Implying technical analysis is real

VisualMaster
VisualMaster

discuss

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forbes.com/sites/rickferri/2013/04/29/no-free-lunch-from-equal-weight-sp-500/#5bdef2847543

farquit
farquit

Quants are still a meme, unfortunately. REALLY smart people misdirecting their talents to things that don't make sense (mathematically) in the long run.

5mileys
5mileys

REALLY smart people misdirecting their talents

No Fuck off. Scientists get paid shit unless they go into pop science or quantitative finance. I'm not going to work my ass off as some lab slave unappreciated for years with the most I can ever hope to earn being $50k as some assistant professor

kizzmybutt
kizzmybutt

I wasn't saying that there isn't money to be made (in the short-term). Have you met many successful quants who have been working in the field for very long? Most will tell you that their recent bout of unemployment happened because they went against their own numbers.

Quants in the insurance industry are another question entirely.

Poker_Star
Poker_Star

Quants in the insurance industry are another question entirely.

how so?

PackManBrainlure
PackManBrainlure

implying technical analysis is real

it is, there are plenty of papers on it.
Beating the market, the amount of risk etc. is a different question.
But technical analysis is proven to not just be voodoo.

On the other hand it might be to a degree a self-fullfilling prophecy of many people acting according to similar TA signals.
Especially in markets like china, were fundamentals dont matter.
If the chinese government says company X has a CEO with better political connections they boost him to heaven even though his fundamentals are shit compared to some other company producing the same goods.
So there is nothing else for china.

Also pic related, just have to git gud to understand it.

Skullbone
Skullbone

They use stats to determine the likelihood to pay on time and such. I guess quants in some other fields might also apply here. The reason why this is a decent field is because they're able to back themselves with data and are generally right in the long-term (if you make less than X and have Y then...). Even if they aren't right about a certain prediction, the actual data that proves them wrong won't generally come up until decades in the future.

Some burn out because they can't stand treating people as numbers for years.

Trying to predict the stock market based on graphs is a pretty dumb move overall though.

WebTool
WebTool

But technical analysis is proven to not just be voodoo.

Except when one considers trading fees. If you have some cites to suggest otherwise, I'd love to read them.

Also pic related, just have to git gud to understand it.
Don't bother. Most investors should do decently well in the long term with index investing.

DeathDog
DeathDog

Thanks. I am aiming for quantitative finance for my postgraduate, but I'm kinda having second thoughts about actually working in insurance.

It's lucrative sure, but not sure about the overall environment.

ZeroReborn
ZeroReborn

Except when one considers trading fees. If you have some cites to suggest otherwise, I'd love to read them.

I haven't saved them. I just read up on it a few years ago.
Again: im not in finance and im not saying you SHOULD invest based on technical analysis. Neither did those papers.
They just looked from an scientific point of view.

Also pic related, just have to git gud to understand it.
Don't bother. Most investors should do decently well in the long term with index investing.

the image was obviously meant as a joke...

eGremlin
eGremlin

What's wrong with insurance?
I dream of having an insurance firm..

AwesomeTucker
AwesomeTucker

1) Indicators react to the market, the market doesn't react to indicators.

2) There's no combinations of indicators that give you a magic signal. Every body with basic programming knowledge in banks has tried so.

3) You are literally better off just picking random stocks.

If you choose stocks at random and combine them in an equal weight portfolio, you will always beat S&P 500, or in 99.99 percent of cases.

CodeBuns
CodeBuns

If you want to work in insurance because you like the job or want a challenge I'd wager it would be a pretty solid position

Personally I just want to fuck off to a rural area, get a house and hike to the mountains while I still can.

BunnyJinx
BunnyJinx

Neither did those papers.
They just looked from an scientific point of view.
They would have been an interesting read.

the image was obviously meant as a joke...
Haha. My bad. I've been dealing with too many people who take things absolutely literally lately.

New_Cliche
New_Cliche

implying people don't sell in fear or overreact
implying that fundamentals aren't remotely reflected in the stock price
implying avg of all random stocks > the average of all stocks
Way to up the stupid game, dingus

Raving_Cute
Raving_Cute

implying people don't sell in fear or overreact
Short term reactions has no impact when you're long term investing. if you think you can make more money day trading and predicting these actions, go right ahead.

implying that fundamentals aren't remotely reflected in the stock price
Stocks are priced at predicted valuations/speculations and fundamentals show whether or not the valuation is cheap or expensive. While company A hasn't done shit and is inventing something new such as self driving car technology, it's going to be valuated pretty highly.

implying avg of all random stocks > the average of all stock

The S&P isn't all stocks "dingus" and it's market weighted to high cap stocks. Why it performs so terribly. Averaging 10% a year is nothing.

Randomly selected equally weighted portfolios have outperformed market-capitalization weighted portfolios globally and by region over the last fifteen years.

Winston Capital carried out 1,000 random samplings of 50 stocks and compared it to the national indexes around the world with a back test of 25 years.

Pic related..

Snarelure
Snarelure

dude u need to go back to elementary school stats picking color jelly beans out of a jar

idontknow
idontknow

this.

Crazy_Nice
Crazy_Nice

Technical analysis should be compared to weather forecasting, it is not an exact science, but it can be used to make predictions. There's always those days when it rains when the forecast said it wasn't going to, but it is generally accurate.

Also, institutional traders and algorithms base their trading on technical analysis so in many ways it is self fulfilling.

Evil_kitten
Evil_kitten

Also, institutional traders and algorithms base their trading on technical analysis so in many ways it is self fulfilling.

No they don't. Most institutions trade options to hedge their long term positions. And HFT isn't based on TA at all. Only day trader memes base their trading on TA. Institutions base their trading on risk.

Nojokur
Nojokur

I'm new to studying this but sofar in my studying I get the sense that
retail traders arent even a blip on the radar
think about where the large speculators, the funds, would want to place their stop orders because thats where the commercials, the market makers, the banks, will drive price to pair their orders with willing buyers/sellers to be the counterparty to take the other side of their trades to hedge.

Harmless_Venom
Harmless_Venom

1) Indicators react to the market, the market doesn't react to indicators.

ohrly

2) There's no combinations of indicators that give you a magic signal. Every body with basic programming knowledge in banks has tried so.

wrooong

3) You are literally better off just picking random stocks.

wrooong

wrooong

forbes.com/sites/rickferri/2013/04/29/no-free-lunch-from-equal-weight-sp-500/#5bdef2847543

Deadlyinx
Deadlyinx

Such a narrow minded nitwit.

ohrly

Yes really. If you don't even understand what an indicator calculates, then you are retarded for thinking it gives magic signals.

wrooong
Every Quant and programmer for an institution has tried this. Technical Analysis is useless. They use indicators but not technical indicators. Social indicators are popular right now. They have "Social Network Directors" that develop bots that scan and analyze the internet, most popularly social network sites, news sites, blog sites, etc. Then they analyze it. They automatically have every information on the internet about stock ABC and analyze it. They have variables ranked by levels of importance used as interpretive tools to evaluate performance and efficiency of the company. Institutions also have many other algorithms. They may use algorithms to break up a 100,000 share order into many smaller orders to hide their presence. You have options trading to hedge risk on positions. Etc. They are trading to make money, they are trading to control risk. The main objective of algo trading is not necessarily to maximize profits but rather to control execution costs and market risk. Yet you go these retards thinking indicators are magic signals to get rich off of.

You should read studies on what Traders, Quants and HFT actually does. But that requires admitting you're wrong and nobody does that on the internet.

forbes.com/sites/rickferri/2013/04/29/no-free-lunch-from-equal-weight-sp-500/#5bdef2847543

You're implying an equal weight S&P 500, not equal weight of 50 random stocks. There are ~19,000 stocks in the US alone, yet alone the rest of the world. The fact that you choose to read blogs instead of research and studies done by billion dollar asset hedge funds shows you're level of competence.

Nojokur
Nojokur

[indicating intensifies]

Carnalpleasure
Carnalpleasure

On the other hand it might be to a degree a self-fullfilling prophecy of many people acting according to similar TA signals

Exactly. If everyone plays by the same rules, market events trigger the same action for the vigilant.

SniperGod
SniperGod

Technical analysis is a self-fulfilling prophecy. They come up with some voodoo to say why we should buy a stock, then it catches on, people buy it, the price rises.

Take all the advice of Graham, Buffett, and Lynch, and buy companies that have good fundamentals, who are cash-generative and do good business.

CodeBuns
CodeBuns

Please never forget that chart readers will never beat the index over a longer period a chart readers basic function is to provide income for a trading firm through commisons.