WAR STORY
A Cautionary Tale
The Chartist
by Edwin Polokoff
Charts don't lie, just in case you needed a reminder.
I shall never forget George. When
I first met him, he was a man in his late 50s, somewhat paunchy, of medium
height, dark hair streaked with gray, silver-rimmed glasses shielding tired
eyes -- George looked docile. A closer look betrayed his seemingly easygoing
manner. His hands shook slightly but uncontrollably, especially when he
ate or wrote. My conclusion was that he had been through too many stock
market wars, and the wear and tear on his nerves, stress from his occupation,
had created the nerve problem.
FIGURE 1: STANDARD GAS & ELECTRIC. George the chartist paid
no attention to the talk about this company, instead following its movements
and buying it when his technique indicated he should.
George was a professional speculator, a broker with one account -- the
family account. He lived constantly on the edge of great wealth or imminent
poverty. His patrician bearing suggested good breeding, a Park Avenue childhood.
How surprised his acquaintances at the country club would have been if
they had known this quiet, solicitous man, who could pass for a philosophy
instructor at a university, could be such a ferocious gambler.
In those early days, since I often worked late doing my research and
planning, I became familiar with George and his theories and modus operandi.
With the office mostly deserted by late afternoon, George would occasionally
chat with me, lecture me on his techniques. I can still see his figure
hunched over the desk, his meticulous, patterned routine of making penciled
entries on each of his 100 separate pages of charts in a big binder.
George was a chartist. The charts were his bible; no need to know economics
or business or financial analysis. He would say that the chart on each
security he followed was the composite of all of the thinking and information
available. Chart skill involved interpreting the hieroglyphics in order
to discover investment opportunities. While I will not burden you with
George's attempts to teach me, I will tell you that much of his
theory made sense; he was adept at his craft, but I trusted fundamental
analysis over chart interpretations. When George would turn to me and say,
"I know nothing about the stock market or individual companies, but
my charts know everything," I would smile. Was he serious or was he
pulling my leg?
I learned that he had once owned a seat on the New York Stock Exchange,
made a fortune, and then lost it in 1929. I felt sorry for him; I wanted
so much he would make one more big hit in order to restore his financial
health. I did not want him to live the rest of his life trading stocks
in order to make a living. Maybe his shaking would stop if he could retire
with a decent stake.
Edwin Polokoff is a retired first vice president of
Merrill Lynch residing in Florida.
Excerpted from an article originally published in the
February 2001 issue of Technical Analysis of STOCKS & COMMODITIES magazine.
All rights reserved. © Copyright 2001, Technical Analysis, Inc.
Return to February 2001 Contents
