📖William Gann
Capital Allocation Assessment
Evaluate management's capital allocation skills.
The most important skill for a CEO is capital allocation. Evaluate how management deploys capital — do they create or destroy value with their decisions?
🏠 Everyday Analogy
📖 Core Interpretation
In Capital Allocation Assessment, W.D. Gann focuses on the gap between price and value. Returns come from paying less than what a business is worth, not from guessing short-term market moves.
💎 Key Insight：Capital allocation is the CEO's most impactful decision.
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❓ Why It Matters
Ignoring valuation turns even good companies into poor investments. Overpaying compresses future returns and leaves little margin when assumptions are wrong.
🎯 How to Practice
Estimate intrinsic value with conservative assumptions, set clear buy ranges, and act only when price offers a meaningful discount with acceptable downside.
⚠️ Common Pitfalls
Confusing a low price with true cheapness
Using one metric without business context
Overly optimistic assumptions that erase margin of safety
📚 Case Studies
1
Pre-Crash Distribution Pattern (1929)
Gann observes repeated geometric and cyclical signals of exhaustion in leading industrials before the 1929 crash, aligning with his natural law timing cycles and price angles.
✨ Outcome：Reduces long exposure and initiates short positions, profiting significantly as the market collapses into 1932.
2
War-Time Low and Cyclical Turn (1942)
Amid WWII pessimism and panic selling, Gann’s time cycles and natural law of vibration signal a major low in U.S. equities around April–May 1942.
✨ Outcome：Accumulates quality stocks near the lows, capturing the early phase of the long post-war bull market.
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