Gerald Appel, With Systems and Forecasts by Thom Hartle
Gerald Appel, a well-known name in the annals of technical analysis, not only publishes the Systems and Forecasts newsletter, he is also a money manager with $200 million under management. But he may be best known for something he considers relatively secondary in his accomplishments, for he is also the originator of the popular and enduring moving average convergence/divergence (MACD) indicator. Ironically, however, he doesn't understand what all the fuss is about with the MACD. So what does he feel is worth the fuss? Stocks & Commodities interviewed Gerald Appel to find out about the indicators he uses including the MACD and how he uses them.
Gerry, today you're a money manager and the publisher of an investment advisory newsletter, but
obviously you didn't begin that way. How did you get started?
I started back in the mid-1960s, when I was investing and trading for myself. My investment education
came from my own research and subscribing to just about every advisory service I could get my hands
on. But my background was actually in psychotherapy, which I was practicing at the time.
Do you have a medical degree, then?
No, I have an MSW — a master's degree in social work. I completed a training program in psychoanalysis
at the Theodore Reik Training Institute in New York. Anyway, I submitted various articles to magazines
like Money and a magazine called Free Enterprise. I'd been writing for Yale Hirsch's Stock Trader's
Almanac and Smart Money and as a result, I developed an audience. So in 1973 I decided to start my
investment advisory letter, which has been in publication since. In addition, a number of my subscribers asked me if I would be interested in actually managing their capital, and I accepted. Eventually, that grew
into managing close to $200 million.
And you focused on technical analysis for monitoring and timing the stock market?
Pretty much so, with a particular emphasis on objectifying a timing signal, as opposed to treating
subjectively the various indicators that people use. There are many assumptions around the stock market
about the validity of technical indicators that don't test very well when subjected to statistical evaluation.
That really became my interest, developing technical methods and models that were objective, that could
be used in actual trading, especially mutual funds.