5 ms·

Full article: http://www.nytimes.com/2015/09/30/opinion/is-your-financial-adviser-making-money-off-your-bad-investments.html http://www.nytimes.com/2015/09/30/o

Full article: http://www.nytimes.com/2015/09/30/opinion/is-your-financial-adviser-making-money-off-your-bad-investments.html http://www.nytimes.com/2015/09/30/opinion/is-your-financial-... 99.9% have no basic knowledge of Technical Analysis (TA) https://en.wikipedia.org/wiki/Technical_analysis https://en.wikipedia.org/wiki/Technical_analysis thereby not applying it in basic investment decisions they advise on. TA is valuable even though it tends to break down in very bad markets.

jevgeni 11y ago
Technical analysis is the financial markets' equivalent of astrology. It is especially bad, if you are considering investment horizon of over a day.
- meeper16 11y ago
  Let me correct you. Indicators based on statistical analysis can't be argued with in terms of their value in providing additional insight into the present condition of a stock or index. Think in terms of moving averages, a common application in TA. http://mathworld.wolfram.com/MovingAverage.html http://mathworld.wolfram.com/MovingAverage.html (BTW: Wolfram and mathematica do not deal in astrology) For example, indicators involved with technical analysis include, lagging indicators or those that show overbought or oversold conditions for stocks or entire indicies such as the Moving Average Convergence/Divergence ratios or MACDs. https://en.wikipedia.org/wiki/MACD https://en.wikipedia.org/wiki/MACD If you are a financial advisor, you should be using these to make sure that when you advise on taking a postion in a stock for example, the stock has not spiked up 10% on the previous day. If the stock did spike the previous day or week and as a financial advisor, if you advised your client to take a position in that stock, you'd effectively be placing them in a position of risk as the stock is likely to retrace. TA indicators are very practical in this case. This is just one of many examples. You're getting your robust methods of statistical analysis confused with astrology.
  - computer 11y ago
    Statistician here with experience in the financial world: you're wrong. Don't confuse the existence of Wikipedia pages and books written by people wanting to make money with actual science. Moving averages have a function in statistics. But there is no evidence that they can be used to time the markets. If they could, it would be done algorithmically by hedge funds, closing the possibility. Please show actual analysis of market data (i.e. recent published scientific papers) supporting your positions. Without those, it's quackery.
    - meeper16 11y ago
      Hedge fund algorithm developer here. You misread: 1. The existence of mathematica was quoted first. 2. Moving averages are a "lagging indicator", which I stated, not a predictive indicator which I did not state. 3. I develop hedge fund algorithms. References to papers include this most important one: "Contagious Speculation and a Cure for Cancer: A Non-Event that Made Stock Prices Soar," https://www0.gsb.columbia.edu/faculty/ghuberman/research.html https://www0.gsb.columbia.edu/faculty/ghuberman/research.htm...
      - jevgeni 11y ago
        > 3. I develop hedge fund algorithms. Do the hedge funds know? ;P
        meeper16 11y ago
        Our bank accounts do.
        tsotha 11y ago
        Until they don't. As a group, hedge funds far underperform index funds.
        meeper16 11y ago
- meeper16 11y ago
  Black magic and astrology is what happens when one disregards mathematical tools and goes on guts, instincts, phone calls and hunches.

jevgeni 11y ago

Technical analysis is the financial markets' equivalent of astrology. It is especially bad, if you are considering investment horizon of over a day.

meeper16 11y ago
Let me correct you. Indicators based on statistical analysis can't be argued with in terms of their value in providing additional insight into the present condition of a stock or index. Think in terms of moving averages, a common application in TA. http://mathworld.wolfram.com/MovingAverage.html http://mathworld.wolfram.com/MovingAverage.html (BTW: Wolfram and mathematica do not deal in astrology) For example, indicators involved with technical analysis include, lagging indicators or those that show overbought or oversold conditions for stocks or entire indicies such as the Moving Average Convergence/Divergence ratios or MACDs. https://en.wikipedia.org/wiki/MACD https://en.wikipedia.org/wiki/MACD If you are a financial advisor, you should be using these to make sure that when you advise on taking a postion in a stock for example, the stock has not spiked up 10% on the previous day. If the stock did spike the previous day or week and as a financial advisor, if you advised your client to take a position in that stock, you'd effectively be placing them in a position of risk as the stock is likely to retrace. TA indicators are very practical in this case. This is just one of many examples. You're getting your robust methods of statistical analysis confused with astrology.
- computer 11y ago
  Statistician here with experience in the financial world: you're wrong. Don't confuse the existence of Wikipedia pages and books written by people wanting to make money with actual science. Moving averages have a function in statistics. But there is no evidence that they can be used to time the markets. If they could, it would be done algorithmically by hedge funds, closing the possibility. Please show actual analysis of market data (i.e. recent published scientific papers) supporting your positions. Without those, it's quackery.
  - meeper16 11y ago
    Hedge fund algorithm developer here. You misread: 1. The existence of mathematica was quoted first. 2. Moving averages are a "lagging indicator", which I stated, not a predictive indicator which I did not state. 3. I develop hedge fund algorithms. References to papers include this most important one: "Contagious Speculation and a Cure for Cancer: A Non-Event that Made Stock Prices Soar," https://www0.gsb.columbia.edu/faculty/ghuberman/research.html https://www0.gsb.columbia.edu/faculty/ghuberman/research.htm...
    - jevgeni 11y ago
      > 3. I develop hedge fund algorithms. Do the hedge funds know? ;P
      - meeper16 11y ago
        Our bank accounts do.
        tsotha 11y ago
        Until they don't. As a group, hedge funds far underperform index funds.
        meeper16 11y ago
meeper16 11y ago
Black magic and astrology is what happens when one disregards mathematical tools and goes on guts, instincts, phone calls and hunches.