C-Cube Message Board - Msg: 11114502

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Technology Stocks : C-Cube

CUBE 36.64

-0.5%

Dec 5 9:30 AM EST

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To: OZ who wrote (44304)	8/31/1999 8:45:00 AM
From: Black-Scholes	Read Replies (5) of 50808

Oz, I challenge you to name one (just one) person from finance in the academic world who has published ANYTHING that supports technical analysis. TA is for the same kind of people who buy self-help books and have seen UFO's. TA is for flakes. The following is a simple proof: Take a coin and flip it. Tails, you receive a $1.03. Heads, you lose a $1. Do this repeatedly and record each flip with a series of marks on a Cartesian graph (# of flips on the X-axis and the accumulated value of the account on the Y-axis). For example, if you receive three tails in a row, you will have accumulated $3.09 which would correspondingly move you up the chart a total of $3.09 in three $1.03 increments (like the daily trading of a stock). After about 100 tosses of the coin, observe the chart you created and low and behold it will look very similar to a stock chart - ANY STOCK CHART!!! Do this exercise many times (create many charts) and one can observe "head and shoulder", "tea cup and handle", "triple tops", and all the other flaky designations TA people have invented. Burton Malkiel wrote an award winning thesis using this exact method. He called it "The Random Walk Down Wall Street." For the record, the extra $.03 you received with a tail represents the real growth in an economy.

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