Re: Why are value investor types so rigidly opposed to TA?
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I believe the market is driven by psycholigical facors that is why FA can work long term, I just don't believe these psychological factors can be predicted with any sory of reliability near term. It is amazing that when a guy like Warren Buffett, who turned $100,000 in to $50 billion buying stocks, says TA is worthless why that wouldn't carry any weight with people.
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If you believe the market is driven by psychological factors, then surely this means those extremes in optimism and pessimism are tradable ST/MT with a disciplined approach?
Also, don't confuse reliablility of "predictions" with profitability. I trade a profitable system that loses money on 70% of the trades.
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yea, confusing profitability w/ correct % is not good.
but, that said, it is the rarer profitable system that loses money more than it makes money.
my old fund made the most money when its hit ratio was >1.5:1 (i.e. 60/40 winner/loser).
this probably has to do with risk constraints though b/c if they let their highest conviction trades absorb more of their risk budget the overall EV may increase, but the volatility would likely increase by more in relative terms.
you've mentioned before that you don't have the ability to institute good risk controls so the differential between "hit ratio" and "profitability" might be accounted for in that...
just some thoughts,
Barron
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