(Reprint of December 1909 issue of the Ticker & Investment Digest.)
Some time ago the attention of this
magazine was attracted by certain long pull Stock Market predictions which
were being made by William D. Gann. In a large number of cases Mr Gann
gave us, in advance, the exact points at which certain stocks and
commodities would sell, together with prices close to the then prevailing
figures which would not be touched.
For instance, when the New
York Central was 131 he predicted that it would sell at 145 before 129. So
repeatedly did his figures prove to be accurate, and so different did his
work appear from that of any expert whose methods we had examined, that we
set about to investigate Mr Gann and his way of figuring out these
predictions, as well as the particular use which he was making of them in
the market.
The results of this investigation are remarkable in
many ways. It appears to be a fact that Mr Gann has developed an entirely
new idea as to the principles governing stock market movements. He bases
his operations upon certain natural laws which, though existing since the
world began, have only in recent years been subjected to the will of man
and added to the list of so-called modern discoveries.
We have
asked Mr Gann for an outline of his work, and have secured some remarkable
evidence as to the results obtained therefrom. We submit this in full
recognition of the fact that in Wall Street a man with a new idea ~ an
idea which violates the traditions and encourages a scientific view of the
Proposition ~ is not usually welcomed by the majority, for the reason that
he stimulates thought and research. These activities the said majority
abhors.
Mr Gann's description of his experience and methods is
given herewith. It should be read with recognition of the established fact
that Mr Gann's predictions have proved correct in a large majority of
instances.
"For the past ten years I have devoted my
entire time and attention to the speculative markets. Like many others, I
lost thousands of dollars and experienced the usual ups and downs
incidental to the novice who enters the market without preparatory
knowledge of the subject.
"I soon began to realise
that all successful men, whether Lawyers, Doctors or Scientists, devoted
years of time to the study and investigation of their particular pursuit
or profession before attempting to make any money out of it.
"Being
in the Brokerage business myself and handling large accounts, I had
opportunities seldom afforded the ordinary man for studying the cause of
success and failure in the speculations of others. I found that over
ninety percent of the traders who go into the market without knowledge or
study usually lose in the end.
"I soon began to
note the periodical recurrence of the rise and fall in stocks and
commodities. This led me to conclude that natural law was the basis of
market movements. I then decided to devote ten years of my life to the
study of natural law as applicable to the speculative markets and to
devote my best energies toward making speculation a profitable profession.
After exhaustive researches and investigations of the known sciences, I
discovered that the law of vibration enabled me to accurately determine
the exact points at which stocks or commodities should rise and fall
within a given time. The working out of this law determines the cause and
predicts the effect long before the street is aware of either. Most
speculators can testify to the fact that it is looking at the effect and
ignoring the cause that has produced their losses.
"It
is impossible here to give an adequate idea of the law of vibrations as I
apply it to the markets. However, the layman may be able to grasp some of
the principles when I state that the law of vibration is the fundamental
law upon which wireless telegraphy, wireless telephone and phonographs are
based. Without the existence of this law the above inventions would have
been impossible.
"In order to test the efficiency of my
idea I have not only put in years of labour in the regular way, but I
spent nine months working night and day in the Astor Library in New York
and in the British Museum of London, going over the records of stock
transactions as far back as 1820. I have incidentally examined the
manipulations of Jay Gould, Daniel Drew, Commodore Vanderbilt & all
other important manipulators from that time to the present day. I have
examined every quotation of Union Pacific prior to & from the time of
E.H. Harriman ~ Harriman's was the most masterly. The figures show that,
whether unconsciously or not, Mr Harriman worked strictly in accordance
with natural law.
"In going over the history of markets and
the great mass of related statistics, it soon becomes apparent that
certain laws govern the changes and variations in the value of stocks, and
that there exists a periodic or cyclic law which is at the back of all
these movements. Observation has shown that there are regular periods of
intense activity on the Exchange followed by periods of inactivity. Mr
Henry Hall in his recent book devoted much space to ' Cycles of Prosperity
and Depression', which he found recurring at regular intervals of time.
The law which I have applied will not only give these long cycles or
swings, but the daily and even hourly movements of stocks. By knowing the
exact vibration of each individual stock I am able to determine at what
point each will receive support and at what point the greatest resistance
is to be met.
"Those in close touch with the market have
noticed the phenomena of ebb and flow, or rise and fall, in the value of
stocks. At certain times a stock will become intensely active, large
transactions being made in it; at other times this same stock will become
practically stationary or inactive with a very small volume of sales. I
have found that the law of vibration governs and controls these
conditions. I have also found that certain phases of this law govern the
rise in a stock and an entirely different rule operates on the decline.
"While Union Pacific and other railroad stocks which made
their high prices in August were declining, United States Steel Common was
steadily advancing. The law of vibration was at work ~ sending a
particular stock on the upward trend whilst others were trending downward.
"I have found that in the stock itself exists its harmonic or
inharmonious relationship to the driving power or force behind it. The
secret of all its activity is therefore apparent. By my method I can
determine the vibration of each stock and also, by taking certain time
values into consideration, I can, in the majority of cases, tell exactly
what the stock will do under given conditions.
"The
power to determine the trend of the market is due to my knowledge of the
characteristics of each individual stock and a certain grouping of
different stocks under their proper rates of vibration. Stocks are like
electrons, atoms and molecules, which hold persistently to their own
individuality in response to the fundamental law of vibration. Science
teaches that 'an original impulse of any kind finally resolves itself into
a periodic or rhythmical motion; also, just as the pendulum returns again
in its swing, just as the moon returns in its orbit, just as the advancing
year over brings the rose of spring, so do the properties of the elements
periodically recur as the weight of the atoms rises.'
"From
my extensive investigations, studies and applied tests, I find that not
only do the various stocks vibrate, but that the driving forces
controlling the stocks are also in a state of vibration. These vibratory
forces can only be known by the movements they generate on the stocks and
their values in the market. Since all great swings or movements of the
market are cyclic, they act in accordance with periodic law.
"Science
has laid down the principle that 'the properties of an element are a
periodic function of its atomic weight'. A famous scientist has stated
that 'we are brought to the conviction that diversity in phenomenal nature
in its different kingdoms is most intimately associated with numerical
relationship. The numbers are not intermixed accidentally but are subject
to regular periodicity. The changes and developments are seen to be in
many cases undulatory.' Thus, I affirm every class of phenomena, whether
in nature or on the stock market, must be subject to the universal law of
causation and harmony. Every effect must have an adequate cause.
"If
we wish to avert failure in speculation we must deal with causes.
Everything in existence is based on exact proportion and perfect
relationship. There is no chance in nature, because mathematical
principles of the highest order lie at the foundation of all things.
Faraday said, 'There is nothing in the universe but mathematical points of
force'.
"Vibration is fundamental : nothing is
exempt from this law. It is universal, therefore applicable to every class
of phenomena on the globe. Through the law of vibration every stock in the
market moves in its own distinctive sphere of activities, as to intensity,
volume and direction; all the essential qualities of its evolution are
characterised in its own rate of vibration. Stock, like atoms, are really
centres of energy; therefore, they are controlled mathematically. Stocks
create their own field of action and power: power to attract and repel,
which principle explains why certain stocks at times lead the market and
'turn dead' at other times. Thus, to speculate scientifically it is
absolutely necessary to follow natural law. "After years of patient
study I have proven to my entire satisfaction, as well as demonstrated to
others, that vibration explains every possible phase and condition of the
market."
In order to substantiate Mr Gann's claims as
to what he has been able to do under his method, we called upon Mr William
E. Gilley, an Inspector of Imports, 16 Beaver Street, New York. Mr Gilley
is well known in the downtown district. He himself has studied stock
market movements for twenty-five years, during which time he has examined
every piece of market literature that has been issued & procurable in
Wall Street. It was he who encouraged Mr Gann to study the scientific and
mathematical possibilities of the subject. When asked what had been the
most impressive of Mr Gann's work and predictions, he replied as follows :
"It is very difficult for me to remember all the
predictions and operations of Mr Gann which may be classed as phenomenal,
but the following are a few.
"In 1908 when the
Union Pacific was 168-1/8, he told me it would not touch 169 before it had
a good break. We sold it short all the way down to 152-5/8, covering on
the weak spots and putting it out again on the rallies, securing
twenty-three points profit out of an eighteen point wave.
"He
came to me when United States Steel was selling around 50, and said, 'This
steel will run up to 58 but it will not sell at 59. From there it should
break 16 points.' We sold it short around 58 with a stop at 59. The
highest it went was 58. From there it declined to 41-17 points.
"At
another time, wheat was selling at about 89c. He predicted that the May
option would sell at $1.35. We bought it and made large profits on the way
up. It actually touched $1.35.
"When Union Pacific was 172,
he said it would go to 184-7/8 but not an eighth higher until it had a
good break. It went to 184-7/8 and came back from there eight or nine
times. We sold it short repeatedly, with a stop at 185, and were never
caught. It eventually came back to 17.
"Mr Gann's
calculations are based on natural law. I have followed his work closely
for years. I know that he has a firm grasp of the basic principles which
govern stock market movements, and I do not believe any other man can
duplicate the idea or his method at the present time.
"Early
this year, he figured that the top of the advance would fall on a certain
day in August and calculated the prices at which the Dow Jones Averages
would then stand. The market culminated on the exact day and within
four-tenths of one percent of the figures predicted."
"You
and Mr Gann must have cleaned up considerable money on all these
operations", was suggested.
"Yes, we have made a great
deal of money. He has taken half a million dollars out of the market in
the past few years. I once saw him take $130, & in less than one month
run it up to over £12,000. He can compound money faster than any man
I have ever met."
"One of the most astonishing
calculations made by Mr Gann was during last summer [1909] when he
predicted that September Wheat would sell at $1.20. This meant that it
must touch that figure before the end of the month of September. At twelve
o'clock, Chicago time, on September 30th (the last day) the option was
selling below $1.08, and it looked as though his prediction would not be
fulfilled.
Mr Gann said, 'If it does not touch $1.20 by the
close of the market it will prove that there is something wrong with my
whole method of calculation. I do not care what the price is now, it must
go there.' It is common history that September Wheat surprised the whole
country by selling at $1.20 and no higher in the very last hour of
trading, closing at that figure."
So much for what Mr
Gann has said and done as evidenced by himself & others. Now as to
what demonstrations have taken place before our representative :
During
the month of October, 1909, in twenty-five market days, Mr Gann made, in
the presence of our representative, two hundred and eighty-six
transactions in various stocks, on both the long and short side of the
market. Two hundred and sixty-four of these transactions resulted in
profits ; twenty-two in losses.
The capital with which he
operated was doubled ten times, so that at the end of the month he had one
thousand percent of his original margin. In our presence Mr Gann sold
Steel Common at 86, saying that it would not go to 86. The lowest it sold
was 86-1/8.
We have seen him give in one day sixteen successive
orders in the same stock, eight of which turned out to be at either the
top or the bottom eighth of that particular swing. The above we can
positively verify.
Such performances as these, coupled with the
foregoing, are probably unparalleled in the history of the Street.
James
R. Koene has said, "The man who is right six times out of ten
will make a fortune." He is a trader who, without any attempt to
make a showing, for he did not know the results were to be published,
established a record of over ninety-two percent profitable trades.
Mr
Gann has refused to disclose his method at any price, but to those
scientifically inclined he has unquestionably added to the stock of Wall
Street knowledge and pointed out infinite possibilities.
We have
requested Mr Gann to figure out for the readers of the Ticker a few of the
most striking indications which appear in his calculations. In presenting
these we wish it understood that no man, in or out of Wall Street, is
infallible.
Mr Gann's figures at present indicate that the trend
of the stock market should, barring the usual rallies, be toward the lower
prices until March or April 1910. He calculates that May Wheat, which is
now selling at $1.02, should not sell below 99c, and should sell at $1.45
next spring. On Cotton, which is now at about 15c level, he estimates that
after a good reaction from these prices the commodity should reach 18c in
the spring of 1910. He looks for a corner in the March or May option.
Whether these figures prove correct or not will in no way detract from the
record which Mr Gann has already established.
Mr Gann was born
in Lufkin, Texas, and is thirty-one years of age. He is a gifted
mathematician, has an extraordinary memory for figures, and is an expert
Tape Reader. Take away his science and he would beat the market on his
intuitive tape reading alone.
Endowed as he is with such
qualities, we have no hesitation in predicting that, within a
comparatively few years, William D. Gann will receive recognition as one
of Wall Street's leading operators.
