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re: 50 Unfortunate truths about investing
Posted on 3/11/13 at 9:12 pm to slackster
Posted on 3/11/13 at 9:12 pm to slackster
quote:
They work for no other than the fact that people expect them to work. The basis for technical analysis is absurd IMO, but it's been around for so long that people who use it have poisoned/influenced their own data.
complete and utter BS. it has worked for me just fine. as well as others. as a matter of fact i have taken a loss before at times when all i used was FUNDAMENTALS. chew on that.
2
Posted on 3/11/13 at 9:25 pm to Fat Bastard
quote:
complete and utter BS. it has worked for me just fine. as well as others. as a matter of fact i have taken a loss before at times when all i used was FUNDAMENTALS. chew on that.
I think one reason people bitch about technicals so much is that they tend to over-rely on technical indicators and lose their arse when things don't work out. For instance they buy/sell at a support/resistance level, only to see the asset prices continue to fall/rise. Or they convince themselves that an obvious head and shoulders is forming, only to have the security rally instead of plummeting.
Investors need to realize that technical indicators should be used as part of a much more exhaustive investment strategy. If you see WTI crude reaching a resistance level, you shouldn't sell if there is news stating that Canada has decided to cut off oil exports to the US; you'd get smashed by the influx of buy orders coming in at increasingly higher prices.
And once again, since so many professional traders use technicals, that means they exist and should be taken into account when trading. It doesn't matter whether or not they're self-fulfilling prophecies.
Posted on 3/12/13 at 9:05 am to Fat Bastard
quote:
complete and utter BS. it has worked for me just fine. as well as others. as a matter of fact i have taken a loss before at times when all i used was FUNDAMENTALS. chew on that.
The price of a stock should reflect the value of the company, do you agree? The value of a commodity should reflect the supply and demand of said commodity, right?
Technicals "work" because people want them to work and see things that are completely and utterly irrelevant. I think it is absurd that technicals must be taken into account when valuing an asset simply because a large portion of investors believe they have value, when in fact they should be irrelevant. For example, if a large chunk of investors believe Stock A should always be down 1% on Tuesdays, that would be an absurd, yet necessary piece of information to use in the valuation of said stock. Technicals are in the same boat.
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