John Magee was the co-author of what is perhaps the most-famous book on technical trading: Technical Analysis of Stock Trends, published in 1948. However, his co-author, Richard D. Edwards gets top billing. That’s because the book was based on the work of Richard W. Schabacker, and Edwards was his brother-in-law.
Schabacker was the man who coined the names “head and shoulders” and “double top” and wrote three books on trading: Stock Market Theory and Practice (1930), Technical Analysis and Stock Market Profits: A Course in Forecasting (1932), and Stock Market Profits (1934). However, Schabacker died at the age of 36, and passed the chart-trading baton to Edwards. In the forward to Technical Analysis of Stock Trends, Edwards says that he (along with Albert L. Kimball) wrote the final edition of Stock Market Profits in 1937.
Part One of Technical Analysis of Stock Trends is titled: “Technical Theory.” Part Two is titled: “Trading Tactics.” And Edwards said that Part One was:
“…based, in large part, on the pioneer researches and writings of the late Richard W. Schabacker.”
John Magee teamed-up with Edwards in 1942, and wrote Part Two. So, Technical Analysis of Stock Trends is really two books: Part One is Schabacker’s theories, written by Edwards, and Part Two is written by Magee. There is even a “midward” in the middle of the book introducing Part Two.
Edwards & Magee published the first three editions of Technical Analysis of Stock Trends. Edwards retired in 1951, and Magee published the fourth and fifth editions. Magee died in 1987, and had sold his business to Richard McDermott who published the sixth and seventh editions. There are no complaints about McDermott’s handling of the book. However, before McDermott died in 2011, he must have sold the rights to W.H.C. Bassetti, a former Magee student. Bassetti has sprinkled the text with annoying comments and proclaimed himself to be a co-author. This has angered a lot of people, including ace trader Peter L. Brandt who has posted a scathing review on Amazon.com.
Schabacker wrote for Forbes magazine, and the The New York Times, and was a profitable trader. Edwards was a horticulturist for the Burpee seed company, and was not a profitable trader. Magee was an MIT-trained engineer, and admitted in an interview that he was not a profitable trader.
Technical Analysis of Stock Trends is basically a trend-following book. It does not cover huge market factors like mean-reversion and sentiment. And the truth is that trend-followers get sliced-and-diced when the market enters a mean-reversion zone. Consequently, I have written my own trading book, The General Theory of Day-Trading, which builds on what Edwards & Magee accomplished.
Peter L. Brandt’s criticism of Bassetti can be found here.