Being a student of the market n' stuff, I love to study old original theories. How they self-distracted, or changed, or endured through decades that follow? What can we learn from the original thinkers of the past?
I got seduced by definitive title "Dow Theory", thinking its a complete text with strict plan to follow. Mr Rhea performed a valuable service in thematically combining excerpts from newspaper articles to form a general outline, but its hardly a step-by-step manual. Basic tenets of Dow Theory are plastered all over internet and they are just as vague and contradicting as Rhea's own book. Here is wiki link, if you don't know.
An unexpected and pleasant surprise was an Appendix, taking up more than half of this book. In it, there are 26 years of periodical editorial column by William Peter Hamilton, one of original editors of Wall Street Journal, from 1903 to 1929. A weekly-to-monthly review of market movement with interpretations of Dow Theory. As it happened, in real time, in a words of participant...
Its like blog, only 100 years ago. Awesome!
October 27, 1913
"It is well to repeat the occasional caution given in this column, that the averages make a good barometer, viewed from disinterested point, but are calculated to ruin anybody if treated as a 'system' for playing the market."
January 5, 1911
"There is nothing in the averages to dogmatize about. They are an immensely valuable guide when studied over long periods in the past. They frequently give useful indications of the tendency of market's short swing. For day-to-day trading they are not only valueless but would probably be dangerous as well."
March 29, 1926
"The passionless barometer is disinterested
because every sale and purchase which goes to make up its findings, is
interested. Its verdict is the balance of all the desires, compulsions
and hopes of those who buys and sells stocks. The whole business of the
country must necessarily be reflected correctly in the meeting of all
these minds, not as an irresponsible debating society but as listening
jury whose members, together, bring more than the counsel or the judge
can ever tell them in finding what has been called the bloodless verdict
of the marketplace."
January 20, 1913
The market does not trade upon what everybody knows, but upon what those with best information can foresee. There is an explanation for every stock market movement somewhere in the future, and the much talked of manipulation is a trifling factor."
July 19, 1910
"There is in Wall Street a small but very useful section of traders which is oftener wright than wrong, and its methods, often unconsciously, are strictly technical, bearing very little reference to conjectures based upon crop prospects or politics."
April 4, 1923
Evey day brings its new experiences, but it is tolerably certain that we shall not have the record of a bull market in which the little speculators successfully liquidated at the top, getting their information from the comic strips in the newspapers."
July 30, 1923
"...the man who picks a wrong stock for speculative purchase, or, more rarely, the right stock at the wrong time... He has no use for the stock market as a barometer of the country's business. He believes he can make money by reading the barometer first and reading business afterwards, or not studying it at all. ...attempt to do both things leads to inextricable confusion."
December 10, 1929
"Mr Hamilton's editorials were widely read and there is an abundant evidence that time and again they exerted a positive and practical influence. Their appeals to thinking men and women may perhaps be attributed in large part to the facility with which he brushed non-essentials aside and went straight to the hart of the question."
Get the book. Go straight to appendix. You'll love it!
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