We Have A Technical

Charting. Sounds like something to do with astrology, doesn't it? It isn't, but it might as well be.


There's a theory that future stock prices can be predicted based on the shape of the historic price graph. For example, a simple form might say: if the line went down yesterday (i.e. the share price fell) then it will go up today (i.e. the share price will go up). Of course, in those terms it isn't much of a theory, so the details followed by practitioners are somewhat more complex than that. And open to interpretation. And dispute. Just like astrology.


But can such a thing be true one may ask. Surely the price of an equity is based on real things like sales, profitability, the amount of debt repayments that need to be made, the state of the economy, etc, etc? Fundamental stuff. Well yes, says the charter/chartist/chartographer, but what about the market. What about all of the people that buy and sell shares? Their actions will most directly determine a stock's value, and why do we assume that they act rationally?


Fair point. Fundamental analysis is flawed. Possibly fatally so when it comes predicting the future value of a company's shares, at least in its ability to outperform random guesswork. So what is the alternative, asks the chart devotee rhetorically.

Their answer: a system in principle incredibly simple, but in practice requiring great skill, diligence and, dare we say it, secret knowledge available only to the true disciples.

'Bollocks' says I. You are no different to the alchemists or the cabalists. You believe something because it sounds elegant and arcane, while at the same time being incredibly simple to grasp (in principle, but oh, most definitely not in practice). You believe this thing because it promises untold power or riches, and it promises them at the expense of the non-believers who will continue to flounder under the weight of all that common sense, 'fundamental' information that you have no time for. Ah, the poor misguided non-believers. How you scoff at them.

Yeah, well just piss off to your yacht in the Caribbean then. What? You don't have one? Why on earth not? Oh, I see...

Never mind. Here, have a copy of The Bible Code on me. You'll love it.