Edson Gould was born in 1902 in Newark and died in 1985 in West Reading PA.
Once he graduated from Lehigh University in 1922, he started to work on Wall Street for Moody’s and spent most of the rest of his life researching. He wanted to be an engineer but he became obsessed with finding the one factor beyond economic and monetary conditions that sparked the market.
Edson’s journey lead to forecasts right so frequently that the mere rumor of a change of would cause discernible market reactions. Everybody wanted to know what Gould had to say, but nobody wanted to believe or study his underlying reasons for his forecasts. When he died in 1985, history soon forgot him and his techniques. A quiet and simple man with reasonable simple methods (less profitable for academics and Wall Street) can easily be left to the pages of history.
INFO FOR BOX VVV
“There are three factors that determine…the level of the stock market and the trend thereof. You can list them as economic, monetary and what I call psychological. Now, the monetary factors are always early, but they’re very important. They give you the early warning of a change. The economic factors are always late….And the so-called psychological factors that I use are concurrent.” Edson Gould
END OF BOX INFO
Gould has been called the dean of technical analysis and the most accurate forecaster ever but he, and his methods, have gone by the wayside-just like the concepts of Charles Dow and his Theory.
Gould’s Senti-meter, calculated on the Dow Industrials dividends, and Dow’s concepts and theory create a great set of indicators for and investor to use for a successful investment program.
Gould was the first to suggest that fundamentals and monetary conditions alone couldn’t explain stock market behavior. Edson read the book “The Crowd” by Gustave Le Bon (see page 4) and after re-reading it he “came to the realization that the action of the stock market is nothing more nor less than a manifestation of mass crowd psychology in action”
Edson created The Senti-meter to measure crowd psychology. It is described on page 2. The indicator shows how much investors are willing to spend for $1.00 of dividends. Kenneth Fisher has called the Price/Dividend Ratio “the single most powerful indicator of long term stock direction I’ve seen. It’s so simple, but inexplicably powerful”
Edgar Lawrence Smith pioneered the Decennial Pattern in 1939. Gould used the Decennial Pattern as a cornerstone of his technical analysis. Larry William in his book The Right Stock at The Right Time, wrote, that after studying Gould’s analysis of “the 10-year pattern for stock prices” he had “been handed, figuratively speaking, the keys to the kingdom of stock market forecasting.” The pattern is shown on page 3.
The Utility Barometer
In 1974, Edson Gould wrote an article that said he thought utilities were an early stock market indicator. He said they peaked and bottomed before the other indices by a few months.
Gould presented times when the utilities did lead the market down and up by a few weeks or more.
The “Gould Standard”
An investor should consider only sound companies with consistently strong earnings, they are the “Gould standard.” Avoid poorly managed companies, which regularly miss Wall Street expectations, they are hunks of lead.
Gould said to focus your holdings on proven winners – companies where investor psychology will always tip back in your favor – is the one of the best ways to remove uncertainty and emotion from your portfolio.