George Wollsten: Expert Stock and Grain Trader

Rating:
Summary: Somewhat bizarre, but has some good points!
Review: "George Wollsten" is a semi-autobiography written in the 1940s, which covers the first years of the author's life, up to about 1910, after he moved to the US from Germany. Bayer was a mathematically-oriented student of the financial markets who developed some unique perspectives on forecasting, analysis, and trading which are presented in this book.

His first method is astrophysical and involves timing the wheat market through aspects between faster and slower moving planets. At the back of the book is a chart showing wheat prices along with the corresponding planetary positions. Although there seems to be a weak-form correlation, visually, it does not appear likely that this method would be profitable.

The second method presented uses two different-sized ellipse overlays to indicate the beginning, mid-point, and endings of trends. While this method seems to have merit, it will run into scaling problems if the relation of the length of the ellipse to the size of the graph does not maintain the appropriate Mercury-cycle dimensions. Two less-troublesome equivalents are Bollinger bands and Wilder's parabolic system. Bollinger bands are useful in determining potential high and low points in trading markets, while the parabolic system functions as both an entry method and a trailing stop in trending markets.

The third method presented is the "Polish ellipse" and is another overlay placed upon counter-trend reactions. With the instructions given, the "Polish ellipse" is in effect, a wave-counter which is useful for timing the five waves in an Elliott-wave expansion sequence. It also seems to handle wave extensions quite well. This method has some utility if scaling problems do not get in the way.

The fourth method is an oscillator which aids in picking tops and bottoms. The construction presented by Bayer has a troublesome, built-in lag. However, if all of the factors are step-weighted, the oscillator becomes a coincident indicator and its utility is markedly enhanced.

The fifth method is "squaring the circle" and is useful for projecting potential support and resistance areas from any given high or low pivot prices. However, where Bayer indicates "points," it is better to use percentages.

While some of Bayer's methods are clearly better than others, all are interesting and can be used as starting points for further research. The historical value of this book is three-fold, it: 1) is the first book (of which I am aware) to offer a complete methodology for trading; 2) shows the trail of reasoning of a market practitioner as trades actually matured; and 3) indicates that money and markets are no more than a very insignificant supplement to what is required for living a valued and productive life.