Tuesday, March 5, 2013

Lessons from the late Ralph Bloch


I was saddened to learn of the recent passing of Ralph Bloch, former chief technical analyst for Raymond James.  Ralph was an inspiration to me back when I began studying technical analysis, and I always enjoyed reading his weekly stock market commentaries in the Mansfield Chart service. 

Bloch could best be described, in the words of one of his colleagues, as “old school.”  He majored in old-fashioned chart reading the Edwards & Magee way and he eschewed many of today’s commonly used technical indicators.  In an interview for a well known financial magazine he was asked if he ever used the stochastics indicator.  He replied, “Number one, I haven’t a clue what it is, and number two, I’m not even sure I can spell it.”  He believed that most technicians today are over-reliant on computer trading systems and have gotten away from the basics of what he called “Technical Analysis 101.”

Bloch made a point of reading Edwards & Magee’s classic work, Technical Analysis of Stock Trends, along with Jesse Livermore’s pseudonymous Reminiscences of a Stock Operator at least once a year, believing that everything a trader needs to know is contained in these books.  He was also a chartist par excellence. He once defined a stock chart thusly: “All a chart is are people’s perceptions of what they think the fundamentals are when they put their money where their mouth is.”  He added that when investors put their money where their mouth is, “that’s when technical analysis takes place.”  He believed that both disciplines, technical and fundamental, confirm each other.

Ralph also emphasized the limitations of technical analysis, believing that it’s primarily a tool for making short-term forecasts.  He was quoted by Investors Business Daily as saying, “It is a mistake to use it for anything longer” than short-term planning.  In an interview with Chris Wilkinson in the book, Technically Speaking, he added: “People who make long-term calls usually go down with the ship.” 

He believed his job as a technician was to look at the market every day and judge whether or not it was healthy.  To do this he embraced a bottom-up approach by looking at individual stock charts first, followed by the indicators.  He defined a strong market as being one where the Dow Industrials are making new highs, the Transports are confirming, and the Advance-Decline Line is also confirming and making new highs. 

Bloch was a big believer in tape reading and was one of the last pure practitioners of the art on Wall Street.  He challenged anyone to match his record on Wall Street, believing strongly that “Technical Analysis 101” would beat new-fangled computer trading systems and arcane indicators.  He believed that analysts who follow myriad technical indicators are purposely avoiding making a decision.  As Wilkinson wrote of Bloch in 1996, “His simple and basic approach” made him “immune from ‘analysis paralysis,” a condition of mental immobility resulting from too many indicators generating conflicting signals.” 

He was a member of a dying breed on Wall Street whose accuracy in making stock market calls was unsurpassed.  He will be greatly missed.

11 comments:

Anonymous said...

I am Ralph's oldest daughter, Elizabeth. My sister Susan and I have wondered if anyone on Wall Street would write anything about his life and contributions to technical analysis. We really appreciate your kind words, especially given that Tom James declined when asked to write something about him. He was deeply loved and is painfully missed by his two daughters, four grandchildren and his wife, Mirela.

Clif Droke said...

Hi Elizabeth. It was my honor to have written a memorial for your late father, Ralph. He was an inspiration to me and countless others in the business. Rest assured he'll never be forgotten.

Anonymous said...

I worked with Ralph at Brand Grumet and Siegel in the mid 60s Besides being a charming man he moved people with his analysis. He would get on the loudspeaker and announce a block of stock was available. Who wants to participate in buying it and cleaning out a seller. He along with the 3 Siegel brothers are all gone now. They were memorable. GG

Anonymous said...

Thanks - I truly appreciate that. I still can't believe he is gone. I know he was old and had health issues but he was always larger than life. Thank you again for commenting! Elizabeth

Anonymous said...

I remember Brand Grumet and Siegel so well. I used to love coming into the office, running around and typing on all the typewriters! Seems so very long ago. Thank you for commenting! Elizabeth

jeff friend of Ralph said...

Hi Elizabeth...Its Jeff Weiss...I did CNBC with your dad and knew him for some time.
Still think of him and loved his devotion and A! work. None better at his craft. He was in the same class as my mentor Newton Zinder - who took over for Joe Granville at EF Hutton & Company in the 1960's. Newton's still with us. Call anytime to chat. 212-893-1189

Anonymous said...

Thanks for all the warm comments about my late Uncle Ralph. This is Steve Goldstein, one of Ralph's three nephews. All three of us grew up knowing and loving Ralph throughout our lives. He was charismatic and intelligent. He was also an athlete and a former lifeguard, for those who didn't know that aspect of him. He was devoted to his parents and his sister, my mother - Jacqueline Goldstein. He came out to our California home at least twice a year to visit all of us. Any time I would see him, no matter how old I was, he would say "Hiya, Stevie" in that classic New York accent of his.

I think Ralph received a good founding in hard work and integrity from his late parents, Arnold and Mella Bloch. I grew up with them as well, and am not surprised that they produced such a man as Ralph.

He is already missed by all.

Anonymous said...

I worked for a smaller regional broker dealer in the Twin Cities 25 or so years ago. Ralph Bloch was our outsourced technical guru. He was highly effective in his analysis; even better with his wit and wisecracks. I still remember how happy I was to shake hands with him when he came out to speak.

This world is a lesser place to be in his absence. Even cynics such as myself admired him and what he taught.

Anonymous said...

When I was an intern in Raymond James' equity research department during the early 1990s I had the opportunity to experience Ralph Bloch's spirit. He really didn't have much cause to say anything to me, but one day paused at my desk, looked over at me and briefly said "Hello". By that time I'd regularly read his office briefings, and if I recall correctly, even found some books he wrote at my university's library. That day I felt like a million dollars, and I've carried that moment in my heart ever since as part of my invenotry of positivity; it's fair to say I was star struck, and I've always believed he must have been a very kind and generous person. Thank you Ralph!

NDS said...

I listened to Ralph's call every morning. He was a real character! I called him on numerous occasions and he was all available and willing to talk investments. His breakout sessions @ the national conferences were always standing room only. I am so sad to hear of his passing but he did make a big difference and was admired and respective by many many folks in the business...me included!

Anonymous said...

I too as a Financial Adviser had opportunity to be impacted by Ralph Bloch and his work. To this day I often quote some of his insights that are timeless. My favorite (as I recall it) "In order to understand the market you need an advanced degree in finance and a minor in child psychology." The conferences were standing room only when he was speaking and with good reason, he knew something you didn't. He had the knack of making a room full of intelligent people feel like they were in kindergarten, not because he spoke down to everyone, because you knew the journey to "get it" like he gets it was a long one. He did not suffer fools and was always on point. I am sorry to hear of his passing. My condolences.