Desmond is skeptical of methods such as Fibonacci analysis when they transfer fixed relationships from the physical world into financial markets. His objection is that markets are governed by variable human emotion, whose range is not necessarily bounded by a natural geometric ratio.

Fibonacci ratios originate in observable physical patterns
Markets are driven by buyers' and sellers' emotions
Human enthusiasm and fear can reach unusual extremes
Physical regularity does not automatically imply predictive market limits

“what controls the stock market is not the physical world. It's the emotional world.”
Paul Desmond · 48:56

“the range of human emotion has almost no limit to it.”
Paul Desmond · 49:18

#fibonacci#market-psychology#technical-analysis#skepticism

Hot Take· 1

Hot Take1:50:11

Desmond Says For-Profit Exchanges Sacrificed Market Ethics

Desmond argues that converting the New York Stock Exchange from an institution into a profit-making corporation had damaging consequences. He links that change to high-frequency trading, the loss of specialist responsibility, paid speed advantages, and a diminished commitment to orderly and ethical markets.

The exchange once operated more like a market institution or utility
Profit incentives encouraged the sale of speed and data advantages
Human specialists had responsibility for orderly markets
Front-running-like behavior became normalized through market structure
Desmond believes ethics should outrank exchange profitability

“the biggest thing in my mind that's occurred in in in my career is that the New York Stock Exchange used to be an institution…”
Paul Desmond · 1:50:11

“Ethics was paramount paramount.”
Paul Desmond · 1:52:23

#nyse#market-structure#high-frequency-trading#ethics

Explainer· 2

Explainer09:53

Why Markets Turn Before the Fundamentals Do

Desmond argues that reported earnings and economic data describe current or past conditions, while prices reflect expectations about the future. Markets can therefore decline while earnings remain positive or rise while economic news remains terrible.

Investors trade on expected future conditions
Fundamental reports arrive after expectations have changed
Prices can weaken before earnings deteriorate
Major bottoms can occur amid extremely negative economic news

“People buy and sell stocks not because of what they know today, but what they think is going to happen in the future.”
Paul Desmond · 10:06

“the major turning points in the stock market occur because of psychology, not because of evidence provided by fund the fundamental school.”
Paul Desmond · 41:51

#fundamentals#expectations#market-psychology#investing

Explainer1:43:22

How ETFs Brought Fund Investing Into the Modern World

Desmond identifies ETFs as one of the most important market innovations of his career. Unlike mutual funds priced only after the close, ETFs trade continuously, offer low-cost access, and work for both individual and institutional investors.

Traditional mutual-fund pricing reflects old operational constraints
ETFs provide intraday pricing and liquidity
The structure serves small and large investors
Portfolio changes can occur internally while investors hold one security

“Instead of being priced once a day, we're going to be priced day long, TI tick all day long”
Paul Desmond · 1:47:06

“it's the perfect investment for all types of investors.”
Paul Desmond · 1:47:44

#etfs#mutual-funds#market-innovation#investing

Story· 2

Story05:26

How a Library Visit Led to Paul Desmond's 50-Year Career

After taking over his ill father's portfolio, Desmond studied investing at the Miami public library and discovered Lowry's supply-and-demand research. He drove to the address on a Saturday, mistook founder L. M. Lowry for a gardener, talked with him for hours, and began working there less than ten days later.

Desmond began studying markets to manage his father's portfolio
Lowry's research matched his belief in supply and demand
The firm's address led him to Lowry's private Miami estate
He sought an education rather than a conventional job
The encounter began a career lasting more than fifty years

“I was looking for education.”
Paul Desmond · 1:03:42

“I'm willing to work for nothing.”
Paul Desmond · 1:03:21

#career#mentorship#lowrys#serendipity

Story1:24:57

Joe Granville's Spectacular Ego—and the Calls He Missed

Desmond recalls market personality Joe Granville as talented, theatrical, and extraordinarily self-confident. Granville explained missed market turns by claiming that other pursuits had made him one of the world's leading bridge players, sailors, or specialists, illustrating how reputation and ego can overwhelm disciplined analysis.

Granville developed the on-balance-volume concept
His presentation style attracted crowds and moved markets
He rationalized missed calls through extravagant stories
Desmond distinguishes sincere self-belief from deliberate fraud
A strong track record can foster dangerous overconfidence

“they are the most egotistical human beings I've ever met in my life.”
Paul Desmond · 1:26:37

“he ate his own cooking. He believed in himself.”
Paul Desmond · 1:29:26

#joe-granville#ego#market-timing#on-balance-volume

Q&A· 1

Q&A1:53:02

Desmond's Career Advice: Study Supply and Demand, Then Find a Mentor

For graduates entering finance, Desmond recommends learning supply-and-demand analysis and seeking an experienced practitioner willing to teach. Mentorship only creates an advantage when the learner works hard, listens carefully, applies the advice, and converts it into direct experience.

Study supply and demand as a foundational discipline
Actively seek a capable mentor
Expect long hours and substantial listening
Apply advice rather than merely collecting it
Experience turns instruction into durable skill

“search out a mentor.”
Paul Desmond · 1:53:26

“finding a mentor is is we'll put you, We'll put you miles and miles ahead of the competition.”
Paul Desmond · 1:55:01

#career#mentorship#finance#learning

Tool· 1

Tool29:17

Why Lowry's Built an Operating Companies Only Index

Desmond explains that the New York Stock Exchange gradually accumulated bond-like securities, funds, REITs, and preferred shares alongside domestic common stocks. Lowry's created an operating-companies-only universe to remove those distortions and measure how actual domestic common stocks were behaving.

The NYSE is no longer composed primarily of common stocks alone
Bond-like securities can distort market breadth
Preferred shares may behave more like bonds than equities
A clean universe improves advance-decline and volume analysis

“the only thing that's in that group is is is domestic common stocks.”
Paul Desmond · 32:34

“investors wanted to know is how are common stocks domestic common stocks moving on the exchange.”
Paul Desmond · 32:18

#nyse#market-breadth#index-design#data-quality

Takeaway· 2

Takeaway35:04

Technical Analysis Is Really Supply-and-Demand Analysis

Desmond considers the label "technical analysis" too broad and imprecise. He describes charts, prices, and volume as records of the continuing auction between buyers and sellers, with price direction determined by which side is more anxious to transact.

Every trade has both a buyer and a seller
Price direction reveals which side is more urgent
Charts visualize the daily contest between supply and demand
Desmond prefers the term supply-and-demand analysis

“we should not use the word technical. We should be using the word supply and demand.”
Paul Desmond · 37:15

“when you're looking at a chart, what you're really seeing is the daily battle of demand versus supply.”
Barry Ritholtz · 37:40

#technical-analysis#supply-and-demand#market-psychology

Takeaway1:35:10

Paul Desmond's Two Timeless Money Books

Desmond recommends The Richest Man in Babylon for enduring lessons about becoming financially successful. He also highlights Reminiscences of a Stock Operator as a timeless account whose market lessons still feel contemporary when company names are changed.

The Richest Man in Babylon presents financial lessons through a short narrative
Desmond regards its principles as broadly applicable
Reminiscences of a Stock Operator teaches recurring investor lessons
Human market behavior changes less than market technology

“There's a book called The Richest Man in Babel.”
Paul Desmond · 1:35:29

“It tells you a lot of the lessons you need to learn in order to be a successful investor.”
Paul Desmond · 1:42:48

#books#investing#financial-literacy

Frameworks in this episode

The Market-Top Breadth Deterioration Model

The Problem-Solution-Prospect Method

The Seller Exhaustion and Buyer Confirmation Test

Insights & moments

⚡Myth Buster· 1

Why Natural Ratios May Not Constrain Emotional Markets

◆Hot Take· 1