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Insight is Making the Complex Simple

Monday, December 1, 2014

– by Sheila & Rich Jamison -

Michael Burke’s death slipped by under most people’s radars, you among them I suspect. Thus I’ll explain that he was one of the titans in Point and Figure (P&F) charting.

There were many others, some of whose names you will recognize – like Charles Dow. But there may be fewer than a dozen of them cited in most reference books on the subject. Michael Burke is on that list.

Before I Had a TV

Burke began contributing his expertise in the 1940s … and may have thus escaped your attention. I didn’t notice what he was doing … and Sheila hadn’t yet been born.

However, by the 1970s, he was a well-respected authority in the P&F field. I was still unaware of him. But decades later I was very aware of one of his ‘students’ – one with a flair for the P&F method. That is Tommy Dorsey.

(No, not Jimmy’s younger trombonist brother of the Big Band era. The other Tommy Dorsey. The one who comprised half of the founders of Dorsey Wright Associates.)

One Guru Points Higher Up

Having had the ongoing privilege of learning from Tommy Dorsey for over a decade, I can attest to his genius in this area. Moreover, I am super-impressed when someone this talented points to Mike Burke and says now there was a guy who really knew his stuff!

And It Stemmed from Baseball?

When speaking of Mike, Tommy said, “He was also a world class bridge player and avid baseball fan. In fact, for him it may have been the latter that drew him to Point & Figure. Keeping track of baseball statistics addicted him to that game more than anything else, and I can imagine the process of keeping an old-fashioned scorecard for something like a Red Sox v. Yankees game being very similar to applying daily price change to a Point & Figure chart. In both cases a rather mundane process, when done by hand, results in a rather intimate relationship with the game being played. Whether it was baseball, or the stock market, Mike was fascinated with the aspects that many people would tend to look past.”

Making Things Simple

In keeping with that “things that may get overlooked” vein, here are three Mike Burke “truisms” for your consideration (with thanks to Tommy Dorsey, both for pointing them out and providing some of the commentary on each):

1. “The Market will do what it wants to do.”

Put in other terms, all the market chatter you hear through the mainstream financial media is meaningless. The latest GDP revision, the most recent election results, or the transcript from the Yellen’s last speech … it is all meaningless.;

The market will do what it wants to do.

It is empowering to realize what is important in this business, and just as empowering to realize what isn’t. The market itself will evaluate all the information there is to evaluate and then decide if it considers the news bullish or bearish. Nothing else is important.

2. “Everything that is written about the market and Wall Street is written to make you do the wrong thing.”

This one may cause a double take when you first hear it. But when you think about it, there are no disinterested players on Wall Street.

Burke shared a story about a mutual fund manager appearing on TV who was asked what stocks he liked. He dutifully rattles off a few. But, adds Mike, do you think he is doing this out of the goodness of his heart? Do you think he is telling the world he likes these stocks so that they can compete with him buying them the next morning?

Treating that somewhat rhetorically, Burke adds, “No, he is more likely selling his stock to them at some point in the future.”

Similarly, market headlines often follow emotion, and are designed to benefit from it. Like magazine covers, editors are paid to “move copy,” and we should never assume that their best interests are aligned with ours. Quite often the opposite is true. 

3. “Stocks that hit $90, almost always go to $100.”

I surmise you’ve heard this one before … maybe even from one of us here at JFG on occasion. And this advice has proved profitable time and time again.

Tommy said that he and Mike did some TV shows together years ago, adding that Mike was far more comfortable being behind the scenes. In that capacity he was “one of the greatest analysts on Wall Street” and leaves behind an army of professionals that he has educated in Point & Figure Charting.

We’d welcome your thoughts and questions on any of the above. Bottom line, it is the process of considering, investigating and questioning that gives rise to new insight.

References
The All New Guide to the Three-Point Reversal Method of Point & Figure Construction and Formations. Michael Burke. Chartcraft.  New Rochelle, NY. 1990.
The Three Box Reversal Method of Point and Figure Construction and Formations. Michael L. Burke. Chartcraft. 1993.

Sources
The data above were taken from sources deemed reliable. However no guarantee can be made as to their completeness and accuracy.
Interpretations of the data, views and/or opinions expressed are those of the Jamison Financial Group based on market and economic conditions as of the date of publication  and are subject to change. They do not necessarily reflect the opinions of any other individual, group or organization.
Nothing in the above is meant to be, nor should it be construed as, investment advice or recommendations to buy or sell any security. Individual securities whenever mentioned are for illustrative purposes only and may not be relied upon as investment advice.
Tax and/or legal information contained herein is general in nature and for informational purposes only. It should not be relied upon as advice. Consult your tax professional or attorney regarding your unique situation.
All indices are unmanaged and are not illustrative of any particular investment. A direct investment cannot be made in any index.
The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks.
The NASDAQ Composite is a market-weighted index of all the over-the-counter common stocks traded on the NASDAQ system.
The S&P 500® is a market-capitalization-weighted index of common stocks.
Past performance is no guarantee of future results.

© 2014 Jamison Financial Group. Please feel free to distribute copies to individuals you feel may benefit from the information presented. Commercial use is prohibited.