Forum Archive Index - March 2003

[Travis Morien <travismorien@yahoo.com>]

--- Morgy <morgy40@xtra.co.nz> wrote:
> Snoopy & Travis
> 
> I spoke to Dr Alex Elder about your (& Travis's) 
> request for information on
> traders using TA, Alex has been a professional
> trader for over 20 years but
> he suggests you read "market wizards by Jack Swagger
> who gives plenty of
> examples of succesful traders (I have not read it) ,

1) I've read these books.  One clear message I got
from it is that those profiled were overwhelmingly
interested in risk mangement and spent virtually all
of their effort on that.  

2) I'm not after proof that it is possible to trade
successfully.  I'm after proof that support and
resistance exists and is exploitable, which is how
this thread began and furthermore that trends can be
readily identified ahead of time and that TA has
predictive ability.  If I recall correctly while there
were some TA users in these books there were just as
many FA users though as I said risk management was
where the real game was.

3) Ever tracked the performance of the Wizards years
later?  Several of them crashed and burned, though no
books were written about that little development.

> I also know of Darryl
> Guppy and Colin Nicholson in Australia, Darral is a
> straight out techncian
> and Colin uses FA to sort targets and TA to get in
> and out and advocates
> this method strongly. On his web site he talks of 2
> professional traders he
> knows and vouches for personally , one being
> american (Dan Gramza ) and the
> other a  Englishman (I think his name is Tony
> Plimmer) both of whom ran
> funds under  management using TA.
> John J Murphy has been a  professional trader,
> analyst (Technical) &TA fund
> manager for many years.

Rattling off the names of people that recommend the
techniques is not the same as providing credible
statistical evidence that TA works.

Not trading, TA.  Different topics.

I could dig up the name of several leading astrologers
but that wouldn't prove that astrology works, only
that people use it.
> 
> John Bollinger, must have heard of him Travis,
> surely

Yes, heard of him.  I'd love to see credible evidence
that the strategies (Bollinger Bands) work though.  I
know that they certainly don't seem to in my copies of
Metastock and Omnitrader, which allow indicators like
this to be backtested.
> 
> I am also a member of the IFTA (international
> federation of Technical
> Analysts) email list and many who write on the list
> give there email address
> at investment banks & financial fund managers across
> the world, surely they
> are not all in La La land.

I've got a client who used to trade on behalf of a
bank's derivatives division, he thinks TA is bunk.

I'm not interested in hearing how popular TA is, I
know that it is popular.  I want credible evidence
that it isn't a complete waste of time.

> I have however read several Buffett books, lovely
> theory, obviously not many
> people follow his theories because people still buy
> stocks that he wouldnt
> touch with a barge pole including the mysterious
> fund managers that Travis
> is fond of quoting. How many people actually do you
> know as professional
> investors follow his theory to the fullest (within
> practicalities) ?.

Very few.  Buffett himself has said that 95% of people
in markets are short term speculators and he claims
this is why he is so successful.  With such a large
number of people who can't see the woods for the trees
he can pick up deeply undervalued franchise stocks all
the time.


> 
> While I accept the names you do give Travis, to
> throw up some unnamed fund
> manager who loathes TA is really not credible,
> particularly as your industry
> has been severley exposed over recent years giving
> people extremely dubious
> advice. In fact it has been so bad they have had a
> heck of a job convincing
> government not to regulate. They looked good in a
> bull market.

What the f@%& has this got to do with the topic at
hand?

I'm after credible evidence that TA works and you
throw in some random swipe at the funds management
industry.  

Your use of the word "particularly" implies that
somehow the sales driven culture of commission based
advisers (of which I am not one) and the short term
oriented nature of the managed funds industry (which I
despise) reinforce your point somehow.  This is a
cheap and completely irrelevant shot and certainly
doesn't build up any case at all for TA.  

>  In my opinion,  local financial investment managers
> seemed to learn nothing
> from the 87 crash, they just jumped on the US market
> when it started to roar
> and said come on the party is over here, how many
> said to a client, heh the
> market is over valued stay on the sidelines, not a
> one I bet, reason,
> simple, no fee money from that is there.

Once again, how the heck does this point lend
credibility to TA?  Crashes happen because people
don't give a hoot about value investment and prefer to
follow trends and chase high momentum stocks.  if
anything you can blame the TA types for the crash of
87.  Buffett, among other value investors, had almost
completely liquidated his portfolio long before the
crash.  Buffett made his money in 1987 only by
arbitrage and it was with all the cash he was sitting
on just before the crash that he bought his now famous
positions in Coke and Amex.

> While I have no axe to grind with you over your anti
> TA stance, personal
> choice is your right, given the profession (would
> you call it a profession
> ?) you are in I think most poeple will take it with
> a grain of salt.

You've not provided a shred of evidence that TA works.

You dropped the names of a few traders then you took a
meaningless and gratuitous swipe at the financial
industry.  

Try again Morgy.

Travis
www.travismorien.com

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