|  SEP 1990

Right On Target by Richard W. Arms Jr.

Right On Target by Richard W. Arms Jr. I used to buy stocks and commodities in the same manner in which Columbus sailed to the New World: I didn't know where I was going when I started out, and when I got there I didn't know where I was. It was a great adventure in exploration, with high hopes at the beginning and self-doubt along the way. Of course, the trip was not randomly chosen. I believed, as Columbus did, that success lay at the end of the journey, and many times it did. Unlike Columbus, however, when I got to my destination I didn't always recognize the fact that I had arrived and get off the boat. Sometimes I let the trade carry me right back to where I started without ever claiming the paradise I had seen only from the quarterdeck of my ship. Then I discovered volume and the part it plays in technical analysis. It is better to have a good idea about where you are going before you set sail. Adverse winds or poor navigation may blow you back to land and wreck you on the rocks from time to time. Such is the nature of all speculation, but a well-charted course provides a higher likelihood of success. There are many ways to chart that course, however. The Polynesians used stick charts to figure out where they were. The Vikings had no way of calculating longitude and had to trust latitude and luck. Today, celestial navigation has been all but replaced by satellite positioning or Loran. Each improvement has made it easier for the helmsman to know where he is and where he is going and, unlike Columbus, know when he has arrived. So too with technical analysis.

by Richard W. Arms, Jr.