YouSaid · the spoken record

Paul Desmond

lines on the record: 141
first: 2015-10-25
most recent: 2015-10-25
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Exactly. As prices rise, it's because buyers were more anxious to do business than the sellers were. If prices are dropping, it's because the sellers are trying to get rid of their stocks and they're lowering the price in order to get rid of it. And the important point is that if you go back to every economic textbook that's probably that's ever been published and turn to chapter one, maybe chapter two, it's about the law of supply and demand. And it says the law of supply and demand is the foundation, it's the starting point of all economic analysis.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“When I was president of the market technicians association, we made an effort to try to go back and find out who first used the word technical, couldn't figure it out.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, you know, it's a broad category, and there are a lot of different Approaches to the stock market that all kind of fit within the category of technical. In other words, if it's not fundamental, then it fits into the category of technical.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Now, the same thing again, you need to know where to look and you need to have the indicators to be able to see it. The advanced decline line that we were talking about in 1929 in 1987 case topped out in March of 1987 and was in a significant decline by the time that the break occurred in October.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's actually about 52%, and another part of it's in there is that instead of convertible preferred stocks, we now just have preferred stocks. And those stocks trade more like bonds than they do like stocks. So in order to eliminate all these potential distortions, we simply said what investors wanted to know is how are common stocks, domestic common stocks, moving on the exchange. And so we created a new universe called the operating companies only. And the only thing that's in that group is domestic common stocks.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, they were essentially portfolios of individual bonds all with an approximately same maturity date. And they didn't have an aftermarket. They had no way to sell if somebody wanted to sell the shares for any reason in between the maturity dates. There was no market. So Nuveen and a number of products like that went to the New York Stock Exchange and said an aftermarket and you need more volume on the exchange. And so they made a deal that essentially said the place should have been renamed the New York Stock and Bond market, but they didn't do it that way. He still called the New York Stock Market, but investors were not aware Of the distortions that were occurring because of the fact that so many bonds were now listed on the New York Stock Exchange.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And convertible prefers So the convertible preferred, because they were tied to the common stock through the conversion process, they moved like common stocks. What happened in 1990 was there were products around particularly from a developer called Nuveen. Nouveen had developed a number of products that were primarily for the retirement community.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, if you go back in time and say you went back to the 40s or even the 50s. And looked at what was registered on the New York Stock Exchange at the time. It was all common stocks. And then it was preferred stocks that were generally convertible into common stocks.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly, and those stocks that have already dropped off are almost always initially in the small cap segment and in the mid-cap segment. So again, very difficult for the average investor to see. And so you need the tools to say, I can see that stocks are falling off the trees. I can see that it's the small caps that are rolling first. And that's a warning sign of a coming bear market.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Two years prior to the top, and each day what that was saying was there are more and more leaves falling off the trees and winters coming. So it was constantly warning you that the market was becoming thinner. There were fewer and fewer stocks that were producing profits for portfolios. It was encouraging portfolio managers to get rid of all of the deadwood that was in their portfolios and start calling out stocks that were no longer in the bull market and therefore moving towards a more defensive position for the coming winter.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“We found that when the Dow Jones Industrial Average reached its peak on September 3, nineteen twenty nine, only two point three percent of the stocks on the New York stock exchange were making new highs that day. Now that was supposed to be the market high. How can only 2.3% be making new highs? They ought to be 60, 70, 80, 90% making new highs. In actuality, around 35% of the stocks on the New York Stock Exchange were already down by 20% or more from their highs. So we went back and we created an advanced decline line. This is a simple way of just saying how many stocks are participating in the uptrend, how many stocks are not participating in the uptrend. And what we found was the advanced decline line. In a steep decline from September 1927”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. If you know what to look for, then it's pretty simple to see. If you don't know what to look for, then you're going to miss it almost every time.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So what you typically find is this study started with us going back and looking at what was going on in 1929. I've always been fascinated with the idea that I've had a number of people who, a number of our clients who were actually in the market in 1929 say to me, you know, the market was just going up in 1929 and then it just crashed. There was no warnings. There was no nothing. And I thought that just doesn't make any sense to me. Nothing happens without some warning signs around it. You can't think of anything in life that doesn't have warning signs, lightning can't occur without white clouds turning to dark clouds, turning to black clouds.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“The chart of the small cap price index. You never see it. You see the SP 500. So, those are stocks that you don't even know exist. So they start to roll over first. They're the first leaves to fall off the trees. Then the mid-caps start to fall off the trees. And that process is all taking place while the S&P 500 is still in a rising pattern because the big caps are the last thing to turn down.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“This is all foliage season. Exactly. And in the autumn, what's happening is the leaves are changing color and everybody's saying, oh, isn't that beautiful? But if the leaves could talk, they'd be screaming out to you saying, Winter's coming, winter's coming, winter's coming. You better get prepared because winter's coming. And nobody's paying any attention. They're all saying, oh, aren't the leaves pretty? Well, the same thing happens in the stock market is that individual stocks drop out of the bull market one by one by one. Very much like the leaves falling off the trees. The process starts with a small caps almost always starts with a small caps. Then it moves to the mid caps. And those are areas that few people are looking at. If you say, when was the last time you saw you open the paper or a magazine and saw a picture of the”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, what occurs is that in the past people used to think of the market as a single entity, the market goes up and goes down all in unison, that stocks move together. That's true at market bottoms, but it's far from true at market tops. Market tops are very much like the autumn season.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Most people say, well, the bear market started in early 2000 and lasted until March of 2003. But for mid-caps and small caps, they were actually going in opposite direction from the big caps. Again, if an investor couldn't see that condition, they missed a huge opportunity.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and you see other situations in which A portion of the market is going in one direction and a portion of the market is going in another direction. For example, in 77, the Dow Jones Industrial Average was down almost all year long. It was down 26, 27% from as high. At the same time, the small caps and mid-caps were making new bull market highs. You saw the same pattern in 2000 actually what was happening in 2000 was the technology stocks were extremely weak. They were probably down, say, 75%. The big caps were down maybe 35%. And the mid-caps and small caps were making new highs. The S&P mid-cap and the S&P small cap indexes made their highs in April of 2002.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely, because the big caps are the last thing to turn down, and therefore they hide all of the weaknesses occurring in the small cap and mid-cap stocks.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Occurred in the small cap and the mid cap indexes. An example, at the top, on the top day in 2000, which I think was January 12th or 14th, this is the absolute top day of the S&P 500 index. If you looked inside the market, you'd see that 55% of all of the stocks listed on the New York Stock Exchange were already down by 20% or more from their highs.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“No one really knows him very well. They're kind of one trick ponies. If their companies don't, if their company's product does not do well, they're pretty much gone. So anyway, what we've seen is that the market does not always move in tandem. It's not a single entity. It's a series of areas of strength and weakness. And so the first stage of a transition from a bull market to a bear market is weakness in small caps. Then at a later point, maybe several months later, you see the deterioration start to occur in the mid-cap stocks. And then later than that, it occurs in the big cap stock. So if you're watching the big cap indexes like the S&P 500 index, you're missing out on all the weakness that has already”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think they're the most speculative stocks. They tend to be overpriced more than most stocks. They're the most illiquid.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Where you're transitioning from an old bull market into a bear market. In that period, the big cap price indexes are incredibly deceptive, and we're in that kind of stage right now.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's what is the 90% upside day. So, in other words, in the 1973, 1974 market decline, we saw 16 90% downside days without ever seeing until we finally saw 90% upside day. What year was that?”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Explain what happens with that. You don't always. That's the important point you can have a series of these 90% downside days where investors are panicking, but the buyers are sitting on the sidelines saying, you know, prices just don't look that good to me. I really can't get too enthusiastic about buying here. If that's the way they view the bargain prices, there will be more sellers. There will be more 90% downside days. And so you can't just view the selling as being the key to a market bottom. It's a one-two punch of you need to see the sellers panic and then you need to see the buyers come rushing back in. If the buyers won't rush back in again, then the market decline will continue until price eventually reach the point where the buyers are really enthusiastic about coming back into the market.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. And near these major market bottoms, the impatience is all on the downside. Just get me out of this place. I don't want to ever see a stock again”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“He's driving the prices. If the seller is anxious, then the price will go down. If the buyer is anxious, the only way he's going to get that stock away from the seller is to raise the price.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. You have to look at the stock market as a double auction system where the buyers can raise or lower their prices and the sellers can lower or raise their prices. And so what you're constantly watching for is to say, is the mood of investors towards selling more than towards buying. So there's always a buyer always a seller, but the question is, who is the most anxious to do business?”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we were looking for some way to indicate that we reached a market bottom. And a lot of writers had talked about capitulation and in a very vague general sense, but nobody had come up with a way to specifically identify the kind of capitulation that occurs at market bottoms. So we went back and looked at the amount of volume that was traded on the downside during periods of market decline. In other words, the seller's volume, how much of the volume was due to sellers and how much of it was due to buyers. And what we found that when you get into the point where investors are panicking, 90% or more of all of the volume traded on the market that day is traded on the downside.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. And what you find generally is that the average investor is panicking right at the bottom. They're saying, oh my goodness, I have to sell now because I'm going to lose. If I don't, I'm going to lose everything I've got.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“All the supply is exhausted. Exactly. Now, the second part of it, which has to be there, is that the buyers who are sitting on the sidelines have to look at the bargains that are available at that point and say, boy, this is an opportunity that I haven't seen in a dozen years, and they come running back in with great enthusiasm to grab up all these bargains. So it's a one-two punch. You have to exhaust the sellers, and then you have to bring the buyers back in again.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. It has to reach the point where people say, just get me out of the stock market. I don't ever want to see a stock again in my life. And at that point, there's no more sellers to drive prices down.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It was rather typical bottom. We saw the conditions that are necessary for a bottom are twofold. Number one, you have to see the selling exhausted.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the fundamentals are delayed. People buy and sell stocks not because of what they know today, but what they think is going to happen in the future. So they look at today's earnings reports and they say, I can see the earnings are positive now, but I just don't think they're going to be that positive six months from now. And therefore, the market starts to turn down because of that change in psychology. And the earnings reports are still positive, but the market turns down. Same thing at market bottoms. The market traditionally turns up because investors are saying, yeah, yeah, I can see how bad things are right now. But I think in the next six months, things are going to get better.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“He I always thought in college that there must be some place in the world that you could go to get a master's degree or a PhD in stock market analysis And I think this is it. And he said, well, I think you can learn a few things here.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Lowry's research, founder of Lowry Research. And so we went into actually the maids quarters have been converted into his private office. And so we went in and sat down and I just said, you know, I've seen your material in the library and like to learn more about it. And we sat and talked for, oh, I think three hours.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right there. Yes, I was put together. I went over to the address that was on the reports and instead of an office building, what I found was in the state area of Miami. And right along the Brickle Avenue estates. And I got to a gate, went through the gate at the end of the property was a three or four story brick colonial home, incredibly unusual in Miami. And I pulled over, they had a separate garage and I guess maid's quarters. And I pulled in there and there was a man in the bushes tending to the flowers. And I said to him, is there anybody around here from the lowry organization? This is actually on a Saturday. And he came up out of the bushes with an old hat on, you know, and dirt all over his fingernails and said, I think we can find somebody around here. And his name was LM Low”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I really wasn't applying for the job. I was trying to learn more about the stock market. And so with the Miami address, I thought, well, this is a chance to just go over there and maybe get a chance to learn more.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I saw a lot of things that did not work that I did not enjoy or did not feel was the right way to go, but I did run into, I had a major in economics in college, and so I was very familiar with the laws of supply and demand and believed in the law of supply and demand very much and started looking for things that fit along with the law of blind demand. Finally got down to the point where I was doing some point and figure charting. I was looking at value line and then all of a sudden I ran across the lowry material and I was in the Miami Library at the time and saw that Lowry's had a Miami address. So I read a lot of their material and felt this was exactly what.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“For 51 years. That's a little unusual. Well, my father was an investor of some size and suffered a series of heart attacks and couldn't handle the portfolio anymore, so I took over for a short time and knew nothing about what I was doing. So I spent a great deal of time at the public library trying to figure out what made sense.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was in the army. Oh, really? So I went from college to the Army to Lowry. Just like that. Yeah, I've got the shortest resume on Wall Street. There you go. One job.”
2015-10-25 · Masters in Business · An Interview With Paul Desmond: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source