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

To: Mama Bear who wrote (35823)	11/11/1998 5:22:00 PM
From: Richard Nehrboss	Read Replies (1) \| Respond to of 132070

Barb, "Correlation does not imply causality." You missed the point of my silly example. What TAers do is try to extract some correlation between an event (typically a chart pattern) and a resulting stock movement. They then take this "correlation" and apply it to future trades. There are many correlations between external events and market prices that have nothing to do with the market and do not have causal relationships with market. IE the superbowl theory, etc. There are some events that are causally related, ie, news events etc. That is FA. Much money and many neurons have been thrown at this issue. If you can give me a set of rules that works over 50 percent of the time, I'd suggest you backtest them and let me know the results... if it's a winner myself and others would likely pay. Which brings me to another point... Breadth, which according to Cohen, Zinbarg, and Zeikel, is the most widely used TA indicator has no funds based on it, at least none of the top performing... wonder why? I will concede a slight point.. if enough TAers have enough dollars and all think they see a "head and shoulders" top, you might have a self-fulfilling prophecy in a decline. Examples like this might be the only use of TA....? Enjoyable debate, Richard PS your portfolio performance is great, and I commend you. Hopefully you can maintain such great returns.. Do you use level II? Momentum plays I'd guess?