Yes, agreed Dreary on fundamental analysis. It is my strong belief that the degree of subjectiveness in fundamental analysis is on par with technical analysis. For both, I think it is more art than science. Just as a simple example from FA, look at the dividend discount model. value of stock = dividend / (discount rate - growth rate) A tiny tweak on either of the components in the denominator (or relative tweak) can easily lead to a large difference in the value of the stock, easily enough to influence your valuation and decision of the stock. Anyways, you raise very good points about the set of issues being the same for FA and TA and therefore I can no longer defend my position about NOT pursuing the CMT on theoretical grounds, only on practical grounds: - CFA will help me get a job more easily than the CMT - CFA will attract clients (institutional esp.) more easily if/when I decide to start my own business since it is “perceived” (not my opinion) as more legitimate Anyways, I bought all the books and sample tests for all three levels of the CMT and they’re sitting on my bookshelf. I plan to learn as much as I can about TA and plan to make as much money as I can using whatever tools I can use.
There you go, I’m with you on that! That’s why I’m going for CFA after receiving my CMT back in 2006. The CFA designation is (touch wood) more respectable.
Interesting thread with some well thought out posts. Thanks guys.
interesting battle going on between the trend line up, and the move down from the fedrally peak on SPY. the bugger pivoted off the 880 level just as the chart hinted. we’re still in a confirmed trend up with resistance at 922. rohufish, CFA, MBA
not bad for a fledgling TA.
Dreary - as you have your CMT now, looking back, would you do it again and get your CMT in retrospect, do you think it was worth it?
right now? no. But it might add up with other things later. Never took it for job purposes anyway, just out of curiosity and knowledge.
daj224 Wrote: if you think only fundies matter, look > at bill miller last year. damn dude cut his assets > by 75% Bad example on Miller. 1) he failed to properly undestand the fundamentals. 2) His picks tanked because they were fundamentally unsound.
Another thing is that using a specific person to back a certain viewpoint, either for/against FA/TA, may not be helpful. I mean, - just because W. Buffett can make billions with FA doesn’t mean that you can make it work - just because Joe FA fails at FA doesn’t mean that FA doesn’t work - just because P.T. Jones can make billions with TA doesn’t mean you can make it work - just because Joe TA fails at TA doesn’t mean that TA doesn’t work When they say some group of people getting results from certain method, FA or TA, are “on average” this or that, it means nothing cause the average usually sucks. You have to look at the maestros of a certain method. On the other hand, the ones that aren’t average may not be average due to statistics rather than skill. Perhaps if you take a bunch of average people and show that they can achieve a certain result after being taught by the maestros, then that may give more evidence.
CMT is worthless. So many CMTs are in the 95% crowd of traders that are net losers. Technical analysis is a brilliant tool, but the key to success is putting emotion on the back burner. Pick a great trading book like one authored by Tim Knight (slopeofhope.com) and you have a great education. If you want to use technical analysis as your primary tool for investing, you can’t be a bull or bear, you just care to be right, and more often than not stubbornness impedes you from not being a bull or bear.
No offense guys, but real traders would laugh at this thread… there is no 1 method that is better than others. There is no holy grail. The bottom line is this: There are a million ways to make money in the markets, but you have to find a way that fits your personality and style. What’s more important than Fundamental Analysis and Technical Analysis is human psychology and emotion. If you can master your emotions and learn from them (i.e., cut losses short, let winners run), you will have do extremely well.
That’s what I said.
Also, that’s what she said, lol.
I have a Bollinger Band spreadsheet that is astounding. I can share it, but you will have to find a provider to fill in the pricing data.
Astounding in what way?
it easily tells me the Buy Signal when given price falls below the lower band and a Sell Signal is given when price rises above the upper band. I have made SO much money!!!
Hey Steve F. I am a follower of technicals as well…would you mind sharing your spereadsheet with me?
Agreed it’s definitely not witchcraft and I think that MOST CFAs who manage serious cash [i.e. me] always have one eye on the technical reports. Willy
I’m looking for some fresh thought here. I went to a seminar today illustrating the various ways to evaluate trend-lines, patterns, and so forth. I’ll have to read up on this some more, but I was hoping for some new thoughts on this from AF.
TA is very important to learn and incorporate into your analysis as it deals with crowd/investor psychology. I mean…traders all use TA, lol. But the usefulness of progressively in-depth TA will decline dramatically. Anyway, I find it irrational that TA isn’t integrated significantly in the CFA. I’ve been told a “theory”: Mutual fund industry, many universities, and brokerage firms bank on investment EMH populists like “Stocks for the Long Run” Siegel and “Random Walkers” because fundamental analysis presents a far better face for the industry. It’s supposed to be a marketing shield to help retain some consumer confidence in the financial services industry during inevitable economic downturns. Maybe that’s why technical analysis is extremely minimal in the CFA and universities don’t teach it?