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Biotech / Medical : SNRS- Sunrise Technologies

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Jun 6 11:01 AM EST

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To: HeyRainier who wrote (1543)	8/24/1998 6:31:00 PM
From: emil	Read Replies (3) of 4140

OT- worth a chuckle at least. It seems the Motley Fools dont care for TA: The relevant part to the world of investing, however, comes in with the rat who was rewarded with the food pellet randomly. This rat just kept pressing and pressing and pressing. Because it never learned any set schedule for reward, it took the longest to figure out that no more food was coming. Consequently, the rat who was intermittently rewarded developed the learned response that took the most time to extinguish. What does this have to do with investing? Its pretty straightforward. Behaviors that are intermittently rewarded are the most persistent -- thus the success of the myopic science of technical analysis. Completely ignorant of the actual business dynamics represented by the company behind the ticker, the technical analyst relies on charts of past price movement, which he swears foretell future stock appreciation. It's much like driving a car by looking in the rearview mirror. Nonetheless, occasionally, the technical analyst is right. The problem is that they are right on an intermittent basis. Which means they develop a learned response that becomes darn near impossible to extinguish. All kinds of justifications, ranging from the sublime to the ridiculous, are given for why past price performance determines future stock appreciation -- in spite of the fact that Malkiel's tremendous book A Random Walk Down Wall Street clearly proved that no chart pattern had any predictive value above and beyond what was possible through pure chance. Even technical analysts will admit that their "science" is really more art than system, saying that experience informs the reading of charts. Others might say that what is really going on is that they are still getting those pellets on an intermittent basis.

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