ILLUSTRATION BY CARL GREEN
Let's start at the beginning. Can you give me some personal history
as well as some of the firm's history?
We're celebrating the 22nd anniversary of the Telephone Switch Newsletter,
which became Fabian Investment Resources in 1993. My father first
published the newsletter 22 years ago, after he self-published his book
How
To Be Your Own Investment Counselor, which he wrote after the 1973-74
bear market. The book followed the advent of the money market fund and
the telephone exchange feature within mutual fund families. His premise
was that stocks were the place to invest to grow your portfolio, and mutual
funds were, and are, the simplest way to participate in the stock market.
How did the newsletter grow out of that?
In How To Be Your Own Investment Counselor, he wrote that he
was considering starting a newsletter some day, and what it would cost.
And people took him at his word?
Apparently so! The checks actually started coming in for the newsletter,
so in April 1977 he sat down at the typewriter -- it was a typewriter back
then -- and put together the first issue of Telephone Switch Newsletter.
Were you there in the beginning?
Not quite. I joined in 1979. My dad said he didn't know where this
thing was going, but that we had an opportunity.
And what did you do?
The first thing I did was become an analyst. When I was in school,
I loved to study two things: history and mathematics. I found the study
of the stock market involved a lot of history and mathematics. I fell in
love with the stock market, investing, and helping people.
When did your duties expand?
I went from being an analyst to co-editing the newsletter in the early
1980s. My primary responsibility as co-editor was to handle all the marketing.
Then in 1989, I became president of the company, and I also became editor-in-chief.
I've been doing that now for 10 years.
What about your father?
My dad is still active today in business, but he runs our sister company,
Fabian Financial Services, which is a money management firm.
What was your father's goal in writing the book?
He recognized that it can be a real challenge for most investors to
stick with a long-term investment approach.
And why is that?
A long-term investment approach can be difficult to adhere to because
of the devastating emotional and financial consequences that bear markets
can have on their portfolios. To help investors cope, he developed a simple
investment methodology in 1976 using a classic tool in technical analysis.
Which was?
The 39-week moving average. It's comparable to the more common 200-day
average. We used 39 weeks because it was a lot simpler to calculate, back
when there were no personal computers.
A lifetime ago!
Sure feels like it, doesn't it? His methodology, or plan -- what we
call the Fabian Compounding Plan -- was a simple way for an individual
investor to be able to use stock mutual funds.
I see people override their own systems all the time. That is not the way to be successful using technical methods over the long term. If you keep changing systems, you're never going to succeed because you're never going to allow your investment methodology to work for you. -- Doug Fabian
Excerpted from an article originally published in the June 1999 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 1999, Technical Analysis, Inc.