How to make money from charts, the Marber way

24 November 2007

Many people working in the City today were not even born on 8 January 1975, when Brian Marber called the end of the cataclysmic bear market of the early 1970s.

When Stephen Eckett at Harriman House, the publisher, asked him to write a personal account of his career in technical analysis he jumped at the idea. “I had long wanted to write about what I do in a language readers could understand including market pitalls and Marber pratfalls,” he writes in the preface.

The result is refreshingly different from any other financial “how to” book I have read. For a start it has a glossary at the front, right after an extract from the Book of Sisylana (try spelling it backwards).

All those strange terms, such as “head and shoulders”, “bottoms” and “bull and bear traps”, are explained. Fundamental analysts, economists and other so-called experts are treated with splendid irreverence. “The function of an expert is not to be right but, when wrong, to have intellectually sound reasons for being so,” is one favourite.

I particularly like his entry on “long-run AKA long-term” in which, according to Keynes, we are all dead. “That doesn’t mean that the long-term should be ignored, ever,” writes Marber. “But the long-term never gets to have its day until the short-term has had its say.”

Apart from the jokes, some of which are painfully arch, Marber’s book is a useful tool for those who genuinely want to understand charts. It is being published at a time of turmoil in financial markets, so I asked him for his best forecasts for gold, the dollar and the stock market.

He spoke for some time about trends and testing new highs and lows but here is the summary: gold, which has been in a bull market since 1999, looks set to plateau and fall in the next few weeks while its mirror image, the dollar, should start to rally. As for the FTSE 100, he predicts it is almost certainly set to fall back to the lows in August. Once that happens it will only take three closes below the August low to confirm a new bear market. You have been warned.