Currently Chief Market Strategist at StockCharts.com in Seattle, I’ve known David from his Bloomberg days. He also has a blog called The Mindful Investor, on which this excellent webinar is broadly based. Interestingly, his first chart maps the high and lows of his career progress as a technical analyst. An idea cobbled from interviewee graphic designer Ken, who he subsequently hired. Creativity and thinking outside the box are David’s strengths.
A talent honed on a Human Resources-mandated six-week course, he admits that Mindfulness changed him a lot; it lives in the present. He believes there are five steps to investing – not the twelve steps advocated by Alcoholic Anonymous – which read as follows: 1) recognition that one is an imperfect investor and that there is room for improvement. 2) restraint, where one should control emotions and stick to evidence. 3) respect – that markets are out of our control. 4) review the landscape, not obsessing in one small area when the world could be our oyster. 5) reflect in order to create structures which can improve themselves.
He then contrasts these with the traits of a Mindless Investor, who has a poor relationship with the past, worries about the present and fears the future. David is convinced that technical analysis helps identify probabilities, which allow us to brush aside clouds and bad thoughts, unleashing our creativity.
His aide-memoire is a pre-flight check list (he’s an experienced amateur pilot) which for technical analysts should be: Dow Theory; Trends; Moving Averages; Patterns; Support & Resistance; Confirmation (meaning oscillators); Relative Strength. As for an exit strategy, he has an (aeroplane) engine cut out list.
Interestingly he’s one of the few who admit that emotions are not necessarily a bad thing; they give you a feeling when things aren’t quite right. Like me, he’s also a firm believer of looking at a series of charts in the same order every day – and others weekly. He warns against business media hype, with which I agree wholeheartedly. I also think I’ll adapt his concept of using your charts as a notebook. I have been creating carefully annotated charts for the South China Morning Post for nearly 6 years now. Instead of deleting them, I’ll save them.
Members can catch up on the talk via the member section of the website. To download a copy of the slides, click here.