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business newsThe Mystery of Deterministic Price Structure
The most bizarre thing about technical anaylst W.D. Gann's accurate predictions is that they came from his study of stock market price.
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Gann was credited with many accurate predictions: In March 1918, Gann successfully predicted the end of World War I and the abdication of the Kaiser. His prediction was acknowledged in many leading newspapers, including the New York Times. In 1928, Gann successfully forecast the top of the bull market for September 3,1929, and forecast that the greatest panic in history would follow. In 1932, Gann made a recommendation for his clients to buy stocks at the time of the Great Depression low. In a book Gann wrote in 1927, he predicted World War II and, specifically, Japan’s attack of the United States.
The most bizarre thing about Gann’s predictions is that they came from his study of stock market price. W.D. Gann, along with Edward R. Dewey and Ralph Nelson Elliott, were three market seers who concluded through the discovery and use of different methodologies, that stock market price moved independently of causal factors and in a deterministic pattern. If the first technical analysts were ancient sky watchers who identified the constellations, these guys were the astronomers who mapped the precession of the constellations. They believed that by studying deterministic price patterns, they could forecast causal events.
Relatively few technical analysts today subscribe to this extreme faction of price study. While a considerable number subscribe to the belief that price structure is based on, or heavily influenced by human behavior, most market technicians are agnostic regarding the true source of price structure. They're like weekend church-goers who subscribe to the basics of family values, charitable giving, and networking, but don't desire to squeeze through the proverbial eye of the needle in order to achieve enlightenment, or don’t believe that it exists.
Early in Gann’s career, Richard Wykoff, editor of Ticker and Investment Digest -- a newsletter that enjoyed a circulation of a quarter million paid subscribers at its peak -- wrote an article on Gann’s exceptional trading ability. The article was titled, “William D. Gann. An Operator Whose Science and Ability Place Him in the Front Rank: His Remarkable Predictions and Trading Record.” For the article, an independent observer monitored Gann's trading during the month:
During the month of October, 1909, in 25 market days, Mr. Gann made, in the presence of our representative,286 transactions in various stocks, on both the long and the short side of the market. Two hundred and sixty-four of these transactions resulted in profits; 22 in losses. The capital with which he operated was doubled 10 times, so that at the end of the month he had 1,000% on his original margin.It's believed that Gann made more than $50 million trading commodities during his life. He was the first individual in the United States to own a private metal airplane, “The Silver Star”. Over the years, he bought a number of airplanes. His private pilot for 19 years was Elinor Smith. He also had a penchant for fast boats, real estate, and gambling in Havana, Cuba.
Gann was a prolific newsletter writer of “supply and demand” for 25 years and also wrote numerous books. Gann produced many trading systems. Some were numerology-based and focused on circles, squares, and triangles, all having to do with the angles of the circle around price structure: 360 degrees, 180 degrees, and 90 degrees were all important. He expected stock market price lows or highs to occur at these time periods or divisions of them. Squares and rectangles determined future price and time. For example, the square of 12 (12 x 12 = 144) was the number of months in circle.
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