Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Vol who wrote (30403)	7/31/1998 11:51:00 AM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

Vol, Hey, will your name go on the former Oilers? Probably not because of the U or Tenn. Anyway, my problem with TA is that the practitioners, many of whom are personal friends, have trouble understanding the difference between random coincidence and causation. Just because, at some point in the past, one event happened and another followed, does not mean that there is any relationship with which to make future decisions. All a TA guy has to work with is back-testing and you can prove just about any relationship you want if you choose your back-testing dates carefully. Most are more honest than that, but they fall into the selective date syndrome accidentally. A lot of what I dislike about TA is also what I dislike about MPT. Both make the assumption, a fatal one, IMHO, that all the fundamental information is known about an issue and, therefore, trying to learn more about what is happening is a futile exercise. The really sad thing is that most Wall Street fundamental analysts buy into this scenario. They figure they have no value to offer and, surprise, they offer no value. <G> They simply parrot whatever the companies tell them and never check other fundamental sources. But the key to my opinion of TA is that no outstanding portfolio manager is a technical analyst. Some are momentum geeks, but, at least on the surface, they tend to be earnings momentum geeks. Some are closet indexers. And, a few are contrarians. But you simply do not see a PM with a good 10 year record talking about head and shoulders and breakouts, etc. You do see the TA people from brokerage firms, who are trying to stampede people into stocks, and the TA folks who have newsletter for sale. You have to ask the question: if I had a mechanical system that helped me beat the market, why would I sell the fruits of that system for $300 a year when I could make millions trading it? It is a different story for those who do good fundamental analysis. Once I have bought a stock or bought puts on a stock, it makes sense to convince others that is a good idea. But, since fundamental info always changes in form and content, I can tell you what I've just done without giving you a clue about how I will make my next pick. Heck, I don't know what is going to catch my attention, so how could you? A TA guy cannot do that. If he is playing relative strength, you can easily pick up what will attract him next. Warren Buffett once said that he has had an easy time making money because people in the investment business no longer believe that making smart decisions matters. <G> He was talking about MPT, but I think the same is true of its cousin, TA. BTW, academics and TA folks would hate the comparision of TA to MPT. They can both realize that the other is false, but cannot see that their own idol has feet of clay. MB