Forum Archive Index - September 2003

[Phaedrus <Phaedrus@techemail.com>]

 The Securities Institute of Australia run a two part, two semester course on 
technical analysis leading to an ATAA Diploma in Technical Analysis. Both parts 
of the course can be cross-credited towards the SIA Graduate Diploma in Applied 
Finance and Investment. 
 Britain has some more complex courses with degree examinations and 
Universities in USA, Europe and Sweden also provide for a degree in Technical 
Analysis. 

 The random walk theory is an academic construct based on the efficient market 
hypothesis. Most people now accept that the market is, in fact, inefficient. A 
good (though difficult) book to read is "A Non-Random Walk Down Wall Street". 
From Amazon :- "For over half a century, financial experts have regarded the 
movements of markets as a random walk--unpredictable meanderings akin to a 
drunkard's unsteady gait--and this hypothesis has become a cornerstone of 
modern financial economics and many investment strategies. Here Andrew W. Lo 
and A. Craig MacKinlay put the Random Walk Hypothesis to the test. In this 
volume, which integrates their most important articles, Lo and MacKinlay find 
that markets are not completely random after all, and that predictable 
components do exist in recent stock and bond returns. Their book provides a 
state-of-the-art account of the techniques for detecting predictabilities and 
evaluating their statistical and economic significance, and offers a 
tantalizing glimpse into the financial technologies of the future. The articles 
track the exciting course of Lo and MacKinlay's research on the predictability 
of stock prices from their early work on rejecting random walks in 
short-horizon returns to their analysis of long-term memory in stock market 
prices". 

 The relatively new field of Behavioural Finance maintains that human 
psychology and securities pricing are intertwined. That, of course, is the 
primary basis of technical analysis.

 In his book "What works on Wall Street"? James P. O'Shaughnessy found that 
strategies combining value and momentum work superbly, outperforming either of 
these approaches used alone. Use both technical and fundamental analysis. To 
me, it seems foolish to limit yourself to one or the other.

                   Phaedrus.


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