Breadth Thrusts & Bread Crusts: Thanks, Ned

JC Parets
April 7, 2022

From the desk of Willie Delwiche.

I got a message last night that Ned Davis is retiring from the eponymous firm he launched more than four decades ago. Turns out, he’s not quite retiring – but he is stepping back. Either way, it’s a good time to reflect on his impact on the industry. 

His data-driven, evidence-based approach to the market can seem obvious to those of us who are following the trail he blazed. But it would have been less obvious at a time when data access and computing power were more limited than they are now. It was revolutionary then, and is the gold-standard today.

More than ever, the industry is filled with those who want to tell stories about what should happen without making space for feedback about whether that is happening. Many want to sit still and find ways to have their priors confirmed, rather than having a disciplined and objective approach toward weighing the evidence. Being data-driven is more than just doing a little math and including a decimal place. Knowing what you want the answer to be before you even ask the question is not evidence-based, it’s narrative-driven.

Seeing and interacting with the approach pursued by Ned and his NDR colleagues has left an indelible mark on my career. It has encouraged a willingness to operate within the environment in which we find ourselves, staying open-minded about outcomes, and adapting to new realities. It has put the focus on managing risk, rather than blindly chasing return. It has brought home the truth this business isn’t about being right, it’s about making money. 

One of the best aspects of this industry is the active and passive collaboration. We each benefit from the work done by others – seeing better approaches and gaining better insight. I know I am not alone in being grateful to have the chance to stand on the shoulders of a giant. 

Thanks, Ned.        

It’s not gospel, but I have found these nine rules developed by Ned and his firm to be quite useful. I refer to them often as I think about how best to participate in wherever it is that the financial markets may be headed.

  1. Don’t Fight the Tape
  2. Don’t Fight the Fed
  3. Beware of the Crowd at Extremes
  4. Rely on Objective Indicators
  5. Be Disciplined
  6. Practice Risk Management
  7. Remain Flexible
  8. Money Management Rules
  9. Those Who Do Not Study History Are Condemned to Repeat Its Mistakes

 

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