All of this from a Montana boy (he used to ride bareback in rodeos) who started his college career as an art major and was totally clueless about trading.
“I first got hooked on the markets in the 1962 crash (when President Kennedy forced a rollback in steel prices),” Williams says. “The headlines caught my attention, but I came from a family that had never owned a single share of stock. All I knew about the markets was that whenever we left the lights on, my dad would say, ‘Turn off the lights. Do you think I own shares in Montana Power?’”
When Williams asked his Sigma Chi fraternity brothers what the market crash was all about, they told him he could have made a whole lot of money if he were short.
“Whatever that meant,” Williams recalls thinking.
But “a whole lot of money” without working sounded good to him. All he had to do was remember his dad’s admonition to “learn to work with your head, not your hands and back like me” and learn what going short was all about. By the time he graduated from the University of Oregon with a journalism degree in 1964, he was reading everything he could about trading and began following the legendary analyst Joe Granville, eventually getting into trading stocks.
“Joe meant so much to me,” Williams says. “Getting to eventually know him was an honor. What an inspiration he has been to so many. Remember how Joe walked across a swimming pool … on water … when he was on one of his many hot streaks? At a recent seminar I told everyone I would do the same as Joe – walk across the pool. With some help I took my first step and, kerplunk, to the bottom of the pool I went. My tribute to Joe was coming to the surface and gurgling, ‘Only Joe Granville walks on water.’”
Williams says traders today can hardly imagine how the task of trading has evolved since his early days.
“The most difficult thing back then was data collection,” he says. “Think about it. There were no downloads, no evening newspapers to get market information from. That meant you had to go to the brokerage firm each and every day to get the day’s numbers – open, high, low, close and volume as well as the number of stocks that advanced and declined for the day. That was our daily download.
“It also helped to have a broker willing to give you the numbers over the phone for the days you could not make it to their office,” he adds. “I had great brokers: Don Southard, Joe Miller, Ed Walters and Al Alessandra. Those guys really helped me so much.”
After Williams got the data and recorded it in his notebooks, he had to “run the numbers” – that is, calculate moving averages, on-balance volume and some oscillators. That took about an hour a day along with charting each day’s numbers on the 30 or so stocks he followed. It became a labor of love.
Although Williams is best-known for his prowess as a commodities trader, it may surprise some people that he actually “cut his teeth” on stocks and didn’t get into commodities until about 1969.