• Skip to primary navigation
  • Skip to main content
  • Skip to footer
Mullooly-Logo

Mullooly Asset Management

Fiduciary Fee-Only Financial Planner | Investment Advisor in Wall, NJ

  • Our Fees
  • About us
  • Schedule a Meeting

Supply and Demand : Measured by Point and Figure Charts

August 30, 2008 by Thomas Mullooly

There’s a great story I read in the New York Times. It’s part business/part technology. While it delves into some pretty sophisticated topics, I’ll try and summarize it as best I can right here.

The author, Anne Eisenberg, wrote about an experimental website, www.many-eyes.com. This is a site where visitors can upload data they want to visualize and use tools to generate displays.

Basically, what they’re trying to do is take a range of data — and instead of leaving it on a spreadsheet for people to interpret, they use images, charts and graphs to “paint” a better picture. The idea being that a picture may tell a better story — a clearer story — than trying to sift through data on a spreadsheet.

I hate to break it to the author, but Charles Dow came up with that concept nearly 120 years ago. Dow was the first publisher of the Wall Street Journal, and the Dow Jones Industrial Average that bears his name. Dow kept listening to all of the “experts” who were giving all of their fundamental reasons why particular stocks “should” go up or “should” go down.

Dow simply came up with a method to plot the price movement. The “image” that he came up with on a chart gave him a much clearer view of stocks that were in demand and stocks that were in supply. Much clearer than what any analysts could ever “predict.” Anything “in demand” must see a price increase. And anything “in supply” will see a price decline. That’s not an economic theory — it’s a law. It’s called the law of supply and demand, and even a fourth grader can explain it.

The article quoted a professor of computer science (Pat Hanrahan) at Stanford, “when analyzing information, no single person knows it all,” he said. This helps dispel the thinking of the “expert stock analyst” following a stock. Rather, a chart shows the “flow” between supply and demand. The chart shows the cumulative votes that people make (on a daily basis) to either get in — or get out — of a particular stock.

One of the founders of the site, Dr. Viegas, mentioned “… why not a visual that gives you some insight into the sea of data that surrounds us? I might find one thing; someone else, something completely different, and that’s where the conversation starts.”

This is precisely the problem when trying to make investment decisions based on only fundamental analysis. The data can be twisted in so many different directions to paint a very good — or very bad — story. Additionally, the fundamental information (supplied by the company… like earnings) can be wrong, or rewritten in the future.

For those of you who have seen these point and figure charts I use in managing the risk in your investments…do they help paint a clearer view of what’s happening? Let’s hear it!

Never miss a post...and we deliver!

newsletter mailman

Get our updates delivered right to your inbox. Sign up today!

Success! Now go and check your email to confirm your subscription.

There was an error submitting your subscription. Please try again.

We won't send you spam. Unsubscribe at any time. Powered by ConvertKit

Filed Under: Asset Management, Point and Figure Tagged With: Dow Jones, fundamental analysis, supply and demand

About Thomas Mullooly

Thomas Mullooly is owner and founder of Mullooly Asset Management, Inc. In 2002 Tom opened Mullooly Asset Management, a fee-only investment advisory firm. As an investment advisor, and not a broker, Tom works strictly for his clients. With the help of point and figure charting, Tom builds a realistic game plan for clients.

Footer

Mullooly-Logo

2052 NJ-35, Suite #203
Wall Township, NJ 07719
Phone: (732) 223-9000
Fax: (732) 223-9600
Email: support@mullooly.net

Form CRS

  • Privacy Policy
  • Disclosures and Legal Disclaimers

Useful Links

  • Contact Us
  • Client Login
  • Pay Bill Online
  • About us
  • Our Fees

The information on this website and blog do not involve the rendering of personalized investment advice. A professional advisor should be consulted before implementing any of the options presented. None of the content contained in this website should be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.

Follow Us

  • Facebook
  • LinkedIn
  • Twitter
  • YouTube

Resource Center

  • Videos
  • Podcasts
  • Blog

Copyright © 2021