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Technically Speaking

A great reminder from technical analyst John Murphy:

“The statement ‘market action discounts everything’ forms what is probably the cornerstone of technical analysis. […] The technician believes that anything that can possibly affect the price–fundamentally, politically, psychologically, or otherwise–is actually reflected in the price of that market.”

Alfred Cowles adds:

“This evidence of structure in stock prices suggests alluring possibilities in the way of forecasting. In fact, many professional speculators, including in particular exponents of the so-called Dow Theory widely publicized by popular financial journals, have adopted systems based in the main on the principle that it is advantageous to swim with the tide.”

William Dunnigan adds:

“We think that forecasting should be thought of in the light of measuring the direction of todays trend and then turning to the Law of Inertia (momentum) for assurance that probabilities favor the continuation of that trend for an unknown period of time into the future. This is trend following, and it does not require us to don the garment of the mystic and look into the crystal balls of the future.”

Richard Donchian adds:

“When I first got into commodities, no one was interested in a diversified approach. There were cocoa men, cotton men, grain men they were worlds apart. I was almost the first one who decided to look at all commodities together. Nobody before had looked at the whole picture and had taken a diversified position with the idea of cutting losses short and going with a trend.” (more…)

Don'ts in badminton & Trading too

One spent many pleasant moments this weekend after uncovering a cache of books that no one has seen for some 80 years: Squash and Badminton Annual, the magazine of winter court games of Massachusetts 1932, and 1933 and Set For Three, A Brief History of Squash Rackets I, Massachussets, 1905-1934, Volume 1. One saw pictures and history of the game that started by displacing squash tennis in 1905 and already by 1927 allowed women the privilege of playing the game in the mornings at the Union Boat Club and the Harvard Club. Eleonara Sears was the womens champion and she was closely followed by Mrs. George Wightman, Miss Maurine Boyen and Mrs. Will Howe, and Miss Priscilla Bartol. The game took a big change in 1921 when Harry Cowles became the coach at Harvard until 1932 and taught the college kids the short drop and the volley pioneered by Palmer Dixon. Jack Summers, coach at MIT and John Skillman, coach at Yale, were already prominent in the pro circuit. It is rare that I read something that I don’t learn something about markets and it was the case here.

Here’s a list from the April 1934 magazine of don’ts in badminton.

1. Don’t alter your grip for any stroke

2. Don’t lose short

3. Don’t try to kill everything

4. Don’t omit to feint but not too often

5. Don’t do a half-hearted smash

6. Don’t try impossible strokes

7. Don’t underrate your opponent

8. Don’t give up trying

9. Don’t forget to encourage your partner

10. Don’t get in your partner’s way

11. Don’t forget that to lose your temper generally loses the game

12. Don’t ever stand still but be always on the move. (more…)