Customer Reviews

Point and Figure Charting: The Essential Application for Forecasting and Tracking Market Prices, 2nd Edition (A Marketplace Book)

5 star:		(23)
4 star:		(2)
3 star:		(3)
2 star:		(4)
1 star:		(3)

 

 

Some people find a good thing early on and are smart enough to stick with it. I am not one of those people, but Tom Dorsey is. I've read about every TA book ever written, I've studied everything from stochastic to voodoo and back, and if someone asked me to recommend one single book for learning and successfully applying Technical Analysis in order to make money, it would be this book. The methods described are powerful yet simple, (which usually is the best), concise, (no filler), and include a strategy for any plan to make money in the market and avoid giving it all back.

From the overall concepts of Point and Figure Charting to the specific rules for managing your trades, your portfolio, and your money, you'll be happy you took the time learn what Tom Dorsey has shared about those little Xs and Os.

Mr. Dorsey is a talented financial analyst and amateur weightlifter when he was younger BUT, he is not a good writer (this has been confirmed in my personal correspondence with Mr. Dorsey) and this book cries out for thorough editing. One can learn Point and Figure charting for free at the dorseywright dot com web site (just look for the point n figure university link at the bottom of the home page). Dorsey knows his stuff but the more easily bored one is, the more one will find this book aimless and boring. Point and Figure is superior to bar and candlestick charts because it records meaningful market movement while ignoring the small stuff. Another Point and Figure book, published in the 1930s by de Viller (?), is also very hard to read and not worthy of buying. Let's hope Mr Dorsey, a great guy and always terrific on CNBC, will get this book re-edited and whittled down to about 175 pages. Learn it for free at his website and order "Chart Reading Made Easy" by John Murphy to quickly and economically learn technical analysis.

If you don't understand technical analysis you will find these concepts very different from anything you've seen but after you grasp the basics you will then only begin to understand what a wonderful tool that point and figure charting is. Dorsey explains all the concepts in a very clear and concise manner. It is very easy to understand but don't let that mislead you into thinking that if it's so easy why isn't everyone doing it. That's the beauty of it. Not too many people know about this. It is uncanny how profitable your investing can become once you employ this methodology. I have been using the methods described in this book and I have been very successful. LAST YEAR (1999) I HAD A RETURN OF 61% WHILE ONLY BEING 70% INVESTED! Talk about low risk and HIGH RETURN! Of course you need to employ some fundamental analysis in conjuction with this technical analysis but I know I couldn't have had such a great year without P & F (point and figure). NO, it wasn't luck. I was invested in as many as 30 stocks and I had exposure in 15 different sectors while having no more than 2 or 3 high flying stocks at one time. Speaking of high flying stocks (like QCOM of which I didn't even have any positions in!), point and figure charting will give you the ability to invest in these wild ones while stomaching the volatility. All in all this book and more importantly this knowledge is the HOLY GRAIL for me!

Like many other people, in the last 15 years I made a pile of money only to give it all back. Clearly, the odds of winning were stacked against me. I neglected to study business in my college career so I decided to read up as on equity analysis. I've been through 30 plus highly-rated books and thousands of magazines and web sites, and Dorsey is at the top. His books are well written and understandable; his tools and methods are the best.
His method is based on supply and demand. If institutions and individual investors favor the stock or sector, the demand will cause the price to rise; if they disfavor the stock or sector, the supply of stock to sell will outweigh the demand and the price will sink. He charts the supply and demand tug of war for stocks, funds, sectors and the market. You can find a stock chart and fundamental data anywhere. He gives you comprehensive and powerful tools no one else has.
I took advantage of the 3 week free trial to his website, and reviewed the archives of their "from the analyst" daily market report. They do get you into and out of the market and sectors in a timely fashion. Last year, in May 2001, they explained to their clients that the market was overbought and due for a correction. They would have had you out until September 24th, when they told you the market was extremely oversold to a degree only seen 14 times since 1955. Dorsey's tools and methods give you the courage to buy at bottoms and sell near tops.
Dorsey and crew follow a top-down approach: market, sector, fundamentals, and technicals. He tells you to build a watch list of fundamentally sound stocks, then wait until the time is right to buy (and sell). I am truly surprised that more people have not heard of him. I think the deep-seated bias against technical analysis is the reason. Dorsey does not skip the fundamentals, he joins them to the technical picture of supply and demand, and overbought and oversold levels, to help you stack the odds in your favor.
My highest recommendation is this: I bought this book for my dear old dad. He cannot afford to take another financial hit, and I think Dorsey's analysis and tools will help him.

This Dorsey book on P&F is actually a 10 star rating to me but I just got five to give.

Say 5 stars for bringing me into a new but expuisite technical analysis technique. P&F is dealing with net-moves of prices only - anything inbetween is what Dorsey calls "noise". So, comparing P&F to standard analysis like based on Stochastik, ROC, RSI, etc., a typical P&F-buy or sell signal is sort of a yell at you to move yourself. As P&F signals are that compelling, it should be a good idea to use P&F in combination with standard techniques like a short term RSI, for instance, to make yourself detect first upcoming divergences and beeing aware of what might be showing up by P&F.

Anyways, I changed my complete analysis directives, rebuilding everything over and put it all around Point & Figure after having read Tom Dorsey.

The 5 stars virtually remaining to me I give for the master`s GREAT ATTITUDE of teaching! I've been busy with technical analysis for quite a while by now, having read a lot of books on it. The Dorsey system to me is (may be next to Pring's KST) the best I ever got known about. Dorsey is a great teacher - what is the more respectable the more it get's you finishing the book: Dorsey starts for beginners but ends deep within the subject - still talking to beginners. I bet he feels like a beginner too and I hope you know what I mean by that...

Supply and demand. The battle to determine prices. Economics 101. Did we forget how simple it was? Do we really need hundreds of different technical analysis methods? The focus of this book is on the basic principles of point & figure charting. It is easily read and digested.

I appreciate the many analogies, like "send the defense on the field". Tom's illustrations and straightforward writing style puts this difficult subject within this reader's grasp. His ability to describe chart patterns in tactical detail helps to better understand the right time to buy and ... just as important ... the right time to sell!

Heady analysts and gunslingers may take offense to the easy flow of this book. Tom's energetic style and subtle wit makes learning this technique a breeze. This book can help private investors to take the reins of their own financial chariots. It gets down. It shows you how to master the basic elements of point and figure charting. Tom takes the mystery out of Technical Analysis. The book serves its purpose very well!

Even though I would rate this book as highly recommended to anyone seriously interested in reducing the risks inherent in investing, this book is not a quick easy read. With a financial services background spanning 20+ years, I had to read this book several times to understand and appreciate it's true value.

In my opinion, the greatest value of this book is found in the larger picture, beyond the "how to" technical talk or author's writing style. Here, Dorsey teaches why the price change in stocks actually has very little to do with company fundamentals, and expouses a very particular investment philosophy - an investment philosophy predicated upon the belief that the lowest common denominator in price change of all kind (including stock price movement) is Nature's own Law of Supply and Demand.

That concept is supported by others, including the Nobel Prize winning "Modern Portfolio Theory", which suggests that only about 20% of the cause of price movement in stocks is a direct result of a company's fundamentals, while as much as 80% can be attributed to investor expectations - or said another way, supply and demand.

For example, if we were all totally logical and could separate our emotions from our investment decisions, then fundamental analysis - the determination of price based on future earnings - would work magnificently. And since we would all have the same completely logical expectations, prices would only change when quarterly reports or relevant news was released. Investors would be seeking "overlooked" fundamental data in an effort to find undervalued securities.

However, if prices are based on investor expectations, then knowing what a security should sell for (i.e., fundamental analysis) becomes less important than knowing what other investors expect it to sell for. That's not to say that knowing what a security should sell for isn't important - it is. But, as we all know firsthand, human emotions are not easily quantifiable or predictable, and this guarantees an element of unpredictability in security prices.

In order to be consistently successful, investors must find a way to effectively identify, measure and manage the intangible or "emotional" (and often times, irrational!) risk component present in all financial markets. So how does this book help investors? The Point and Figure Method of charting stock prices was created by Charles Dow in the late 1800's as a way to accurately identify and measure supply and demand - and therefore risk unrelated to fundamentals - in the financial markets.

Although there is little written resource material such as this book on Point & Figure Methodology, there are now several Point & Figure related resource sites available for free in the Internet.

Tom Dorsey's book speaks to the rest of us. Those of us who have been dazzled and confused with the so-called professional's version of the stock market now have a sound plan with which to invest in our futures. Mr. Dorsey speaks in terms that are easily understood by the average investor. Point & Figure Analysis is a comfortable and understandable approach in this day of candles, tea leaves, UFO's and all the other disciplines that the Professionals attempt to confuse and bewilder us with. Let's face it, if supply and demand are the True indicators of market direction, why do we need all the big boys to sell us their "stock of the day" with their fat commissions. Mr. Dorsey's book instills the kind of confidence in the reader that comes when you know what to do and when to do it. He keeps it simple and you feel as if an endearing uncle is sharing his life's worth of learning and discovery with you. The various market indicators are explained thoroughly, giving us an understanding of the probabilities of success or failure with each and every trade or position we hold. Not losing money and/or limiting losses is just as rewarding as making money, perhaps even more so, and knowing when to bail out of a position is very enlightening. I highly recommend this book as it has changed the way I view the market and my goals and understanding of it's movement and trends. Since learning Point & Figure charting from Mr. Dorsey's book, I could not imagine entering a position without this knowledge. Not knowing about the NYSEBP (NYSE bullish percentage) would be like driving in a downpour without windshield wipers. Read it--You just might be on to something BIG!

This book changed how I view the stock market in a most profound way. I found it easy to understand and easy to apply the concepts in real time. This book, in combination with Dorsey's web site, have enabled me to make a lot of money in the stock market. No more floundering around in the dark, throwing darts at a newspaper. As a matter of fact, the concepts discussed in the book have made me very bearish at a time (3/27/02) when there are a lot of bullish fund managers and members of the media. This book will make you a member of the "smart money".

I am sure I am in the same catagory as many investors who buy various types of investment books. I am looking for an edge; that extra knowledge or idea I can use to make more and keep more of my stock market profits. I found it in this book by Tom Dorsey. I learned when to be offensive and when to be defensive in the stock market, stock market sectors and the individual stocks I own.

Do your self a big favor. The next time you save $50 on discounted Internet commissions use the money to buy this book.