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"There's a reason hedge funds aren't pitching clients on technical analysis based trading...it's because technical analysis is the astrology of the investment w
by jmalicki 8y ago
"There's a reason hedge funds aren't pitching clients on technical analysis based trading...it's because technical analysis is the astrology of the investment world." - Two Sigma, Jane St., and RenTech are just slightly more refined versions of technical analysis - like comparing modern astrophysics to Ptolemny.
"Also, everybody seems to be scared about the yield curve, but the problem with using an inverted yield curve as an indicator is that...while it may be a good recession indicator, recessions are a bad indicator for market performance." - everyone should be scared. For the typical person, recessions cause a chance of job loss, which for the majority is a far bigger financial disaster than a market crash.
- pembrook 8y agoUltimately it comes down to semantics but I think there's a lot of confusion about the difference between traditional technical analysis and what a quant shop like Rentech or TwoSigma does. Quantitative strategies might use certain technical data as inputs, but it's not the same thing as drawing teacups on charts and publishing an article in Market Watch saying the world is going to collapse. Nobody knows what RenTech is doing in the medallion fund, but I can tell you with certainty they do not have analysts drawing head-and-shoulders patterns (ie. traditional technical analysis). I think we could argue semantics here again but my point is ultimately that what this article is doing with that chart makes no sense. I do agree that increased risk of job loss is of course bad and that recessions are bad in general, but this article is about the stock market.
- melling 8y agoWe do know that humans don’t do the trading. It’s all algorithms.