David Buffalo is a trader and investor who is basically self-educated. Though his educational study was in engineering and business administration, he always wanted to understand investing. When his father died in 1977, he began his quest to learn about investments to help his mom and to get a head start toward building wealth and securing some kind of retirement income. Having worked in the petroleum, environmental systems business, and water treatment industries, he began to learn about investments. Actual project work with the pulp and paper, basic chemical, oil refining, and food industries helped him in this process. When the first oil bust hit in the early 1980s, he decided that he would go back to graduate school to pursue a degree in finance. When that option collapsed, he decided to concentrate on manufacturing and operations management.
After having worked for nearly 7 years in the fiber optic cable in business planning and manufacturing, he decided to chuck it all and help a group of individuals build a successful institutional brokerage business in 1993. He obtained his Series 7 and 65 licenses within the first week, and began to call on institutions. His customers included many large Canadian, European, and Middle Eastern banks and investment houses. He went on his own to be a trader in 1995. Never looking back, he continued to to invest and trade.
In 1999, he decided to work with Larry Pesavento to learn and adopt his Fibonacci pattern trading techniques. That method has since been his primary mode of short-term swing trading. Though he has day-traded bond futures and currency futures, he learned that he preferred inter-day swing trading more than the shortest-term forms of trading. The primary reason for that was the ability to have the freedom to do other things during the day and to not be stuck to a chair watching markets constantly.
His investment strategy was at first intermediate to long-term until 1999-2000 with primary emphasis on growth, but never attempting to pay more than 50 cents per dollar of fair value on initial entry. He realized that in 1999 and 2000 that the markets were both incredibly overvalued and almost totally momentum driven. Having lived through the crash of 1987, an event which convinced him to study technical analysis and not just fundamental analysis, he decided to learn more short-term trading strategies as he reverted to cash in 2000. He discovered the use of neural net models helped him to place statistical measures to swing trades. He also adopted the use of a Boolean algebra model of Fibonacci-ratio-based price patterns. He has employed Neuroshell Day Trader Professional for that purpose and still uses it today. The main reasons he uses it is that it has a 20-plus-year history of development and is easy to program in relatively simple English-language variables and mathematical symbols. The developer, Steve Ward, was always helpful in working with him as he began to learn the software. Though he has passed, he continues to work with the software to help him in his positioning strategies.
If long, he tends to buy cheap stocks in very strong sectors that have the potential both on a near-free-cash flow basis AND a technical basis to hit trading targets. He also realizes that he will only be right about 60 to 70% of the time on average, so he manages his position sizes and stops accordingly. He also realizes, as all traders should, that trading is a marathon and NOT a sprint. It takes discipline and work to make trading succeed, just as it takes discipline and work to make ANY business succeed.
In recent years, David has worked with his partner Bruce Linker to build automated analog trading models for stock index futures, bond futures, and foreign exchange pairs. The partners are continuing to pursue neural-net-based automated models using NeuroShell Day Trader Professional and Chaoshunter. as soon as they can find a reliable platform to accomplish the transference of those signals, they will expand that research. That process continues to this day.
David loves music, golf, exercise, hiking, and white water rafting (though our old crew seldom does it any more). He also enjoys reading, movies, some live theater, and occasional travel. He decided to stay in Upstate South Carolina, where he was born, because it does have most all the convenience of larger cities, but without the hassle, tax burden, and bureaucracy of the political classes one sees in other parts of the United States. Though he has lived in major cities in the United States during his life, he really prefers open spaces now to urban landscapes. He is rekindling his study of history, particularly American History. Though he is an engineer by trade, his first love was and probably still is art and mathematics. He often wonders what his life might have been like had he pursued those things as opposed to engineering. That, however, is idle speculation. Real life is often stranger than fiction and the story never ends, even after one’s life is over. The ability to learn something new each day tends to drive him on. He also invests in raw land and monkeys around with a couple of other side businesses.
He is a 1978 graduate of the Georgia Institute of Technology, Cooperative Plan, in Chemical Engineering, and a 1986 graduate of the Babcock School of Business at Wake Forest University with a Masters in Business Administration.
It is hoped that this website will be a reference for traders to learn how to use patterns in all timeframes for trading and investing. Mr. Buffalo uses valuation and sector analysis as screening techniques prior to trading. The reason for that screening is to reduce risk associated with extreme valuation or weakness in a given sector at certain times in market history.