Ed Carlson, CMT, has enjoyed a long and interesting career in the financial industry. Traditional jobs, or
at least what many think of as traditional analyst positions, are disappearing and Ed’s story may help
others find success in the field. We hope that this will be the first in a series of career paths followed by
MTA members.
Ed’s start in the business came about almost by accident. In late 1989, he had returned from a yearlong internship in China and finished his MBA that year. By early 1990 the economy was headed into a
short recession and like many recent graduates, he was having trouble finding employment. A sixmonth stint working the graveyard shift on a factory floor during the winter of 1990 gave him an appreciation for any desk job that might come along.
One day, during lunch at a small restaurant, he spotted a Dean Witter broker that he had cold called several years earlier, during his first semester in graduate school. The broker remembered Ed, and asked what he was doing. The response was similar to what many recent graduates say now, “looking for a job.” The broker suggested applying for a position with Dean Witter. Ed remembered that he had enjoyed the four months he had spent in the office. He liked the people and the idea of discussing investments and the economy with colleagues and clients appealed to him, but the idea of cold calling for customers left him even colder. The need for a job overcame any doubts, and he decided that if they would take him, he would do his best and make it a career. Time was on his side and Ed landed a financial services job during the biggest bull market in history.
This allowed Ed to rekindle his early interest in technical analysis, a subject he’d always been curious about. He read his first book on the subject while in junior high school. Although the name of that paperback book is long forgotten, Ed does remember that it was a difficult book to read and although he didn’t understand much of it at the time, he was interested enough to finish the book.
But, as he began his career as a stockbroker, there really wasn’t time or even the need for a broker to use much of any type of research. He would frequently glance at technical analysis reports, along with all the other economic and fundamental reports that a large brokerage firm typically publishes. Although they may have been fascinating, during the 1990s, research was often nothing more than a distraction from the main objective of young brokers which is opening accounts.
After the 2000-2002 crash destroyed large amounts of client wealth, he realized it was time for something other than buy-and-hold. While searching for an improved method for making decisions about investments, Ed realized that he had seen the track record of fundamental research and it had been unable to help his clients preserve wealth. He decided to give technical analysis a chance.
Ed found more success with technical analysis than he had with fundamentally driven buy-and-hold investment strategies. But eventually, he felt it was time for another change, as he recently explained:
“As difficult as it was to deal with scared customers after 2000, dealing with the regulators and the brokerage firms’ response to the plethora of new regulations was even more difficult. Each year the paperwork became deeper as the number of regulations grew. And if that wasn’t bad enough, the regulations were constantly changing or at least the firms’ methods of implementing and enforcing those regulations was constantly changing. The products we had for clients were constantly changing too in response to those regulations. Every new product meant a host of new fees and other details that had to be learned and explained to clients. I saw the future as me spending all my spare time learning about products and new rules rather than the markets.
The industry spent the late 1990s and early 2000s changing the business model of the industry. It had gone from an industry MBAs and former lawyers and accountants to an industry made up of salesmen in the worst sense; people with no real understanding of the markets, only the gift of gab. Those of us who had been around for several years used to joke that if you asked a modern broker for their top 3 ‘stock picks’, they would respond “large-cap, mid-cap and small-cap”. I was no longer proud to tell people what I did for a living. I was far enough along in my career that I could have ridden what I see as a sinking ship down into the waves. A ship that I believe will, for all intents and purposes, be sunk just about the time I would be retiring. But sinking isn’t how I want to spend the last years of my career. I’m the kind of person who always has to be working toward a goal. So 18 months ago I climbed down off that sinking ship into my little lifeboat of ideas and goals and started rowing; rowing with faith that there is land out there somewhere. I am still rowing but I believe I can at least see dry land now.”
Now, Ed considers himself to be unemployed, since he doesn’t hold a traditional job, but he stays very busy even by the standards of someone who is employed. He has a website called Seattle Technical Advisors.com, where readers can find daily market commentary as well as a full weekly report for subscribers. He admits that finding subscribers was difficult at first, but notes that it’s starting to pickup now and he is optimistic that there will be even more interest in his site after his book comes out.
He says that he’s happier now that he has left the brokerage industry, noting that, “My friends used to tell me they could hear the difference in my voice when we spoke on the phone. My success or failure depends on only one person and I like that very much. I can also grow and/or change my mind about my approach to the markets as often as I feel the need and don’t need to worry about explaining that change to anyone. Life is much simpler.”
He has just finished writing George Lindsay and the Art of Technical Analysis. The effort required five months, roughly five hours per day, to complete the rough draft. The book is due at the publisher’s warehouse on August 2.
Two years ago, Ed says that he had never heard of George Lindsay. He learned of the work in an MTA Podcast interview he did with Peter Eliades in November 2009. Peter mentioned Lindsay and Ed’s follow-up question was how he could find out more about Lindsay’s work. The only help Peter could offer was that he thought Investors’ Intelligence had some old newsletters. He was right, and Ed was able to get a copy of those newsletters, discovering that Lindsay’s methods, while not simple, intuitively made sense.
Lindsay’s work had nearly disappeared by the time Ed stumbled upon it. In addition to the small collection of writings from Investors Intelligence, he was able to obtain a few more examples of his work from John Bollinger and Janice Teisch, the widow of Lindsay’s business partner Stuart Teisch. Ed is optimistic that more of Lindsay’s work has survived, “I’m sure there are more out there and if anyone has access to them I would love to hear from you. I can be reached through my website GeorgeLindsay.com.”
Many MTA members have probably never even heard of Lindsay, and those who have seem to rarely use his methods. The one name pretty much everyone knows who had Lindsay’s methods figured out was Jerry Favors. Unfortunately, Jerry has passed away and Ed was unable to learn anything from his widow. Ed stumbled on a few technicians who were applying Lindsay’s methods, but some refused to divulge anything they knew, “as if they were guarding nuclear secrets.” Others, Ed noted were very tight lipped but smart enough to realize that, with the research he was conducting, they might be able to gain further insights into Lindsay. There was a sort of quid-pro-quo relationship that developed with these technicians.
Since Lindsay had never written a book on his market methods, anyone wanting to apply them had to find his newsletters. To make matters worse, Lindsay wrote with a very dense style. Ed commented that, “Reading those old newsletters is like drinking from a fire hose. I wanted to make his ideas more readable and save them before they disappeared forever.”
Perhaps the most famous idea shared by Lindsay is the three peaks and domed house pattern. The nominal pattern is shown below.
Starting in the fall, Ed will embark on a number of speaking engagements, mostly with CFA Societies, and will be traveling all over the country to talk about the methods in the book.
Ed intends to keep busy writing in the future. Although he hasn’t spoken to a publisher about the idea, he’s already working on his next book. In this one, he’ll apply Lindsay’s methods to the entire history of the Dow. It’s a natural follow-on to his first book and Ed believes that that anyone who becomes interested in Lindsay’s models will want more examples of how these models are applied. This is a long-term project, which he expects to take at least a year.
In the mean time, he’ll continue trading and studying the markets.
Ed Carlson, author of George Lindsay and the Art of Technical Analysis, is an independent trader, consultant, and Chartered Market Technician (CMT) based in Seattle, Washington. Carlson hosts the MTA Podcast Series: Conversations and contributes frequently to SFO Magazine. He also manages the website Seattle Technical Advisors.com, where he publishes daily and weekly commentary. He spent twenty years as a stockbroker and holds an M.B.A. from Wichita State University.
Letter from the Editor
HTTP://WWW.CSISS.ORG/CLASSICS/CONTENT/8
DIAGRAM 43 FROM “THE WAR WITH GERMANY: A STATISTICAL SUMMARY2”
SOURCE: HTTP://WWW.MCOSCILLATOR.COM/DOWNLOAD/SPECIAL/MCCLELLAN_MTAAWARD.PDF
CHART AND DATA PROVIDED BY SRC STOCK CHARTS.
CHART AND DATA PROVIDED BY SRC STOCK CHARTS.
FIGURE 1: A MONTHLY CHART OF THE S&P 500, BOLLINGER BANDS AND THE VIX SHOWS THE RELATIONSHIP BETWEEN HISTORIC AND IMPLIED VOLATILITY. (SOURCE: TRADE NAVIGATOR)
FIGURE 2: APPLYING BOLLINGER BANDS TO THE RATE IF CHANGE OF PRICES IN THE SHANGHAI COMPOSITE INDEX OFFERS TIMELY TRADING SIGNALS. (SOURCE: TRADE NAVIGATOR)