11/17/2006

Conversation with a chartist

walter said...

gotcha...

i find that personally i do well with visual information - hence my interest and predisposition with charting. that being said, when i get a set of stocks that someone likes for some relatively consistent reason, i like to investigate to see if any visual commonality emerges among them...

in that sense, if you do, how to you use charts?

11:24 AM

Pradeep Bonde said...

How Charts can help you in the stock market by Jiller is what I like. I have nothing against chartists.
My submission is that if you use some logic first to select stocks like earnings/ momentum or value based PE envelopes kind of stuff and then use technical analysis on it, your returns are dramatically different.
For example if you are chartist and if you forget everything else and concentrate only on the IBD top/bottom 200 composite Stock lists which they publish on Thursday, you will get at least 3 times the return you get by using technical analysis on random set of stocks.
All those day traders who trade dummy method would find lot of easy money if they just make an effort to understand earnings. They will be (with their superior visual acumen) able to make more money and enter in anticipation. Plus will have more conviction in what they are doing. Will be able to prioritise opportunities. But many are so completely wedded to technical analysis that they are not even open to alternative possibilities.
They keep on reading more books on technical analysis and keep getting deeper in to it , while there may be a better way to make money.
Many times our deeply held beliefs or paradigms stop us from looking at other possibilities or create blind spots. I always suggest two books which have influenced me personally to look at things constantly differently.
1 Paradigms by Joel Arthur Barker
2 A kick in the seat of the pants by Roger von Oech
and if you can find watch the Paradigm movie by Joel Arthur Barker. It is one very insightful small documentary.

1 comment:

walter said...

i agree - my lack of undestanding/embracing of fundamental analysis does set me back when it comes to identifying opportunities...