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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.