Forum Archive Index - February 2003

[Travis Morien <travismorien@yahoo.com>]

--- nickk@quicksilver.net.nz wrote:
> Don't waste your skin doing the typing Phaedrus. 
> 
> It's like convincing All Black supporters that
> Australia are better at 
> Rugby.  The AB supporters just don't want to listen
> no matter how many times 
> you try to tell them. 
> 
> Cheers 
> 
> Gooner 

Gooner, there is a big difference.

If I was able to provide a large stack of academic
evidence showing after thorough statistical testing
that the All Blacks had lost 95% of their games....

If I was able to point out that there are many great
rugby players, based on scoring stats etc, yet unable
to show any All Black team member had ever played at
higher than a weekend amateur's level...

If I'd backed this up with a systematic point by point
attack of the logic behind every piece of pro-All
Black hype....

The All Blacks are a good team, I can point out that
they have beaten many good teams and are ranked near
the top of world rugby.  I can point out the stats of
many individual players and show that the team has
many world class players.  And generally speaking if
you are going to say nice things about the All Blacks
one has no logical claim to say otherwise because they
certainly are a very good team.

So...

Where are the technical analysts with independently
verified track records?  I can rattle off a variety of
names like Warren Buffett, George Soros, Peter Lynch,
Sir John Marks Templeton, John Neff, Ben Graham,
Tweedy Brown Inc, Mario Gabelli.  Then I can name
lesser known investors who also have outperformed by a
huge margin, guys like Kerr Neilson (Platinum), Greg
Perry (Colonial First State) etc.  Can anyone name a
single famous TA exponent that didn't eventually go
bust?

If not, where is the academic evidence that TA works? 
Actually there is a vast pile that it doesn't.  This
doesn't deter the many TA fans though because very few
of them read research.  There is plenty of evidence
that FA works, including backtested fundamental
indicators.

Where is the logic behind TA?  If you were looking to
buy a business your accountant would call you an idiot
if you choce a business based only on the recent trend
in asking price, but this silly concept is the very
foundation of TA.  Mind you, value investment has a
very solid theoretical foundation.

In other words, where is the beef?

For every chart that Phaedrus shows us with support
and resistance there will be several without.  For
every trend that held out for a long time there will
be many choppy stocks trading up and down with no
direction for extended periods of time.  

It is like making the claim that red cars always
travel in threes, and offering up as proof a few
photographs of red cars travelling in threes.  I'd be
able to run out and photgraph many red cars travelling
alone or with cars of other colours, but then we'd get
somebody try to argue that that is ok so long as we
make the most of every opportunity to photograph three
red cars and quickly hide our camera when red cars are
alone.  (Stop loss)
> 
> Phaedrus writes: 
> 
> > Travis,
> >        Here is an 8 year chart of CSL. I have
> marked the trendline break Buy and Sell signals for
> you. From this you should be able to work out the
> answers to your questions about this stock. I think
> you will agree that the exit signals were quite
> timely. Isn't it amazing just how linear long-term
> trends can be? I doubt that you could have chosen a
> better example to illustrate the value of
> trendlines.

I take it you made a fortune on the short and long
side of CSL then, or is this another incredible
espisode of charting's favourite game "Amaze your
friends with incredible forecasts of the past".

It just wouldn't do to write in those buy signals with
hindsight...

Travis
www.travismorien.com

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