📖William Gann
Price vs Value Disconnect
Prices diverge from value short-term but converge long-term.
In the short run, the market is a voting machine; in the long run, it's a weighing machine. Prices can diverge wildly from value, but eventually converge.
🏠 Everyday Analogy
📖 Core Interpretation
In Price vs Value Disconnect, 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：The voting-to-weighing machine transition is inevitable.
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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
Dot-Com Bubble Peak (2000)
The NASDAQ in early 2000 broke its prior swing lows, forming a clear downtrend per Gann’s rule of lower highs and lower lows after a parabolic rise.
✨ Outcome：Investors who sold when the trend reversed sidestepped years of heavy tech stock drawdowns.
2
Dow Jones Crash and Gann Retracements (1929)
After the 1929 peak near 381, the Dow plunged and later retraced key Gann levels, notably around the 50% and 62.5% zones, signaling potential resistance and trading opportunities for disciplined followers of percentage retracement rules.
✨ Outcome：Traders using Gann retracements managed risk, capturing partial rebounds while avoiding full re-entry before a durable long-term bottom.
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