Forum Archive Index - May 2001

["nick" <helmett@xtra.co.nz>]

          The small dip in Frucors shareprice just before the crash
could of been caused by a number of factors.  Could be that the
previous buying of the preceding weeks dried up as people waited
for the announcement.
       As we know on this occasion the news was bad and the chart
was vindicated.  However, if the news had been good, the chart
would of indicated a sell just before the good news.
  For every chart like this one there are many more that give false
indicators etc.
         I regard charts rather like horse racing systems, it is easy to
come
up with a system which will make a profit based on past results.
hwever there is no proof they can foretell the fiuture. This is what
is written in the herald today,by their financial advisor.
 Maybe charts work maybe they dont, but just because a chart
is right dosent necessarily mean it couldnt just as easily been wrong.

'These people are chartists. They reckon they can tell what
will happen to a share price based on patterns in charts of its
past performance.
any people have tried to do this over decades. Sometimes, a
pattern seems to hold for a while. But, just when you put money
 on it, it doesn't any more. Why on earth should it? Share prices
 are set by many people trying to assess how well a company
 will do in the future.
I also don't know of one academic researcher who has shown
that chartism works. And many have looked into it. "

              My own view is that charts do have value, simply because so
many people use them that they create a self fulfilling prophesy effect

    nick




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