MiB: Ned Davis on Risk Management and Mistakes

Ned Davis could be the most respected Technical Analyst working today. He co-founded Ned Davis Research in 1980 along with Ed Mendel and others. He is the author of Being Right or Making Money as well as The Triumph of Contrarian Investing: Crowds, Manias, and Beating the Market by Going Against the Grain.

NDR quickly developed a reputation as independent, institutional research company by offering unbiased, in-depth financial analysis. The firm was sold to Euromoney in 2011 for $173 million.

Davis states “We are in the business of making mistakes. The only difference between the winners and the losers is that the winners make small mistakes, while the losers make big mistakes.”

He notes that all successful investors share four basic traits:

  1. They use objective indicators;
  2. They are Disciplined;
  3. They have Flexibility;
  4. They are Risk adverse.

Brief historical note: Ned Davis was one of the people who inspired the idea for these deeper dive Masters in Business conversations; he was one of the very first person I interviewed — it was over the phone, its unedited, and is very rough (if you can tolerate it, the original interview is here). But the seeds of the idea for this podcast were planted with that interview.

All of the books Davis references are here.

You can stream/download the full conversation, including the podcast extras, on iTunes, Soundcloud, Overcast, and Bloomberg. Our earlier podcasts can all be found on iTunesSoundcloudOvercast and Bloomberg.

Next week, we speak with Anindya Ghose is the Heinz Riehl Chair Professor of Business at New York University’s Stern School of Business and the Director of the Masters of Business Analytics program at NYU; he is the author of Tap: Unlocking the Mobile Economy.

 

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