George Lindsay and The Art of Technical Analysis

by Ed Carlson

No, this book is not about Goober from Mayberry RFD. (That’s “Lindsey” with an “e”.) The George Lindsay of this book was a technical analyst from the 1930’s and ‘40’s through the early 1980’s or so. He was a guest star on Louis Rukeyser’s stock program and was considered a bit of a savant, I guess. This book sets out to be a detailed study of his technical analysis methodology. But don’t let that fool you: There is precious little this book that pertains to, or could be used in, modern equities markets.

I knew I was in trouble at the first chapter of a book, which explores the biography  of Mr. Lindsay, including his sexuality. The author says that an understanding of the whole person is essential to understanding his technical analysis methods, but I have my doubts about that. Thankfully, that chapter is relatively short. The remainder of the book is all about the technical analysis methods of Mr. Lindsay. It is a straight-forward, no nonsense explanation. Most of the methods are graphically and numerically illustrated, and I think that once upon a time, these methods, mainly charting highs and lows and comparing intervals between them, probably had some validity. I think now they are painfully outdated and not of any practical use in current equities markets. For example, one of the methods involves subtracting a market high from a market low and subtracting from that by another number derived from some ratio or something (details are not important here). From there, you get some other number that dictates some interval of rising or falling prices. Fine, but back when the formula was derived, the DJIA was at 300 points or so. And in one of the cases, the example talks about a 30-point movement – 10% of the market. Well, a 30-point movement now is less than 0.25% of the market and probably happens fifty or a hundred times a day. Likewise, if we were trying to get to a 10% difference (let’s say), you’d be talking about a 1,200 point movement. Not out of the realm of possibility (especially in today’s markets), but are you really going to do that analysis and place bets on the markets, hoping for a 10% shift one way or another? Really? Good luck. What’s worse, the book’s only case study, presumably to prove the value of the methods, uses stock charts from the 1960’s. Maybe it’s just me, but it seems obvious that the equities markets of fifty years ago are a completely different breed of market compared to today’s. I don’t think you can successfully employ investing strategies from half a century ago in this day and age. (Again, if you think differently, good luck.)

Technical analysis has come a long way, even in just the last few years. Maybe a thorough analysis and extrapolation of Mr. Lindsay’s methodology could be put to practical use in today markets. Maybe. But I’d doubt it. As a history of equities analysis and an insightful exploration into one of the early pioneers of technical analysis, this book is probably of some value, but as a primer for investing in today’s markets, it’s not. I can give it three dollar marks for being well-written and informative, but that’s it.