On the other hand, most of the fundamental investors I am aware of seriously underperformed in 2022. That recession everybody and their economist uncle knew was coming, didn't.
Which fundies predicted 2008?
Retail investors are quite often suckers, whether they're technical or not. IMO however, that's because they don't have their emotions under control. It's not the tool, it's how you're using it.
As for the pros... How many outperform the indexes? Buffett's Bet, baby.
I agree with much of what you say, but just because fundis get it wrong a lot doesn't mean technical analysis works better in the long run. And I am a fan of technical analysis for timing purposes, but not for medium- or long-term investment decisions.
Over the years, I have observed some of the biggest reasons for underperformance for most retail traders who trade stocks and ETFs struggle with emotional decision-making, such as reacting impulsively to market ups and downs and overtrading, often buying and selling too frequently to time the market. They also lack the knowledge, strategy, and risk management to succeed.
In contrast, I have noticed that mutual fund investors often trade less frequently. This may be partly due to mutual funds settling at the end of the day, which gives investors time to reflect on their decisions. Additionally, mutual funds are designed for long-term goals, often come with professional management, and tend to discourage the short-term mindset that leads to overtrading. While mutual funds don't eliminate emotional decision-making, their structure helps reduce the temptation to act impulsively compared to the real-time trading flexibility of stocks and ETFs.
As a friend of technical analysis, I always enjoy reading this article. Michael Riesner from GMCP had the best mix for me with his technical outlooks. Macro and technical analysis belong together. Fundamentals are a separate area for me.
I think there must be a major flaw in this research. There is no way any average investor would continue racking up 40% losses. All of us occasionally sustain losses and I have had some way over 40% but overall I am very happy with my portfolio performance with gains far exceeding losses. I would guess that like me, many investors use many metrics and analysis when selecting investments without rigidly sticking to a particular methodology......
I don’t think there is a flaw. These are cumulative losses of 40% over ten years, so less than 4% per year. Plus, these are the losses of technical analysis recommendations. Most people will do some trading with their portfolios and keep other elements stable over time. The result is that those 40% losses over ten years are often hardly noticeable from one year to the next.
On the other hand if there were not idiots (both retail and professional) in the markets then the rest of the population would find it difficult to make a good return.
it's staggering and logical in the end. These lines on the charts represent real companies and the real economy. They cannot always trade like leaves on a windy tree.
On the other hand, most of the fundamental investors I am aware of seriously underperformed in 2022. That recession everybody and their economist uncle knew was coming, didn't.
Which fundies predicted 2008?
Retail investors are quite often suckers, whether they're technical or not. IMO however, that's because they don't have their emotions under control. It's not the tool, it's how you're using it.
As for the pros... How many outperform the indexes? Buffett's Bet, baby.
I agree with much of what you say, but just because fundis get it wrong a lot doesn't mean technical analysis works better in the long run. And I am a fan of technical analysis for timing purposes, but not for medium- or long-term investment decisions.
Over the years, I have observed some of the biggest reasons for underperformance for most retail traders who trade stocks and ETFs struggle with emotional decision-making, such as reacting impulsively to market ups and downs and overtrading, often buying and selling too frequently to time the market. They also lack the knowledge, strategy, and risk management to succeed.
In contrast, I have noticed that mutual fund investors often trade less frequently. This may be partly due to mutual funds settling at the end of the day, which gives investors time to reflect on their decisions. Additionally, mutual funds are designed for long-term goals, often come with professional management, and tend to discourage the short-term mindset that leads to overtrading. While mutual funds don't eliminate emotional decision-making, their structure helps reduce the temptation to act impulsively compared to the real-time trading flexibility of stocks and ETFs.
As a friend of technical analysis, I always enjoy reading this article. Michael Riesner from GMCP had the best mix for me with his technical outlooks. Macro and technical analysis belong together. Fundamentals are a separate area for me.
https://www.nzz.ch/finanzen/aktien/sieg-der-chartisten-auf-ganzer-linie-ld.1055406
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2648292
Oh yes. I know Michael from way back when we both were at UBS. His analysis is among the best I have ever seen in TA.
I think there must be a major flaw in this research. There is no way any average investor would continue racking up 40% losses. All of us occasionally sustain losses and I have had some way over 40% but overall I am very happy with my portfolio performance with gains far exceeding losses. I would guess that like me, many investors use many metrics and analysis when selecting investments without rigidly sticking to a particular methodology......
I don’t think there is a flaw. These are cumulative losses of 40% over ten years, so less than 4% per year. Plus, these are the losses of technical analysis recommendations. Most people will do some trading with their portfolios and keep other elements stable over time. The result is that those 40% losses over ten years are often hardly noticeable from one year to the next.
Never underestimate the supply of idiots.
On the other hand if there were not idiots (both retail and professional) in the markets then the rest of the population would find it difficult to make a good return.
Fundamental analysis is to “What to buy” as Technical analysis is to “When to buy” as Risk analysis is to “How Much to buy.”
Value > Momentum
it's staggering and logical in the end. These lines on the charts represent real companies and the real economy. They cannot always trade like leaves on a windy tree.