I haven’t ever been to one of these events, but looks interesting - http://www.mta.org/eweb/DynamicPage.aspx?webcode=nyregion IMPORTANT NOTICE: For security purposes attendees will not be admitted more than a half hour prior to the start of meetings held at the Bloomberg offices. In addition, all those who plan to attend this live event, must register 24 hours prior to the start of this event. No registrations will be permitted the day of the event. DATE: Monday, June 8, 2009 TIME: 5:30 PM EST LOCATION: Bloomberg building, 731 Lexington Ave, between 58th & 59th Streets. The Bloomberg reception area is located on the 58th Street side. As you walk up from Lex on 58th, enter Beacon Court halfway on the left. You will see a Bloomberg awning to enter the building. Please make sure to bring photo IDs for security purposes at Bloomberg. COST: This event is free for all attendees SPEAKERS: Tony Dwyer REGISTRATION: Important notice - Please register no later than Friday, June 5th. Due to security purposes there will be no registration the day of the event. MTA Members and Affiliates: Click here to register. (Please be sure to select “Affiliate/Member” in the “Registrant Type” drop down menu, and to check the “Event Fee” in the product line.) Non MTA Members and Affiliates: Please contact Cassandra Townes, 646-652-3300. CHAPTER CHAIR: Katie Stockton, CMT; 203-987-4061 VICE CHAIR: Paul Ciana, CMT; 516-849-3121
I am sure there are people who have been successful using it, but my strong intuition is that technical analysis is utter bullshit.
The word that got bleeped out above starts with “bullshi” and ends with “t”.
Don’t tell that to 2x2equals4: http://www.analystforum.com/phorums/read.php?1,938198,954290#msg-954290
haha nice Captain Windjammer I tend to think that if someone has a good fundamental idea (from fundamental analysis), they could get a bit higher alpha by executing at the right time (from technical analysis). Maybe a 90% / 10% mix or something like that (fundamental / technical).
Wow. My strong intuition is that 2x2equals4 is quite confused.
That sounds good in principle philip.platt but I tend to think that technical analysis simply can’t help you identify the right time to execute.
Captain Windjammer Wrote: ------------------------------------------------------- > I am sure there are people who have been > successful using it, but my strong intuition is > that technical analysis is utter bullshit. There is a whole world out there using it my knowledgeable friend: it’s called managed futures/CTAs and it’s not a big secret. The AVERAGE manager has produced annualised returns of 12% pa since 1980. Yes, twenty nine years of double digit returns for the AVERAGE manager What about that really difficult year, 2008, I hear you ask: +14% for the AVERAGE manager. Here, have some evidence, based on 494 programs running a managed futures/CTA program. http://www.barclayhedge.com/research/indices/cta/sub/cta.html?btg_trk=OLD-BARCLAY-WEBSITE-REFFERAL Last thing, some of the institutional managers have better than the AVERAGE perofrmance. Way better, Guess what? Yep, they use technical analysis to implement their trading rules. Who would have thunk it huh? Happy googling.
Muddahudda. I don’t know what that index represents, but I don’t think it is what most people would regard as technical analysis. I would imagine the hedge funds in that index are using a whole range of inputs in their models. TA as I understand it involves looking back purely at historic price and volume data to extapolate forecasts for the future. This involve the 1,2,3,4,5 technique, elliott waves, looking for heads and shoulders etc and other pseudo scientific nonsense that has very little if any basis in fact. I would accept that some TA techniques such as MACD and relative strength indicators can be useful in locating turning points, but in general I would say its usefulness is greatly overstated by its advocates. I can’t imagine there are many successful hedge funds earning 12% CAGR over 30 years basing their strategies entirely around historical price and volume data. For a start, TA is useless on illiquid assets such as real estate, private equity and other alternative investments. I would have thought many hedge funds would get a lot of their alpha from those asset classes.
Carson Wrote: ------------------------------------------------------- > Muddahudda. I don’t know what that index > represents, but I don’t think it is what most > people would regard as technical analysis. I’m afraid it largely does > I would imagine the hedge funds in that index are > using a whole range of inputs in their models. TA > as I understand it involves looking back purely at > historic price and volume data to extapolate > forecasts for the future. This involve the > 1,2,3,4,5 technique, elliott waves, looking for > heads and shoulders etc and other pseudo > scientific nonsense that has very little if any > basis in fact. Some of this is nonsense, agreed. But then again, some hedge fund managers employ variants of these indicators to greater or lesser effect. > I would accept that some TA techniques such as > MACD and relative strength indicators can be > useful in locating turning points, but in general > I would say its usefulness is greatly overstated > by its advocates. I expect you are right, but again it is used, and successfully so. > I can’t imagine there are many successful hedge > funds earning 12% CAGR over 30 years basing their > strategies entirely around historical price and > volume data. Au contraire. I could name several successful managers with returns more in the midteens. Price is the key input. Volume decides which markets get traded (liquidity). For a start, TA is useless on > illiquid assets such as real estate, private > equity and other alternative investments. I would > have thought many hedge funds would get a lot of > their alpha from those asset classes. Agreed. Managed futures managers use futures contracts. Liquid. Cost effective. Easy to go long or short. No borrowing required. Low margin required. Access to multiple asset classes. So, the question you are no doubt asking is how does it all work for these multibillion dollar shops using technical analysis. The extremely simple version is trend following. Take the exponential moving average of a price series over two time frames. One short term e.g. 5 day, one long term e.g. 60 day. When the short term moving average cuts above the long term moving average buy. Reverse for a sell trade. As you can see, no fundamental data in sight. Just price. What is the economic rationale for all this? Simple. Human behaviour creates trends. This is a behavioural insight that has existed long before the emergence of behavioural finance. It’s been making money for years and years. Lets look at 2008 as an example although this applies to any period in finance: stocks tanked = sell equity index futures. Flight to safety, bonds rose = long bond futures. Interest rates cut at the short end = short rates futures. Commodities rose and then fell for a prolonged period = long oil futures then short oil futures. Dollar fell = short dollar futures. And so on and so forth. Across asset classes - this is also key. You need diversification for when markets give back. Lots of it. The more uncorrelated the better. This is why you or I probably cant do it. Some of these managers trade over 100 futures markets. 95% automated. 24 hours per day. With researchers looking at markets, timeframe, correlations, volatility, liquidity etc. Tons of phds. It’s all technical analysis.
Muddahudda Wrote: ------------------------------------------------------- > The AVERAGE manager has produced annualised > returns of 12% pa since 1980. Yes, twenty nine > years of double digit returns for the AVERAGE > manager > > What about that really difficult year, 2008, I > hear you ask: +14% for the AVERAGE manager. > > Here, have some evidence, based on 494 programs > running a managed futures/CTA program. > > http://www.barclayhedge.com/research/indices/cta/s > ub/cta.html?btg_trk=OLD-BARCLAY-WEBSITE-REFFERAL Survivorship bias
Muddahudda, all I can say is that with all due respect you don’t know what you’re talking about. Many large fund managers (or even one large fund manager, for that matter) achieving consistent double-digit growth for 29 years straight? You are the only one I know of that is aware of this.
Captain Windjammer Wrote: ------------------------------------------------------- > I am sure there are people who have been > successful using it, but my strong intuition is > that technical analysis is utter bullshit. My strong intuition is that both technical and fundamental analysis is utter bullsh*t when used by 98+% of people. The fact is, a few people–a very small few–are successful with fundamental strategies and technical strategies, but the facts–from CFAI–are clear: both methods are failures compared to indexing.
I used to be in the TA is BS camp. But then it started sounding like one of those dogmas that is worth investigating to see if it’s really BS or not. So I took some time to look into it, and my conclusion: some parts of TA make sense.
I’ve worked with people who used exclusively TA and who made 7 figure incomes year after year. If you don’t find me credible, then I suggest you read what JDV has posted several times about TA. He has been decades in the industry and is a believer of it. Not everyone makes it with TA just like not everyone makes it with FA.
Some TA makes sense (volume, breadth, etc.), but most of it is utter BS.
kkent Wrote: ------------------------------------------------------- > Captain Windjammer Wrote: > -------------------------------------------------- > ----- > > I am sure there are people who have been > > successful using it, but my strong intuition is > > that technical analysis is utter bullshit. > > > My strong intuition is that both technical and > fundamental analysis is utter bullsh*t when used > by 98+% of people. The fact is, a few people–a > very small few–are successful with fundamental > strategies and technical strategies, but the > facts–from CFAI–are clear: both methods are > failures compared to indexing. If you’re defining utter bullshit as people not being smart enough to generate better returns than the average investor then, yes, I would agree with you.
former trader Wrote: ------------------------------------------------------- > I’ve worked with people who used exclusively TA > and who made 7 figure incomes year after year. There are people who deal drugs who make 7 figures year after year. There are people who put a round ball in a small hoop who make 8 figures year after year. There are people who wrote in 6 random numbers on a small ticket and walked away with 9 figures. Point is there are always those outliers in each profession who are successful in the most unlikely of ways. Doesn’t legitimize what they do over the broad population of participants.
TA - more useful for small (especially micro) caps where the signal is not diluted. Not so much for large caps. Agree with EMHdenied that the price/volume money flow stuff makes some sense, but a lot of it is kind of out there.
JohnThainsLimoDriver Wrote: ------------------------------------------------------- > former trader Wrote: > -------------------------------------------------- > ----- > > I’ve worked with people who used exclusively TA > > and who made 7 figure incomes year after year. > > There are people who deal drugs who make 7 figures > year after year. There are people who put a round > ball in a small hoop who make 8 figures year after > year. There are people who wrote in 6 random > numbers on a small ticket and walked away with 9 > figures. Point is there are always those outliers > in each profession who are successful in the most > unlikely of ways. Doesn’t legitimize what they do > over the broad population of participants. +1. Well said.