It has been emphasized that the main vogue for formulas began in the late thirties, and was primarily a reaction to the market declines of 1929-32 and 1937-38. Naturally, the market analysts who first worked with formulas were more interested in building protection against declines than profiting from advances, and they understandably assumed that the severity of future drops in market prices would match these two earlier periods.

It is almost impossible to resist the temptation to forecast stock prices, and it is difficult for a formula investigator to know at any particular time whether he is making a forecast on the basis of available facts or whether he is allowing his optimism or pessimism of the moment to dominate his efforts. In 1949, for example, one investigator wrote about the original Keystone plan whose weakness has turned out to be too low a secular growth rate “more recent stock-price fluctuations gives us some cause to question the assumption that the trend will be as strongly upward in the future as it appears to have been over the entire period from 1897 to 1946.”x If this commentator had been writing either three years earlier or three years later, it is doubtful that he would have made such a criticism.1 Stocks - Read More.