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There's countless different indicators and investors don't follow the same ones, if any at all. Most people aren't computer programmers who have run historical

by xyzzy4 11y ago

There's countless different indicators and investors don't follow the same ones, if any at all. Most people aren't computer programmers who have run historical simulations. Just because you know something doesn't mean that other investors do. For example I bought lots of Bitcoin when it was at $16, because I thought I knew something other people didn't, and I was right. The fact is if you followed the indicators that I mentioned since 1950, your net worth growth rate would've increased at least 50% without even using leverage. Trends in the general stock market change slowly (the price doesn't look like random noise) and that's why it's predictable enough to beat a buy and hold strategy.

jrockway 11y ago
So are you mostly short on the S&P 500? If I was guaranteed a recession, I would be. I'm long on the US stock market because if US companies are good at one thing, it's their 5% YoY growth.
- xyzzy4 11y ago
  I was long until today. And now I'm short because of thresholds that were hit by my technical indicators.
jonknee 11y ago
> The fact is if you followed the indicators that I mentioned since 1950, your net worth growth rate would've increased at least 50% without even using leverage. Well that's easy, the hard part is finding the indicators that will do that for the next 60 years, not the previous!
solotronics 11y ago
Do you believe that technical indicators take into account factors like political and social pressures on an asset?
- xyzzy4 11y ago
  Ultimately, what matters the most is the price and what other investors do. The price is affected by investors' perceptions of political and social pressures. If there are new political or social pressures, then they would affect the price (over seconds to months) which would then change the indicators. The indicators wouldn't pinpoint what those pressures are, and they would only change after the fact, but they would still change. I wouldn't want to predict the influence of those kinds of pressures unless I could get quantitative data and back-test it, which I don't think is possible. It's not a perfect strategy by any means. But I think using indicators is superior to a buy and hold strategy. When you invest you are necessarily choosing between different strategies. There is nothing magical about buy and hold other than that it's simple, and a lot of people do it. Historical data shows that if you trade based on indicators then your returns are much higher. I think it's important to find what works the best through calibration and back-testing. There are also risks such as survivorship bias that even applies to indicators, in addition to companies and economies. The best indicators survive in whatever system you use, and that doesn't guarantee they will actually work well in the future. Still I think it's better than the buy and hold strategy.

by xyzzy4 11y ago

jrockway 11y ago

So are you mostly short on the S&P 500? If I was guaranteed a recession, I would be. I'm long on the US stock market because if US companies are good at one thing, it's their 5% YoY growth.

xyzzy4 11y ago
I was long until today. And now I'm short because of thresholds that were hit by my technical indicators.

jonknee 11y ago

> The fact is if you followed the indicators that I mentioned since 1950, your net worth growth rate would've increased at least 50% without even using leverage. Well that's easy, the hard part is finding the indicators that will do that for the next 60 years, not the previous!

solotronics 11y ago

Do you believe that technical indicators take into account factors like political and social pressures on an asset?

xyzzy4 11y ago
Ultimately, what matters the most is the price and what other investors do. The price is affected by investors' perceptions of political and social pressures. If there are new political or social pressures, then they would affect the price (over seconds to months) which would then change the indicators. The indicators wouldn't pinpoint what those pressures are, and they would only change after the fact, but they would still change. I wouldn't want to predict the influence of those kinds of pressures unless I could get quantitative data and back-test it, which I don't think is possible. It's not a perfect strategy by any means. But I think using indicators is superior to a buy and hold strategy. When you invest you are necessarily choosing between different strategies. There is nothing magical about buy and hold other than that it's simple, and a lot of people do it. Historical data shows that if you trade based on indicators then your returns are much higher. I think it's important to find what works the best through calibration and back-testing. There are also risks such as survivorship bias that even applies to indicators, in addition to companies and economies. The best indicators survive in whatever system you use, and that doesn't guarantee they will actually work well in the future. Still I think it's better than the buy and hold strategy.