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Technical Stock Analysis

Problem with technical stock analysis is knowing when the market has peaked. If that information could be obtained then anyone could make a fortune from the stock market. Bad news - the stock market prices cannot be predicted.
 
rjh01 said:
Problem with technical stock analysis is knowing when the market has peaked. If that information could be obtained then anyone could make a fortune from the stock market. Bad news - the stock market prices cannot be predicted.
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Or bottomed.
 
It is impossible in principle to predict the stock-market using any (widely known) methodology.

If I came up with some fantastic methodology that allowed be to pick the top (or bottom) of the market, on any timescale, then that methodology would lead to people selling just before the top (or buying just before the bottom), to anticipate the move caused by those using the new technique; and by so doing, they would cause the top (or bottom) to be earlier than expected. If the algorithm allows you to predict the effect of this movement, then it will trigger earlier selling (or buying) than it predicted - which would be mathematically impossible.

If Apple shares can be predicted to peak at, say, 11am on February 9th, you can beat the market by selling at 10:59:59.999; but as everyone has access to the methodology, the shares will now peak at 10:59:59.999, so you should sell at 10:59:59.998. You can chase the reitieration of this effect back to the present moment, and the upshot is that any algorithm that works will tell you to buy right now; and also to sell right now.

The only way to make any method for picking the market work is to keep it top secret. So we can show that any method to pick stock movements that is public knowledge must be ineffective.
 
bilby said:
It is impossible in principle to predict the stock-market using any (widely known) methodology.

If I came up with some fantastic methodology that allowed be to pick the top (or bottom) of the market, on any timescale, then that methodology would lead to people selling just before the top (or buying just before the bottom), to anticipate the move caused by those using the new technique; and by so doing, they would cause the top (or bottom) to be earlier than expected. If the algorithm allows you to predict the effect of this movement, then it will trigger earlier selling (or buying) than it predicted - which would be mathematically impossible.

If Apple shares can be predicted to peak at, say, 11am on February 9th, you can beat the market by selling at 10:59:59.999; but as everyone has access to the methodology, the shares will now peak at 10:59:59.999, so you should sell at 10:59:59.998. You can chase the reitieration of this effect back to the present moment, and the upshot is that any algorithm that works will tell you to buy right now; and also to sell right now.

The only way to make any method for picking the market work is to keep it top secret. So we can show that any method to pick stock movements that is public knowledge must be ineffective.
Click to expand...
Well, I've been in and out of the market 3 times over the last 15 years, and as embarrassing as it is to say it, I have little room to talk. I suck. Well, some might regard me as a resident expert on a few things here or there, but it's the damn results that I guage my benchmark on.

<whimpers away>
 
fast said:
bilby said:
FIFY.
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No, luck runs out. I said, "consistently."
Click to expand...

If you are lucky, your luck will hold for as long as you remain in the market. Most people are not lucky; so most people do not consistently profit in the stock market using technical analysis (or any other technique that doesn't involve insider knowledge)
 
fast said:
bilby said:
It is impossible in principle to predict the stock-market using any (widely known) methodology.

If I came up with some fantastic methodology that allowed be to pick the top (or bottom) of the market, on any timescale, then that methodology would lead to people selling just before the top (or buying just before the bottom), to anticipate the move caused by those using the new technique; and by so doing, they would cause the top (or bottom) to be earlier than expected. If the algorithm allows you to predict the effect of this movement, then it will trigger earlier selling (or buying) than it predicted - which would be mathematically impossible.

If Apple shares can be predicted to peak at, say, 11am on February 9th, you can beat the market by selling at 10:59:59.999; but as everyone has access to the methodology, the shares will now peak at 10:59:59.999, so you should sell at 10:59:59.998. You can chase the reitieration of this effect back to the present moment, and the upshot is that any algorithm that works will tell you to buy right now; and also to sell right now.

The only way to make any method for picking the market work is to keep it top secret. So we can show that any method to pick stock movements that is public knowledge must be ineffective.
Click to expand...
Well, I've been in and out of the market 3 times over the last 15 years, and as embarrassing as it is to say it, I have little room to talk. I suck. Well, some might regard me as a resident expert on a few things here or there, but it's the damn results that I guage my benchmark on.

<whimpers away>
Click to expand...

Don't feel bad about it. I think the stock market is particularity dangerous for smart people.
 
bilby said:
fast said:
No, luck runs out. I said, "consistently."
Click to expand...

If you are lucky, your luck will hold for as long as you remain in the market. Most people are not lucky; so most people do not consistently profit in the stock market using technical analysis (or any other technique that doesn't involve insider knowledge)
Click to expand...
One that was not lucky enough to remain lucky for extended periods was not therefore unlucky for shorter periods. Take for instance winning eight consecutive small scratch off tickets. One can press his luck and not win the ninth.
 
NobleSavage said:
fast said:
Well, I've been in and out of the market 3 times over the last 15 years, and as embarrassing as it is to say it, I have little room to talk. I suck. Well, some might regard me as a resident expert on a few things here or there, but it's the damn results that I guage my benchmark on.

<whimpers away>
Click to expand...

Don't feel bad about it. I think the stock market is particularity dangerous for smart people.
Click to expand...

"The market can remain irrational, longer than you can remain solvent" - Keynes
 
NobleSavage said:
fast said:
Well, I've been in and out of the market 3 times over the last 15 years, and as embarrassing as it is to say it, I have little room to talk. I suck. Well, some might regard me as a resident expert on a few things here or there, but it's the damn results that I guage my benchmark on.

<whimpers away>
Click to expand...

Don't feel bad about it. I think the stock market is particularity dangerous for smart people.
Click to expand...
Thanks.

Fortunately, my losses were minimal. I always swore to myself that I'd never trade with big money that wasn't gained in the market. That has saved me in all three instances.
 
fast said:
bilby said:
If you are lucky, your luck will hold for as long as you remain in the market. Most people are not lucky; so most people do not consistently profit in the stock market using technical analysis (or any other technique that doesn't involve insider knowledge)
Click to expand...
One that was not lucky enough to remain lucky for extended periods was not therefore unlucky for shorter periods. Take for instance winning eight consecutive small scratch off tickets. One can press his luck and not win the ninth.
Click to expand...

If what you lost on the ninth was equal to, or greater than, what you won on the first eight, then your overall score is 'unlucky'. If not, your overall score is 'lucky'. Technical analysis might or might not be the technique used to pick your bets, but it is only down to luck if you are a consistent winner using that (or any) technique. Except insider trading; that's not luck; and it's only illegal if you get caught.
 
bilby said:
fast said:
One that was not lucky enough to remain lucky for extended periods was not therefore unlucky for shorter periods. Take for instance winning eight consecutive small scratch off tickets. One can press his luck and not win the ninth.
Click to expand...

If what you lost on the ninth was equal to, or greater than, what you won on the first eight, then your overall score is 'unlucky'. If not, your overall score is 'lucky'. Technical analysis might or might not be the technique used to pick your bets, but it is only down to luck if you are a consistent winner using that (or any) technique. Except insider trading; that's not luck; and it's only illegal if you get caught.
Click to expand...
Trading is not the same as betting. Only illegal if? Lol.
 
fast said:
bilby said:
If what you lost on the ninth was equal to, or greater than, what you won on the first eight, then your overall score is 'unlucky'. If not, your overall score is 'lucky'. Technical analysis might or might not be the technique used to pick your bets, but it is only down to luck if you are a consistent winner using that (or any) technique. Except insider trading; that's not luck; and it's only illegal if you get caught.
Click to expand...
Trading is not the same as betting. Only illegal if? Lol.
Click to expand...

If it looks like a bookmaker, and quacks like a bookmaker...
 
For what it's worth I think private equity with domain knowledge is the way to go.
 
Usually you'll do better with an index fund like the S&P 500. Brokers are the modern day equivalent of astrologers and soothsayers.
 
seyorni said:
Usually you'll do better with an index fund like the S&P 500. Brokers are the modern day equivalent of astrologers and soothsayers.
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Over the very long term, with no use of technical or fundamental analysis, one has a 95% chance of doing 95% better than all traders and investors regardless of expertise by simply investing in an S&P 500 index fund.
 
fast said:
seyorni said:
Usually you'll do better with an index fund like the S&P 500. Brokers are the modern day equivalent of astrologers and soothsayers.
Click to expand...
Over the very long term, with no use of technical or fundamental analysis, one has a 95% chance of doing 95% better than all traders and investors regardless of expertise by simply investing in an S&P 500 index fund.
Click to expand...

That's true; but it is little consolation if there is a large correction shortly before your planned retirement date.

Anyway, over the very long term, money is unnecessary. Nobody cares if yours is the wealthiest corpse in the whole cemetery.
 
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