a 1398 01:30:46,240 --> 01:30:53,040 Speaker 1: red um silk shirt and a red tie and the 1399 01:30:53,560 --> 01:30:57,519 Speaker 1: excuse me, a red kerchief in in his pocket and 1400 01:30:58,640 --> 01:31:07,000 Speaker 1: bright red shiny shoes and um, you know, just I mean, really, really, 1401 01:31:07,800 --> 01:31:10,080 Speaker 1: really an outfit. And he came over to the table 1402 01:31:10,120 --> 01:31:15,240 Speaker 1: and he sat down and I said to him, you 1403 01:31:15,240 --> 01:31:19,800 Speaker 1: you did a fantastic job up there on the podium today, 1404 01:31:20,040 --> 01:31:25,000 Speaker 1: and he well, of course, he said, well you realize, 1405 01:31:25,000 --> 01:31:29,840 Speaker 1: of course that last year I received the award in 1406 01:31:29,960 --> 01:31:35,559 Speaker 1: Las Vegas for the greatest entertainer of the year, and 1407 01:31:35,760 --> 01:31:39,000 Speaker 1: that that was the way he was. So a crowd 1408 01:31:39,040 --> 01:31:42,479 Speaker 1: gathered around the table while I was sitting there, no 1409 01:31:42,640 --> 01:31:45,400 Speaker 1: crowd move when Joe came. All of a sudden, it 1410 01:31:45,400 --> 01:31:49,439 Speaker 1: was a big crowd. What what year is This has 1411 01:31:49,479 --> 01:31:51,640 Speaker 1: to be pre eight too, right, yeah, I think it was. 1412 01:31:52,160 --> 01:31:54,000 Speaker 1: I think it was in the I think it was 1413 01:31:54,040 --> 01:31:56,720 Speaker 1: in the late seventies. And he has to have a 1414 01:31:56,760 --> 01:32:01,920 Speaker 1: couple of years on you, oh quite sure years. So yeah. 1415 01:32:02,040 --> 01:32:09,360 Speaker 1: So anyway, uh, somebody, somebody, somebody that was in the 1416 01:32:09,400 --> 01:32:13,920 Speaker 1: crowd said to him, Joe, you've missed every major market 1417 01:32:13,960 --> 01:32:18,880 Speaker 1: top in the last twenty years. And Joe started telling 1418 01:32:18,920 --> 01:32:23,479 Speaker 1: the story. He said, well, yeah, I there's no reason 1419 01:32:23,560 --> 01:32:30,680 Speaker 1: for that. In fifty seven, Um, I got involved in 1420 01:32:31,040 --> 01:32:36,120 Speaker 1: playing bridge, and I became one of the greatest bridge 1421 01:32:36,160 --> 01:32:39,479 Speaker 1: players in the history of the world. And the kings 1422 01:32:39,520 --> 01:32:42,840 Speaker 1: and queens around the world were inviting me to come 1423 01:32:42,920 --> 01:32:47,559 Speaker 1: to their countries to play bridge with them, and so 1424 01:32:48,120 --> 01:32:52,000 Speaker 1: I was. I was completely involved in meeting with all 1425 01:32:52,040 --> 01:32:56,479 Speaker 1: of these heads of state around the world, and I 1426 01:32:56,560 --> 01:33:00,080 Speaker 1: wasn't paying any attention to my numbers. And that's my 1427 01:33:00,800 --> 01:33:04,360 Speaker 1: fifty seven decline. Missed the fifty seven decline. In sixty two, 1428 01:33:06,280 --> 01:33:12,439 Speaker 1: I got involved in um sailing lightning sailboats, and he 1429 01:33:12,840 --> 01:33:17,040 Speaker 1: I quickly became one of the greatest lightning sailboat captains 1430 01:33:17,120 --> 01:33:22,519 Speaker 1: in history. And people were inviting me to come to 1431 01:33:22,560 --> 01:33:27,200 Speaker 1: participate in regatta's all across the world to sail my 1432 01:33:27,439 --> 01:33:32,719 Speaker 1: lightning boats. And he said, in sixty two, I wasn't 1433 01:33:32,720 --> 01:33:35,320 Speaker 1: paying attention to my numbers because I was I was 1434 01:33:35,479 --> 01:33:39,719 Speaker 1: winning sailboat races. And so I missed the sixty two decline. 1435 01:33:40,280 --> 01:33:42,920 Speaker 1: And he went on and on like this, every top 1436 01:33:42,960 --> 01:33:47,400 Speaker 1: and decline. It was he had become the greatest expert 1437 01:33:47,439 --> 01:33:53,720 Speaker 1: in the world and gemology or whatever it was. And 1438 01:33:53,720 --> 01:33:56,040 Speaker 1: and somebody in the crowd said, oh my god, I'm 1439 01:33:56,080 --> 01:33:57,960 Speaker 1: gonna sell all the time. I gotta get to a 1440 01:33:57,960 --> 01:33:59,920 Speaker 1: phone right now. I've got to sell all my stock 1441 01:34:00,720 --> 01:34:03,120 Speaker 1: and he and he said, why why would you do that? 1442 01:34:03,200 --> 01:34:06,080 Speaker 1: And he said, because Joe Granville just married a twenty 1443 01:34:06,120 --> 01:34:09,800 Speaker 1: two year old woman. He's gonna be He's going to 1444 01:34:09,880 --> 01:34:16,880 Speaker 1: be involved. Otherwise, I'm surprised. No one said, imagine, if 1445 01:34:17,000 --> 01:34:20,200 Speaker 1: you the greatest expert in all these things, only applied 1446 01:34:20,320 --> 01:34:22,720 Speaker 1: that to the stock market, how much money you can 1447 01:34:22,840 --> 01:34:26,120 Speaker 1: make for you and your subscribers. Yeah, that's uh so 1448 01:34:26,360 --> 01:34:28,400 Speaker 1: if that was the case, if he missed all these 1449 01:34:28,479 --> 01:34:32,920 Speaker 1: great tops, how did he have that reputation in the 1450 01:34:33,040 --> 01:34:37,280 Speaker 1: seventies for beings he fled? He developed a concept called 1451 01:34:37,320 --> 01:34:40,679 Speaker 1: on Bailan's volume. Sure, of course that still exists today. Yeah. 1452 01:34:40,720 --> 01:34:43,800 Speaker 1: And and as he says, O b V, if you'd 1453 01:34:43,840 --> 01:34:47,080 Speaker 1: paid attention to on Bailance volume, you would have caught 1454 01:34:47,080 --> 01:34:51,920 Speaker 1: those tops. Is that true? Sort of kinda not really? 1455 01:34:52,439 --> 01:34:55,400 Speaker 1: More often than not? Yes, Okay, it's a good tool. 1456 01:34:55,680 --> 01:34:58,720 Speaker 1: So then why did he miss the turn when the 1457 01:34:58,720 --> 01:35:03,400 Speaker 1: bullmarket of eighty two to two thousand began? You know, 1458 01:35:04,240 --> 01:35:10,120 Speaker 1: two year old life? Yeah, that's that's hilarious. Um, let's 1459 01:35:10,120 --> 01:35:12,840 Speaker 1: talk a little bit about books. I only have you 1460 01:35:12,880 --> 01:35:16,240 Speaker 1: for another twenty minutes or so, but any any books, 1461 01:35:16,320 --> 01:35:22,520 Speaker 1: fiction or nonfiction stand out as as significant or informative 1462 01:35:22,640 --> 01:35:29,320 Speaker 1: or worthwhile to you. Um there's a book that I 1463 01:35:29,400 --> 01:35:32,880 Speaker 1: recommend every everybody. Anybody ever asked me about what's a 1464 01:35:33,040 --> 01:35:35,920 Speaker 1: what's a good book to read? There's a book called 1465 01:35:35,920 --> 01:35:38,479 Speaker 1: The Richest Man in Babel. Oh. Sure, I've read that 1466 01:35:38,680 --> 01:35:44,040 Speaker 1: years ago. It was fabulous. It's a true story. Is 1467 01:35:44,080 --> 01:35:47,160 Speaker 1: that the case. I always thought of it as a parable. No, 1468 01:35:47,800 --> 01:35:50,360 Speaker 1: that's a real true story. It's a by the way 1469 01:35:50,400 --> 01:35:54,960 Speaker 1: for people listening. It's a very thin, short book. You 1470 01:35:55,000 --> 01:35:56,840 Speaker 1: could sit down and bang it out in an out 1471 01:35:57,000 --> 01:36:01,719 Speaker 1: in an afternoon anyway. And I reminded me of another book. 1472 01:36:02,680 --> 01:36:05,679 Speaker 1: There's a similar book to it, that same sort of concept, 1473 01:36:05,760 --> 01:36:10,639 Speaker 1: but a true story dating back to the thousands. Yeah, 1474 01:36:11,439 --> 01:36:15,120 Speaker 1: there's a there's a small little I think it's probably 1475 01:36:15,200 --> 01:36:18,519 Speaker 1: maybe a one page explanation at the back of the book. 1476 01:36:19,200 --> 01:36:23,040 Speaker 1: The book itself is about a number of people who 1477 01:36:23,080 --> 01:36:27,280 Speaker 1: grew up together and one of them becomes extremely rich 1478 01:36:27,400 --> 01:36:32,200 Speaker 1: and powerful. Yeah, and the rest of them are camel 1479 01:36:32,320 --> 01:36:35,720 Speaker 1: drivers and things of that sort. And he he he 1480 01:36:36,240 --> 01:36:40,960 Speaker 1: brings his old friends in and they asked him how 1481 01:36:41,000 --> 01:36:44,400 Speaker 1: in the world did you get so rich and so successful? 1482 01:36:44,800 --> 01:36:50,519 Speaker 1: And he reveals to them the secrets of how he became, 1483 01:36:51,280 --> 01:36:56,920 Speaker 1: the secrets of how anybody can become successful. In the 1484 01:36:56,920 --> 01:36:59,120 Speaker 1: back of the book, there's this a very short thing 1485 01:36:59,160 --> 01:37:04,519 Speaker 1: that says, uh, the story of this man was, uh 1486 01:37:04,960 --> 01:37:08,479 Speaker 1: was he was identified on clay tablets that were found 1487 01:37:08,479 --> 01:37:11,680 Speaker 1: at the site of the original Babylon. And so it's 1488 01:37:11,720 --> 01:37:16,160 Speaker 1: a it's an actual true story. Uh, and that that 1489 01:37:16,439 --> 01:37:19,920 Speaker 1: simply adds to the whole thing to say, this isn't 1490 01:37:19,960 --> 01:37:23,040 Speaker 1: just something that some writer sat down and dreamed up. 1491 01:37:23,920 --> 01:37:29,599 Speaker 1: This is this is true concepts. Uh. Along those same lines, well, 1492 01:37:30,040 --> 01:37:33,000 Speaker 1: you know it was as far as influences, there used 1493 01:37:33,040 --> 01:37:38,000 Speaker 1: to be a fellow on the radio named Earl Nightingale. Okay, 1494 01:37:38,840 --> 01:37:42,479 Speaker 1: and this goes back into this into probably the fifties 1495 01:37:42,520 --> 01:37:44,640 Speaker 1: and sixties and seventies. I think he died in the 1496 01:37:44,680 --> 01:37:48,800 Speaker 1: mid eighties, but he would he had a radio show 1497 01:37:49,320 --> 01:37:52,120 Speaker 1: every day, and he kind of dwell on how to 1498 01:37:52,160 --> 01:37:54,720 Speaker 1: get ahead in the world. And I thought, how to 1499 01:37:54,920 --> 01:37:57,840 Speaker 1: how to conduct yourself in life and and everything else. 1500 01:37:58,680 --> 01:38:00,680 Speaker 1: And he told us he told us story one night 1501 01:38:00,720 --> 01:38:04,400 Speaker 1: that had a huge impact on me. Uh, he said, 1502 01:38:04,680 --> 01:38:06,479 Speaker 1: he said, you know, when I was preparing for the 1503 01:38:06,479 --> 01:38:08,679 Speaker 1: show today, a young man called me on the phone 1504 01:38:09,880 --> 01:38:14,519 Speaker 1: and said to me, Mr Knightonale. Um, I've I'm just 1505 01:38:14,560 --> 01:38:17,479 Speaker 1: a few years out of college. I've I've been trying 1506 01:38:17,520 --> 01:38:21,320 Speaker 1: a career and uh, it's not working out for me. 1507 01:38:21,680 --> 01:38:25,320 Speaker 1: And um, I was wondering if you could tell me 1508 01:38:25,439 --> 01:38:31,479 Speaker 1: some some area of enterprise that I could that I'd 1509 01:38:31,479 --> 01:38:35,480 Speaker 1: have a better chance to success. And so Mr Nightingale 1510 01:38:35,479 --> 01:38:40,040 Speaker 1: said to him, uh uh, well, what what area are 1511 01:38:40,040 --> 01:38:43,280 Speaker 1: you in And the Fellows said, well, I'm in life insurance. 1512 01:38:45,080 --> 01:38:48,519 Speaker 1: And Mr Nightingale said, well, I've always believed that there's 1513 01:38:48,600 --> 01:38:56,080 Speaker 1: one answer to success. It all comes down to the 1514 01:38:56,200 --> 01:38:59,439 Speaker 1: same thing, no matter no matter how it plays out, 1515 01:38:59,479 --> 01:39:02,559 Speaker 1: and always them back to the same thing. If you 1516 01:39:02,600 --> 01:39:07,680 Speaker 1: want to be successful, look around the world and identify 1517 01:39:07,720 --> 01:39:13,000 Speaker 1: a big problem something, That something is a lot of people, 1518 01:39:13,680 --> 01:39:18,400 Speaker 1: a large number of people are are trying to deal 1519 01:39:18,479 --> 01:39:23,760 Speaker 1: with and can't deal with. Then find a solution to 1520 01:39:23,840 --> 01:39:27,040 Speaker 1: that problem. So just solve the world's biggest problems and 1521 01:39:27,280 --> 01:39:31,519 Speaker 1: solve a problem a problem. It doesn't have to really 1522 01:39:31,560 --> 01:39:35,439 Speaker 1: be the world shaking problem, but it could be a 1523 01:39:35,479 --> 01:39:39,599 Speaker 1: case they're saying, you know, kids have kids have always 1524 01:39:39,640 --> 01:39:42,960 Speaker 1: had trouble time shoes. So if you can make a 1525 01:39:43,000 --> 01:39:46,920 Speaker 1: velcrow strap that goes across that solves a problem you 1526 01:39:46,960 --> 01:39:51,080 Speaker 1: can make, you can be successful. So, so you identify 1527 01:39:51,160 --> 01:39:53,920 Speaker 1: a problem, come up with a solution, and then go 1528 01:39:54,000 --> 01:39:55,800 Speaker 1: to the people who have the problem and tell them 1529 01:39:55,800 --> 01:39:59,040 Speaker 1: you've got a solution. And he said, you know, I 1530 01:39:59,080 --> 01:40:02,439 Speaker 1: can't imagine a big your problem existing anywhere else in life, 1531 01:40:02,479 --> 01:40:07,160 Speaker 1: but death, that death is a big problem. So he said, 1532 01:40:07,200 --> 01:40:10,360 Speaker 1: you're already in an area that has is dealing with 1533 01:40:10,400 --> 01:40:13,400 Speaker 1: a huge problem and you have a solution. You have 1534 01:40:13,439 --> 01:40:15,840 Speaker 1: a solution. But he said, you're you're the way you're 1535 01:40:15,840 --> 01:40:18,360 Speaker 1: going about it is all wrong. He said, you're calling 1536 01:40:18,479 --> 01:40:21,120 Speaker 1: your people up, and what you should be saying to 1537 01:40:21,200 --> 01:40:24,800 Speaker 1: him is, Mr Jones, death is a real problem for you, 1538 01:40:24,880 --> 01:40:28,200 Speaker 1: and I've got a solution. No, you're not doing it 1539 01:40:28,240 --> 01:40:30,920 Speaker 1: that way. You're calling Mr Jones up. You say, Mr Jones, 1540 01:40:31,160 --> 01:40:33,959 Speaker 1: I got a problem. I need to feed my family, 1541 01:40:34,560 --> 01:40:36,439 Speaker 1: I need to buy a car, I want to have 1542 01:40:36,479 --> 01:40:39,000 Speaker 1: a new nice house, and I don't have enough money. 1543 01:40:39,200 --> 01:40:43,799 Speaker 1: So I've picked you out as a solution to my problem. 1544 01:40:43,880 --> 01:40:48,519 Speaker 1: He said, you're going about it all wrong. Well, uh, 1545 01:40:48,680 --> 01:40:52,679 Speaker 1: as far as the stock market goes, that same story 1546 01:40:53,520 --> 01:40:56,120 Speaker 1: is coming back to me again and again and again 1547 01:40:56,120 --> 01:41:01,599 Speaker 1: and say, the biggest problem that all investors have, cancer 1548 01:41:01,720 --> 01:41:05,439 Speaker 1: is something else. And you know, but in the stock market, 1549 01:41:06,000 --> 01:41:11,080 Speaker 1: the biggest problem that every investors faced with is bear markets. 1550 01:41:11,960 --> 01:41:14,519 Speaker 1: Bear markets seem to sneak up on people, don't. They 1551 01:41:14,520 --> 01:41:18,640 Speaker 1: don't seem coming, they don't seem to be able to emotionally, 1552 01:41:18,720 --> 01:41:20,680 Speaker 1: they don't seem to be able to do what is 1553 01:41:20,760 --> 01:41:25,519 Speaker 1: necessary to do to avoid them, and um, and they 1554 01:41:25,600 --> 01:41:29,320 Speaker 1: usually end up uh selling near the low of they. 1555 01:41:29,400 --> 01:41:33,720 Speaker 1: I mean, that's a real problem for investors. And so 1556 01:41:33,840 --> 01:41:40,080 Speaker 1: I've spent probably oh at least twenty five years fixated 1557 01:41:40,240 --> 01:41:45,120 Speaker 1: on looking at major market tops, how bear markets develop, 1558 01:41:45,320 --> 01:41:49,400 Speaker 1: how they occur, and what you can do to avoid them. 1559 01:41:49,560 --> 01:41:54,520 Speaker 1: And so that was a huge influence on my life. Nightingale, 1560 01:41:54,680 --> 01:41:58,400 Speaker 1: the gentleman's name is is Nightingale? Night and Gale? Any 1561 01:41:58,439 --> 01:42:00,439 Speaker 1: other books you want to mention besides it's just man 1562 01:42:00,479 --> 01:42:04,599 Speaker 1: in Babylon before we move on to the next question 1563 01:42:04,640 --> 01:42:08,400 Speaker 1: in our last few minutes, No, I think that's that's 1564 01:42:08,400 --> 01:42:10,840 Speaker 1: a that's a good one. That's a good place to stop. 1565 01:42:10,960 --> 01:42:14,400 Speaker 1: And I read that so long ago. I have to go. 1566 01:42:14,479 --> 01:42:16,080 Speaker 1: I know I have a copy of it somewhere. I'm 1567 01:42:16,080 --> 01:42:20,080 Speaker 1: gonna have to pull that and reread it. Um. So 1568 01:42:20,160 --> 01:42:26,400 Speaker 1: the last four questions are should go back to one 1569 01:42:26,479 --> 01:42:31,200 Speaker 1: more one more book Reminiscences of a Stock market Trader, 1570 01:42:31,840 --> 01:42:39,960 Speaker 1: uh talking about um the boy Plunger, right, which, UM, 1571 01:42:40,600 --> 01:42:43,320 Speaker 1: I don't know anybody who hasn't read that. That's that's 1572 01:42:43,360 --> 01:42:48,480 Speaker 1: a standards it's a standard book, but it's timeless, tells 1573 01:42:48,560 --> 01:42:51,919 Speaker 1: you everything. It tells you a lot of the lessons 1574 01:42:51,920 --> 01:42:54,400 Speaker 1: you need to learn in order to be a successful investor. 1575 01:42:54,600 --> 01:42:58,240 Speaker 1: There there are things in that book that if you 1576 01:42:58,400 --> 01:43:01,960 Speaker 1: just changed the name of the stock, you wouldn't know. 1577 01:43:02,120 --> 01:43:07,080 Speaker 1: It wasn't written a week ago. It's the same thing. Um, okay, 1578 01:43:07,120 --> 01:43:11,200 Speaker 1: so you joined Lowry's over fifty years ago. What are 1579 01:43:11,240 --> 01:43:15,120 Speaker 1: the most significant things that you've seen change in the market, 1580 01:43:15,640 --> 01:43:18,360 Speaker 1: Perhaps that people don't really pay attention. What do you 1581 01:43:18,400 --> 01:43:22,280 Speaker 1: think is the most important changes we've seen since you've 1582 01:43:22,400 --> 01:43:27,479 Speaker 1: entered this field? Well, uh gee, something's uh would would 1583 01:43:27,520 --> 01:43:30,920 Speaker 1: be the creation of ETFs. It's so funny you said 1584 01:43:30,960 --> 01:43:35,360 Speaker 1: that because Jeremy Siegel said the exact same thing a 1585 01:43:35,400 --> 01:43:39,120 Speaker 1: few days ago, same exact answer. What why why are 1586 01:43:39,120 --> 01:43:41,559 Speaker 1: e t F so important? Sorry I don't disagree with you, 1587 01:43:42,000 --> 01:43:45,120 Speaker 1: but but why why do you think it's so important? Well, 1588 01:43:46,439 --> 01:43:52,160 Speaker 1: it's it's it's been fascinating that the the mutual fund industry, 1589 01:43:53,640 --> 01:43:58,080 Speaker 1: uh has persisted this for as long as it has 1590 01:43:58,479 --> 01:44:02,599 Speaker 1: more mutual funds than actual stocks. Well, and yeah, that's right. 1591 01:44:02,680 --> 01:44:07,280 Speaker 1: And and what what we have is saying you know, 1592 01:44:07,800 --> 01:44:13,760 Speaker 1: when mutual funds were originally created, people were recording all 1593 01:44:13,800 --> 01:44:17,240 Speaker 1: of the information about prices and who owns it and 1594 01:44:17,280 --> 01:44:22,360 Speaker 1: everything else with a pencil and paper. Uh. And so 1595 01:44:22,760 --> 01:44:27,479 Speaker 1: to get out of a mutual fund, you had to 1596 01:44:27,520 --> 01:44:30,640 Speaker 1: sell on one day and get your money on the 1597 01:44:30,680 --> 01:44:33,040 Speaker 1: next day. We would sell after the close because they 1598 01:44:33,080 --> 01:44:35,320 Speaker 1: had a wait for closing prices. Even if you called 1599 01:44:35,400 --> 01:44:39,000 Speaker 1: during the day, they wouldn't sell. Yeah. Sorry, And in 1600 01:44:39,439 --> 01:44:41,600 Speaker 1: most cases you had to call before two o'clock in 1601 01:44:41,600 --> 01:44:45,679 Speaker 1: the afternoon in order to get that day's price. Um 1602 01:44:45,960 --> 01:44:49,479 Speaker 1: in some cases they wanted to even earlier, and it 1603 01:44:49,560 --> 01:44:51,880 Speaker 1: was simply a case of saying they didn't have the 1604 01:44:52,040 --> 01:44:56,559 Speaker 1: mechanical equipment necessary to be able to arrive at a 1605 01:44:56,600 --> 01:45:00,960 Speaker 1: price in a short period of time. But the eighties, 1606 01:45:01,400 --> 01:45:04,240 Speaker 1: you know, computerization has coming now and now we can 1607 01:45:04,280 --> 01:45:09,559 Speaker 1: solve anything in a millisecond, and the mutual fund industry 1608 01:45:09,600 --> 01:45:11,720 Speaker 1: is still sitting there saying, well, you gotta put in 1609 01:45:11,760 --> 01:45:14,519 Speaker 1: your trade before four o'clock or or you don't get 1610 01:45:14,560 --> 01:45:17,560 Speaker 1: today's trade. How is that possible? Is that just inertia 1611 01:45:17,760 --> 01:45:20,439 Speaker 1: that these guys have managed, because if you look at 1612 01:45:20,479 --> 01:45:23,960 Speaker 1: the long term charts, it's clear that ETFs are rising, 1613 01:45:24,479 --> 01:45:27,240 Speaker 1: attracting more and more assets, and many of the mutual 1614 01:45:27,240 --> 01:45:33,120 Speaker 1: fund companies are running into increasing their plateaued at best 1615 01:45:33,200 --> 01:45:36,760 Speaker 1: only a handful of Vanguard is an exception, continues to 1616 01:45:36,800 --> 01:45:41,080 Speaker 1: gain assets. You look at Fidelity not not as much. Well. 1617 01:45:41,120 --> 01:45:44,519 Speaker 1: I think part of this because Vangard Vanguard picked up 1618 01:45:44,560 --> 01:45:50,439 Speaker 1: the idea of a fixed portfolio of the index in 1619 01:45:50,439 --> 01:45:55,040 Speaker 1: the s and UH there are two for their two 1620 01:45:55,080 --> 01:46:01,360 Speaker 1: thirds um indexes and one third active manner um. And 1621 01:46:01,400 --> 01:46:03,880 Speaker 1: I think the reason has persisted that way is because 1622 01:46:03,920 --> 01:46:09,080 Speaker 1: it's it's convenient for the owners of of the mutual 1623 01:46:09,120 --> 01:46:12,200 Speaker 1: funds to say, well, you can't get out of our 1624 01:46:12,240 --> 01:46:18,639 Speaker 1: funds fast, so you have a chance to rethink, rethink 1625 01:46:18,680 --> 01:46:21,400 Speaker 1: your your idea of trying to sell our mutual funds. 1626 01:46:21,400 --> 01:46:24,840 Speaker 1: And Vanguard has been a leader in that approach of 1627 01:46:24,920 --> 01:46:29,439 Speaker 1: saying they essentially say, listen, give us your money, we'll 1628 01:46:30,479 --> 01:46:32,800 Speaker 1: go away and we'll see you in forty years. It's 1629 01:46:32,880 --> 01:46:35,640 Speaker 1: it's worth that for them, and and to a large 1630 01:46:35,680 --> 01:46:40,000 Speaker 1: degree it's worked out for their clients. But the Vanguard 1631 01:46:40,000 --> 01:46:42,880 Speaker 1: client is a different client. They tend not to be 1632 01:46:43,520 --> 01:46:46,080 Speaker 1: They're a set and forget and we'll see in thirty 1633 01:46:46,120 --> 01:46:50,240 Speaker 1: years sort of client. The average investor is very different 1634 01:46:50,240 --> 01:46:53,679 Speaker 1: than the average vanguard investor. They're looking at the news, 1635 01:46:53,720 --> 01:46:56,880 Speaker 1: they're getting there, but they're panicking at the bottom. It's 1636 01:46:56,880 --> 01:47:01,000 Speaker 1: a very different philosophy than we see with UH with 1637 01:47:01,120 --> 01:47:06,400 Speaker 1: Van Guard so so E t fs a real big innovation. Well, 1638 01:47:06,479 --> 01:47:08,479 Speaker 1: E t F have simply come along and said said, 1639 01:47:08,520 --> 01:47:11,719 Speaker 1: we're moving into the modern world. Instead of being priced 1640 01:47:11,760 --> 01:47:14,720 Speaker 1: once a day, we're going to be priced day long, 1641 01:47:14,760 --> 01:47:17,640 Speaker 1: TI tick all day long, and that that makes it 1642 01:47:17,720 --> 01:47:22,000 Speaker 1: a very very acceptable tool, not only the small investors, 1643 01:47:22,000 --> 01:47:26,880 Speaker 1: but also the institutions. We've seen a huge growth on 1644 01:47:26,920 --> 01:47:30,000 Speaker 1: the institutional side. At the same time it's growing for 1645 01:47:30,120 --> 01:47:35,200 Speaker 1: small individual investors. So lowry capital not gonna issue an 1646 01:47:35,200 --> 01:47:39,640 Speaker 1: E t F on your Yeah, we're we're going to 1647 01:47:39,760 --> 01:47:43,479 Speaker 1: be creating interest in very near future. Because I think 1648 01:47:44,080 --> 01:47:46,719 Speaker 1: in a lot of ways it's the perfect investment for 1649 01:47:46,840 --> 01:47:51,240 Speaker 1: all types of investors. It works, works for small investors, 1650 01:47:51,280 --> 01:47:55,000 Speaker 1: work for big investors. Sufficient, it's it's inexpensive, it's easy 1651 01:47:55,080 --> 01:47:58,280 Speaker 1: to it's easy, it's it's hard to find a downside. 1652 01:47:58,360 --> 01:48:00,639 Speaker 1: John Bogel not a big fan out of him because 1653 01:48:00,640 --> 01:48:04,600 Speaker 1: he says it encourages over trading. But your sort of 1654 01:48:04,640 --> 01:48:08,960 Speaker 1: et F is not designed to be actively traded. I'm 1655 01:48:09,000 --> 01:48:12,880 Speaker 1: assuming that internally you guys are handling the trading or 1656 01:48:12,920 --> 01:48:18,040 Speaker 1: any value slash timing related decisions. Yeah. We we think 1657 01:48:18,080 --> 01:48:20,720 Speaker 1: that we think that our ETF will eventions will will 1658 01:48:20,800 --> 01:48:25,680 Speaker 1: essentially be buy and hold, buy and whole type of investments. Um, 1659 01:48:25,760 --> 01:48:30,920 Speaker 1: that we take care of the changing the portfolio internally. 1660 01:48:31,040 --> 01:48:34,320 Speaker 1: We we moved from bowl market to bear market and 1661 01:48:34,360 --> 01:48:36,599 Speaker 1: make make all the changes that need to be made 1662 01:48:36,640 --> 01:48:41,680 Speaker 1: for an investor. That that's fascinating This next question. So 1663 01:48:41,720 --> 01:48:43,280 Speaker 1: I was gonna ask you what did you see as 1664 01:48:43,280 --> 01:48:49,000 Speaker 1: the next major shifts? Um. Well, uh, you know, there's 1665 01:48:49,000 --> 01:48:53,360 Speaker 1: bring some One of the things that affected us a 1666 01:48:53,400 --> 01:48:56,639 Speaker 1: great deal was was the change in the uptick rule. 1667 01:48:56,880 --> 01:49:01,000 Speaker 1: Took place in two thousands around June two thousand seven. 1668 01:49:01,680 --> 01:49:03,439 Speaker 1: There used to be a rule that you could not 1669 01:49:04,439 --> 01:49:08,200 Speaker 1: sell short until there was an uptick in the in 1670 01:49:08,240 --> 01:49:13,280 Speaker 1: the price. And for reasons that are just absolutely beyond me, 1671 01:49:14,280 --> 01:49:19,639 Speaker 1: they the SEC chose to remove that remove that control. 1672 01:49:19,840 --> 01:49:24,080 Speaker 1: Good timing to it was put into place. Yeah, it 1673 01:49:24,240 --> 01:49:29,200 Speaker 1: was put into place as a result of the crash. 1674 01:49:29,320 --> 01:49:32,240 Speaker 1: Another word, JUNO one sellers piling on and it's one 1675 01:49:32,240 --> 01:49:33,840 Speaker 1: thing if you own a stock and you want to 1676 01:49:33,840 --> 01:49:36,880 Speaker 1: sell it, but we don't want people short selling and 1677 01:49:37,000 --> 01:49:39,280 Speaker 1: driving it lower. You at least need a little bit 1678 01:49:39,320 --> 01:49:42,800 Speaker 1: of up trading in order to get a short loss, right. 1679 01:49:43,000 --> 01:49:45,960 Speaker 1: And that makes sense, doesn't Yeah, And so why they 1680 01:49:46,120 --> 01:49:49,479 Speaker 1: why they removed the rule that was that was created 1681 01:49:49,560 --> 01:49:55,280 Speaker 1: to avoid another ninety nine and they they made the 1682 01:49:55,320 --> 01:49:58,799 Speaker 1: change just in time for the for the two thousand 1683 01:49:58,840 --> 01:50:01,320 Speaker 1: seven two thousand nine market. And then they went the 1684 01:50:01,360 --> 01:50:03,560 Speaker 1: other way and said, Okay, nobody can short bank or 1685 01:50:03,640 --> 01:50:07,439 Speaker 1: related stocks. So they messed up one direction, and then 1686 01:50:07,439 --> 01:50:11,320 Speaker 1: they went too far in the other direction. Uh. The 1687 01:50:11,320 --> 01:50:18,240 Speaker 1: the the biggest thing in my mind that's occurred in 1688 01:50:18,240 --> 01:50:21,000 Speaker 1: in in my career is that the New York Stock 1689 01:50:21,040 --> 01:50:26,040 Speaker 1: Exchange used to be an institution and it went from 1690 01:50:26,040 --> 01:50:29,960 Speaker 1: being an institution to being a profit making corporation. That's 1691 01:50:29,960 --> 01:50:36,280 Speaker 1: a huge, huge change, which with major, major ramifications. Yeah, 1692 01:50:36,400 --> 01:50:39,400 Speaker 1: and I think that was absolutely wrong. That that's what 1693 01:50:39,479 --> 01:50:42,120 Speaker 1: led us to the world of high frequency trading and 1694 01:50:42,120 --> 01:50:45,320 Speaker 1: and all these other things that are h the loss 1695 01:50:45,320 --> 01:50:48,280 Speaker 1: of the specialist, and and now we end up with 1696 01:50:49,360 --> 01:50:52,760 Speaker 1: a bunch of computers standing making markets, which isn't the 1697 01:50:52,800 --> 01:50:56,639 Speaker 1: same as having a person responsible for creating an orderly market, 1698 01:50:57,080 --> 01:51:01,799 Speaker 1: and and and some rules that have been in place 1699 01:51:01,880 --> 01:51:08,880 Speaker 1: for decades um the ability to the ability to jump 1700 01:51:10,120 --> 01:51:13,360 Speaker 1: jump in front of another investor by by and so 1701 01:51:14,680 --> 01:51:19,600 Speaker 1: uh right, front running. Front running used to be a 1702 01:51:19,720 --> 01:51:24,200 Speaker 1: thing that was a really serious problem, and now it's 1703 01:51:24,439 --> 01:51:28,040 Speaker 1: just ignored. Well, it's not even ignored. It's that the 1704 01:51:28,120 --> 01:51:34,040 Speaker 1: exchanges sell co location servers and data feeds and they 1705 01:51:34,120 --> 01:51:37,720 Speaker 1: let the h f T sniff out incoming orders and 1706 01:51:37,800 --> 01:51:40,559 Speaker 1: let them run ahead. And you know that that's an 1707 01:51:40,560 --> 01:51:44,880 Speaker 1: issue because that basically the profits of the h f 1708 01:51:44,920 --> 01:51:47,439 Speaker 1: T s are coming out of someone somewhere. It's a 1709 01:51:47,560 --> 01:51:50,800 Speaker 1: zero sum game. And if they're sliced, the pie is 1710 01:51:50,840 --> 01:51:54,320 Speaker 1: getting bigger. That means the investors the pie is getting smaller. 1711 01:51:54,479 --> 01:51:58,639 Speaker 1: That said, a number of big shops, including Vanguard, has 1712 01:51:58,680 --> 01:52:02,000 Speaker 1: said it adds liquidly, it allows us to execute orders 1713 01:52:02,520 --> 01:52:06,400 Speaker 1: more more easily. I'm not fully convinced. Uh well, I 1714 01:52:06,400 --> 01:52:09,639 Speaker 1: think it's an interesting thing that people are saying that 1715 01:52:09,680 --> 01:52:14,080 Speaker 1: because of what they're saying is we're allowing people to 1716 01:52:14,280 --> 01:52:19,880 Speaker 1: front run because it's to our particular advantage to have 1717 01:52:20,040 --> 01:52:23,840 Speaker 1: them able to front run. And the new York Stcuchans 1718 01:52:23,920 --> 01:52:29,840 Speaker 1: used to be about ethics. Ethics was paramount paramount. Yeah, 1719 01:52:30,040 --> 01:52:34,240 Speaker 1: I couldn't agree today we say, well profit mode at 1720 01:52:34,240 --> 01:52:38,120 Speaker 1: this paramount. They should have stayed as a utility, as 1721 01:52:38,160 --> 01:52:41,040 Speaker 1: a public they should have been in square and not 1722 01:52:41,400 --> 01:52:45,600 Speaker 1: a for profit construct and people that people that represented 1723 01:52:45,640 --> 01:52:50,360 Speaker 1: the New York Stocuchian should have been appointed by a 1724 01:52:50,439 --> 01:52:55,000 Speaker 1: committee and too important in should it should have been 1725 01:52:55,080 --> 01:52:57,800 Speaker 1: conducted on the most ethical levels that could possibly be 1726 01:52:57,880 --> 01:53:02,519 Speaker 1: done on. So last two questions you your story of 1727 01:53:02,560 --> 01:53:06,360 Speaker 1: how you started a Lowry is Lowry's is certainly unique. 1728 01:53:07,160 --> 01:53:09,880 Speaker 1: What sort of advice would you give to a millennial 1729 01:53:10,040 --> 01:53:13,920 Speaker 1: or someone just graduating college today starting out in a 1730 01:53:13,960 --> 01:53:19,920 Speaker 1: career in finance study the law supply demand number one 1731 01:53:21,080 --> 01:53:26,640 Speaker 1: um UH and I think I think I would have 1732 01:53:26,720 --> 01:53:34,680 Speaker 1: to say, search out a mentor. I know I know 1733 01:53:34,800 --> 01:53:41,920 Speaker 1: of a lot of extremely capable UH supply demand type 1734 01:53:43,080 --> 01:53:47,160 Speaker 1: UH analysts that that have that they have taken great 1735 01:53:47,240 --> 01:53:51,240 Speaker 1: pride in serving as a mentor to other people. You 1736 01:53:51,360 --> 01:53:56,519 Speaker 1: mentioned Alan Shaw, you mentioned Bob Farrell that that sort 1737 01:53:56,520 --> 01:53:59,840 Speaker 1: of thing of of teeing up the next generation of 1738 01:54:00,640 --> 01:54:03,559 Speaker 1: and and there are a lot of people that enjoy it. 1739 01:54:03,640 --> 01:54:05,600 Speaker 1: I mean it's not it's not as though you have 1740 01:54:05,640 --> 01:54:08,160 Speaker 1: to go to them and and cajole them in the 1741 01:54:08,280 --> 01:54:14,320 Speaker 1: in the giving you a job. It's a case of saying, uh. 1742 01:54:14,600 --> 01:54:17,719 Speaker 1: In any company that's trying to grow, you're looking for 1743 01:54:17,800 --> 01:54:23,439 Speaker 1: those those exceptional people who are really willing to to 1744 01:54:24,160 --> 01:54:29,639 Speaker 1: have another education. And and that means that you've got 1745 01:54:29,680 --> 01:54:32,520 Speaker 1: to be willing to work along hours. You've got to 1746 01:54:32,560 --> 01:54:37,080 Speaker 1: be willing to sit and listen to uh somebody like 1747 01:54:37,200 --> 01:54:41,240 Speaker 1: me pontificate uh and and tell you the information. And 1748 01:54:41,280 --> 01:54:42,920 Speaker 1: then you've got to be and you've got to go 1749 01:54:42,920 --> 01:54:44,800 Speaker 1: and apply it. And you've gotta there's a lot of 1750 01:54:44,800 --> 01:54:49,320 Speaker 1: hard work that you need to do to to take information, 1751 01:54:49,400 --> 01:54:55,160 Speaker 1: to take advice, and then and then create actual experience 1752 01:54:55,440 --> 01:55:01,040 Speaker 1: of seeing that advice payoff. And um, I think finding 1753 01:55:01,040 --> 01:55:05,320 Speaker 1: a mentor is is we'll put you, We'll put you 1754 01:55:05,440 --> 01:55:09,400 Speaker 1: miles and miles ahead of the competition. So people pulling 1755 01:55:09,480 --> 01:55:12,200 Speaker 1: up on a Saturday afternoon while you're in the dirt 1756 01:55:12,680 --> 01:55:14,800 Speaker 1: playing in the garden, is that is that how people 1757 01:55:15,080 --> 01:55:18,400 Speaker 1: find you? Yeah, the same location, You're still in the 1758 01:55:18,440 --> 01:55:21,080 Speaker 1: same building. Have we have we have we have several 1759 01:55:21,080 --> 01:55:25,400 Speaker 1: people in our office that came to us, came to 1760 01:55:25,480 --> 01:55:28,480 Speaker 1: us and pretty much set the same fashion. Really, one 1761 01:55:28,520 --> 01:55:31,560 Speaker 1: of the people's been with me for twenty five years now, 1762 01:55:32,360 --> 01:55:36,000 Speaker 1: fascinating And our last question, and I suspect I know 1763 01:55:36,120 --> 01:55:38,680 Speaker 1: the answer to this one. What do you know about 1764 01:55:38,720 --> 01:55:42,840 Speaker 1: investing today that you wish you knew when you started 1765 01:55:42,960 --> 01:55:52,600 Speaker 1: fifty years ago? Oh? Um? Well, uh, some of this 1766 01:55:52,720 --> 01:55:57,120 Speaker 1: recent work that we've done is is uh has been 1767 01:55:57,800 --> 01:56:01,120 Speaker 1: about tops and bottom incredibly revealed. Yeah, it would have 1768 01:56:02,520 --> 01:56:08,080 Speaker 1: absolutely fifty years ago people You know, people were dramatically 1769 01:56:08,160 --> 01:56:14,280 Speaker 1: suffering with with bear markets. Um um. They had no 1770 01:56:14,440 --> 01:56:19,760 Speaker 1: idea as to as to how to how to avoid them. 1771 01:56:19,800 --> 01:56:22,160 Speaker 1: They didn't know what was going on the market was 1772 01:56:22,200 --> 01:56:24,680 Speaker 1: a single entity. They didn't have they didn't have any 1773 01:56:24,680 --> 01:56:29,080 Speaker 1: way of looking inside. I often I often use the 1774 01:56:29,120 --> 01:56:32,120 Speaker 1: example of saying if you went to a doctor, uh, 1775 01:56:32,160 --> 01:56:34,880 Speaker 1: and you said, doctor, you know, hurting all over. I 1776 01:56:35,200 --> 01:56:38,880 Speaker 1: don't know what it is, I just hurt all over. 1777 01:56:39,640 --> 01:56:43,400 Speaker 1: And the doctor says, I'm looking at your face. Your 1778 01:56:43,440 --> 01:56:46,920 Speaker 1: face looks good, your skin good color, and your skin, 1779 01:56:47,040 --> 01:56:50,000 Speaker 1: your eyes are bright. I think you're healthy. Here's here's 1780 01:56:50,040 --> 01:56:53,840 Speaker 1: my bill for two hundred dollars. And you'd say, you'd 1781 01:56:53,840 --> 01:56:55,960 Speaker 1: say to him. Doctor, there's no way to do an 1782 01:56:56,000 --> 01:56:58,760 Speaker 1: analysis of a patient. I want you to take me 1783 01:56:58,760 --> 01:57:00,800 Speaker 1: in the laboratory and the okay, I want you to 1784 01:57:00,840 --> 01:57:03,960 Speaker 1: put me through sixteen different kinds of machines and see 1785 01:57:04,000 --> 01:57:07,880 Speaker 1: what's going on inside. It's not the outside, it's the 1786 01:57:08,000 --> 01:57:12,880 Speaker 1: inside that's really important. In stock market analysis, the same thing. 1787 01:57:13,000 --> 01:57:15,879 Speaker 1: The outside is the S and P five hundred INDEXS, 1788 01:57:15,960 --> 01:57:19,760 Speaker 1: the Dow Jones Industrial Average, all of that stuff. The 1789 01:57:19,840 --> 01:57:25,240 Speaker 1: inside is supplying demand. It's the forces of buyers and sellers. 1790 01:57:25,240 --> 01:57:29,760 Speaker 1: It's the volume and the price changes and momentum and 1791 01:57:30,000 --> 01:57:33,680 Speaker 1: breath and all of these other factors that determine whether 1792 01:57:33,800 --> 01:57:36,600 Speaker 1: the market is in an uptrend or in the entrant. 1793 01:57:37,680 --> 01:57:43,760 Speaker 1: And um uh you know, now, all of a sudden, 1794 01:57:44,520 --> 01:57:47,280 Speaker 1: we know these things, and I should I should say 1795 01:57:47,480 --> 01:57:52,800 Speaker 1: these are not commonly known situations. For example, we're doing 1796 01:57:52,800 --> 01:57:57,760 Speaker 1: the segmentation of of of the market. Uh, segmentation of 1797 01:57:57,920 --> 01:58:01,320 Speaker 1: not only the advanced declines, but upside and downside volume 1798 01:58:01,400 --> 01:58:04,680 Speaker 1: and points gaining points, austin all kinds of other factors. 1799 01:58:05,320 --> 01:58:08,000 Speaker 1: I don't think that anybody else in the industry. I 1800 01:58:08,040 --> 01:58:10,400 Speaker 1: don't know of anybody else in the industry that's doing 1801 01:58:10,440 --> 01:58:12,840 Speaker 1: that kind of work and what you've learned over these 1802 01:58:12,920 --> 01:58:17,360 Speaker 1: years would have been really helpful back in Oh. You 1803 01:58:17,400 --> 01:58:21,160 Speaker 1: know what you have to think about is this if 1804 01:58:21,280 --> 01:58:28,080 Speaker 1: it right now? Right now? Of all the money managers 1805 01:58:28,080 --> 01:58:33,640 Speaker 1: in the world have a have a philosophy that you 1806 01:58:33,760 --> 01:58:37,320 Speaker 1: cannot see a bearer market coming. There are no warning 1807 01:58:37,400 --> 01:58:41,080 Speaker 1: signs of a bearer market. They just appear out of nowhere, 1808 01:58:42,000 --> 01:58:45,440 Speaker 1: and the only thing you can do is endure them. 1809 01:58:45,480 --> 01:58:48,160 Speaker 1: There's anything that you try to do to avoid a 1810 01:58:48,200 --> 01:58:51,440 Speaker 1: bearer market, you'll just you'll just follow it up and 1811 01:58:51,720 --> 01:58:58,960 Speaker 1: it will make things even worse. Um. So, of all 1812 01:58:59,000 --> 01:59:03,360 Speaker 1: the money managers leave that, what we've done is we've 1813 01:59:03,400 --> 01:59:09,280 Speaker 1: found in the last few years that they're absolutely wrong. 1814 01:59:09,800 --> 01:59:13,040 Speaker 1: Number One, there are warning signs. There are There are 1815 01:59:13,160 --> 01:59:18,680 Speaker 1: numerous warning signs that occur over a long period of time, 1816 01:59:19,440 --> 01:59:23,320 Speaker 1: and that an investor can easily use those warning signs 1817 01:59:23,400 --> 01:59:28,200 Speaker 1: to to move to the sidelines in advance of the 1818 01:59:28,320 --> 01:59:32,480 Speaker 1: dramatical losses. What do you think is going to happen 1819 01:59:32,840 --> 01:59:37,880 Speaker 1: to a money manager who has that information available to 1820 01:59:38,000 --> 01:59:42,880 Speaker 1: them compared to a money manager that doesn't. That's a 1821 01:59:42,960 --> 01:59:46,880 Speaker 1: huge advantage to say the least ss are going to 1822 01:59:47,000 --> 01:59:50,680 Speaker 1: move around I'm looking forward to seeing what happens with 1823 01:59:50,720 --> 01:59:54,280 Speaker 1: this new ETF that you're going to be putting out. UM, 1824 01:59:54,360 --> 01:59:56,920 Speaker 1: and thank you so much for being so generous with 1825 01:59:56,960 --> 01:59:59,680 Speaker 1: your time and spending UH all these hours with us. 1826 01:59:59,680 --> 02:00:03,200 Speaker 1: We really appreciated. I've been chasing you to do this 1827 02:00:03,360 --> 02:00:06,640 Speaker 1: for hours. I actually asked you at a conference not 1828 02:00:06,720 --> 02:00:09,040 Speaker 1: too long ago in New York. Hey, let's let's let's 1829 02:00:09,080 --> 02:00:11,640 Speaker 1: do this, and I'm glad you took me up on 1830 02:00:11,720 --> 02:00:15,400 Speaker 1: my offer. We've been speaking with Paul Desmond. He is 1831 02:00:15,440 --> 02:00:20,640 Speaker 1: the president of Lowry's Research Service, the oldest continuously operated 1832 02:00:20,920 --> 02:00:25,839 Speaker 1: UH technical and analytical service UH in the United States, 1833 02:00:26,000 --> 02:00:29,520 Speaker 1: if not in the world. If you enjoy these conversations, 1834 02:00:29,600 --> 02:00:32,840 Speaker 1: be sure and check out all of our other chats UM. 1835 02:00:32,960 --> 02:00:34,960 Speaker 1: You can find them on iTunes. Just look up an 1836 02:00:34,960 --> 02:00:36,880 Speaker 1: inch or down an inch and you'll see the whole run. 1837 02:00:37,440 --> 02:00:40,920 Speaker 1: Check out my daily column on Bloomberg View dot com. 1838 02:00:41,160 --> 02:00:45,960 Speaker 1: Follow me on Twitter at rid halts Um. I want 1839 02:00:45,960 --> 02:00:49,480 Speaker 1: to thank my recording engineered today has been Genie. Charlie 1840 02:00:49,560 --> 02:00:52,360 Speaker 1: Volmer is our producer, and my head of research is 1841 02:00:52,400 --> 02:00:55,600 Speaker 1: Michael bat Nick. I'm Barry Ridhults. You've been listening to 1842 02:00:55,720 --> 02:00:58,040 Speaker 1: masters in Business on Bloomberg Radio