Stock Price Moves Seen Following A Pattern!





He was a great provider for his loved ones and was quite frugal. He was a prisoner of war in Germany in world war II and’d walked the departure March around Germany for six weeks. After working for approximately 20 years that he had sufficient savings to invest in stocks. Unfortunately for him other investors seemed to accumulate investable funds at precisely the exact same time and the stock exchange was high. This was in the period of time of 1967 to 1968. His stockbroker urged stocks like Westinghouse and other businesses which the brokerage company was underwriting. My father lost money on all these eleven stocks.


My father read a book entitled, ” How To Make The Stock Market Make Money For You”, by Ted Warren. Ted had never earned more than $200 per week, but had made a whole lot of money in the stock exchange.

I tried to split the study that had been given to me together with buddies and had devastating outcomes. The stock market had appeared in 1968 and didn’t bottom until 1974 at about 570 on the Dow Jones Industrial Average. Luckily for me I used Ted Warren’s basic methodology and managed to get stocks at value prices which over time worked out very well. Other brokers working with me fared very poorly over this age.

The simple message was that stock prices move in a random fashion and that analysts and fund managers offered little value to investors. It was not until 1976 after continuing to do very well for my clients I chose to find out more about the logic of my approach.

The Research Project

The chart book publisher had some of the books on hand, but we had to go to Putnam Funds, Fidelity Funds and other management businesses to acquire the missing books. We knew the basic concept was to find great stocks that had fallen out of favor and traded for a protracted period in a base without making a new low. We had to have a look at thousands of these charts to ascertain our two standard rules. Number one, if we bought these stocks too early our gains would be inhibited by the duration of time the stock remained stagnant in the base. Number two, a few of these companies failed early in the base period. After many hundreds of hours of perusing many thousands of stocks we empirically determined or two primary rules.


Our study, published in 1978 proved that stocks do follow a discernible pattern which may be recognized and exploited. You may see the results by Googling,” Eleven Quarter Stocks “, an independent site. The recommendations at the conclusion of the book also had average gains of over 466%. Thus from a data standpoint the proof is certainly enough to refute the classic, ” A Random Walk Down Wall Street “. Also data from 1978 to present shows that the patterns still are working.


I would caution you not to be deceived by the simplicity of the rules of this idea. While they may appear obvious once they’ve been pointed out to you, this certainly not alters their value. It’s simple to comprehend and difficult to execute. Why? Because the rules are consistent and human emotions aren’t. It is people who need to act on their understanding of these rules, and people are swayed by powerful tides of fear, greed, and impatience.

I’ve used this logic in working with thousands of individuals. Most will quit because it takes a long-term patient perspective. Often when the indexes are rising these stocks aren’t. After waiting two years without a profit, your stock rises 50% simply to drop back where it was previously. Some stocks have very big rises and entice you to buy more only to drop substantially. My way of handling these issues is to invest only about 10% in a group of these stocks, especially after a cyclical market decline. It’s a lot easier to hold should you not over invest. Your understanding of cycles can assist you in mutual fund investing too. Take very little risk after the markets have risen for three years without big corrections and buy more aggressive assets after a four year cycle bottom. I’ve used this knowledge to advantage except when I make a lot of money, I have lost a couple times by investing too heavily in biotech stocks at too significant prices. Unfortunately I have human frailty’s too.

I mean to sell the study, “Non Random Profits” as an eBook together with the remainder of the story.

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