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Reading stock charts is a bunch of crackpot hooey. I'm nr. 2 on your site with my highly sophisticated "always buy" strategy. However, it might be an excellent

• hugh 19y ago
  I'm no expert, but it seems to me that reading stock charts is just a particularly unsophisticated form of statistical arbitrage, and that it _might_ work provided that nobody else in the world is doing it. Real statistical arbitrage firms, as I understand it, work by looking at the historical variation in thousands of asset prices at once, putting them into an enormous covariance matrix, and using dozens of very smart mathematicians and millions of CPU hours to figure out which assets are likely to be currently underpriced. That's how folks like Renaissance Technologies got rich. Unfortunately, as soon as the secret got out, other folks started doing it as well, and pretty soon the mispricing of assets got smaller and smaller, so they're in an arms race to find more and more sophisticated algorithms. So I guess the point is that if mispriced assets are that hard to find when you have a hundred PhDs and a supercomputer, you're not likely to do very well just by looking at whether a squiggly line is currently above or below its recent average. All the easy money has already been vacuumed up.