Why are value investor types so rigidly opposed to TA?

[skindog]

Although I'm a huge fan of FA and generally dismiss TA, you can't use the argument that there are no billionaire TA investors to dismiss TA. I don't know much about its mechanics, but it seems like TA would scale far, far worse than FA does. It is based on many trades, and the costs of turning billions of dollars over based on technical indicators is probably prohibitive - because either the trader makes large trades that influence the market, cutting into profits, or the trader makes lots of small trades that are difficult to monitor at the same time. The FA investor has the luxury of sitting back and enjoying a 4 hour workweek!

Oh yeah, and there are tax differences preferring the FA investor too. TA has a lot stacked against it, especially with large sums - so I doubt we'll see billionaire TA guys anytime soon.

I like easy things and fewer heart attacks, so I'll stick with FA.

[Mark1808]

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4)With Buffet, yes, let's move on. While there were no recent offerings, the point I was brining up was that Buffet along with the other famously wealthy fundies have shown strong results with their trading, but their billionaire status is a function of the trading and as a function of their investment company and having a crapload of shares of those companies. Yes, he did grow those shares, but he wasn't some joe blow that took a td ameritrade account from peanuts to bling.


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Buffett started with $100,000 and is now worth $50 billion!!! He may have taken $30 million in profit sharing from his investment partnership but the rest of his net worth is entirely from buying stocks!!! He could have most certainly taken $100,000 and turned it in to billions in a etrade account because he did it it in regular brokerage accounts.

With FA there is no guarantee that even if you are right about value the market price will move there any time soon or ever! However there are market forces which include buy outs that tend to move stock prices towards their intrinsinc value. There have been many praticioneers of FA that were schooled by Benjamin Graham and they all had stellar track records. I see no such lineage in TA. I see no large accumulations of wealth from TA as we have seen from FA. I see more taxes and costs from TA than FA.

The guy who keeps asking what TA is asking avery insightful question. FAers can say to buy stocks selling for a fraction of what the company as a whole would be worth to a potential buyer and they can lay out parameters on why they think a stock is undervalued. There is no such rationale from TAers, there is support, resistence, trends and such but there is no one who can point to a set of variables that when they exist in a stock's trading will lead to abnormal profits. If there are lets see them.

[thehun69]

Then don't use TA.

THE HUN.

[Mark1808]

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Then don't use TA.

THE HUN.

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I don't. I am trying to do my best as a good American to see that impressionable young investors don't waste their time and resources on drival.

[DcifrThs]

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Agreed. Now the question is WHY ARE THEY BUYING? To that, there is no predictive answer. That was my comment to Dessert in the sense that he felt that for whatever reason, people would miraculously come to their senses in a couple of years time and realize that this stock is trading significantly underbook, here comes the buying pressure, and Dessert makes a nice profit as the price is driven up to par. My critique of that point is the fallacious assumption that people would realize the stock's undervalued quality (which would have to be based on a clear consensual and mutually agreed market model, which is a wonderfully amazing assumption)and then flock to it. I brought up that point for the purpose of demonstrating that as a TA I don't care why people buy stocks. I only care what the stock action is currently demonstrating. I don't think it is reasonable to assume that everyone would agree on a valuation based on some economic model and then flock there, the price action on the charts show you EXACTLY the valuation that the public assumes.

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the best way to explain why people start buying is like backwardation. it isn't some magical thing. it may or may not need a catalyst.

in backwardation, as the maturity date approaches, the futures price trades up towards the spot price. "normal backwardation" is a large source of returns from investing in commodity futures.

similarly, as the value becomes more and more visible to the market, the individual security can become more and more attractive to the market as time passes. events, company filings etc. can release more and more info about the value of that company relative to its traded price.

a fundamental analyst looks to what can cause the buying pressure to increase over time. at least this is how i'd think about it.

it isn't soem flippant random act like i think you seem to suggest though. there is logic and well founded study behind it.

as for mandelbrot, just look up any of his freely available papers on MMAR (or MMAP)...multifractal model of asst returns (or asset prices). look at the resulting graphs. post an example here.

post one price chart with any TA analysis you have and then post the MMAR price charts to see the comparison.

easy enough...

Barron

[ArturiusX]

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Then don't use TA.

THE HUN.

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I don't. I am trying to do my best as a good American to see that impressionable young investors don't waste their time and resources on drival.

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Go [censored] yourself. TA is profitable.

[thehun69]

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Then don't use TA.

THE HUN.

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I don't. I am trying to do my best as a good American to see that impressionable young investors don't waste their time and resources on drival.

[/ QUOTE ]

Go [censored] yourself. TA is profitable.

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Sweet.

[Mark1808]

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Then don't use TA.

THE HUN.

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I don't. I am trying to do my best as a good American to see that impressionable young investors don't waste their time and resources on drival.

[/ QUOTE ]

Go [censored] yourself. TA is profitable.

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If TA is so profitable why are you so angry? I'm not mad that you think FA is not as good as TA. Wanna know why? Cuz I'm doing fine and you can think whatever you want.

TA is a losers game when you consider trading costs and taxes. Short term market movements are not predictable.

[DcifrThs]

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Then don't use TA.

THE HUN.

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I don't. I am trying to do my best as a good American to see that impressionable young investors don't waste their time and resources on drival.

[/ QUOTE ]

Go [censored] yourself. TA is profitable.

[/ QUOTE ]

If TA is so profitable why are you so angry? I'm not mad that you think FA is not as good as TA. Wanna know why? Cuz I'm doing fine and you can think whatever you want.

TA is a losers game when you consider trading costs and taxes. Short term market movements are not predictable.

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this is fairly closed minded.

if you can ascertain methodologies to extract value consistently then go ahead. it is possible that TA is unwittingly doing this in terms of the psychological aspects that humans exhibit when doing things like trading/gambling etc.

i just don't think that aside from that possibility, there is any logic behind TA. i have recruiters from prop trading firms calling me fairly regularly now and it seems unbelievably shady. all of them use TA. obviously there are reasons there aside from this argument but just thought i'd throw that out there (i.e. i'm not using it as evidence b/c it isn't).

Barron

[Mark1808]

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Then don't use TA.

THE HUN.

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I don't. I am trying to do my best as a good American to see that impressionable young investors don't waste their time and resources on drival.

[/ QUOTE ]

Go [censored] yourself. TA is profitable.

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If TA is so profitable why are you so angry? I'm not mad that you think FA is not as good as TA. Wanna know why? Cuz I'm doing fine and you can think whatever you want.

TA is a losers game when you consider trading costs and taxes. Short term market movements are not predictable.

[/ QUOTE ]
this is fairly closed minded.

if you can ascertain methodologies to extract value consistently then go ahead. it is possible that TA is unwittingly doing this in terms of the psychological aspects that humans exhibit when doing things like trading/gambling etc.

i just don't think that aside from that possibility, there is any logic behind TA. i have recruiters from prop trading firms calling me fairly regularly now and it seems unbelievably shady. all of them use TA. obviously there are reasons there aside from this argument but just thought i'd throw that out there (i.e. i'm not using it as evidence b/c it isn't).

Barron

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While I may be a close minded individual my mind will usual open to facts and supporting evidence. I see none for TA. TA preys on those who think a quick easy buck is possible. I personally think it is a scam to try and convince Joe Blow he can make money short term trading the market. The market has exhibited positive variance in recent years, many "experts" will one day soon find out they don't know as much as they thought. The people I am debating with may very well be making great returns short term trading the market, this does not, however, prove their system is +EV.