this is another one of my all time favorite finance pieces too:
The date of that newspaper article was June of 2019.
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More debt yet lower rates. Biggest joke on the planet
It broke! It broke! I really hope it goes down to 300. I can’t stand these idiots that always say “buy the dip.”
BTFD
BFTD
BFTD
This is a complete sentence AF nanny
- Dip buyers
- Idiots
You’re gonna have to choose one, can’t give you both.
Not mutually exclusive events.
TO THE MOON MOON MOON ’
yes its a complete sentence leave me alone
You think the SPY will hit its 200 sma?
I just stargaze dem gainz
real pros use EMA
Reasons why you should use technical analysis when making investment decision. hahahaha!
What’s going on with the market? Evergrande didn’t make a dent.
Are we in an environment where bubbles never burst. Diamond hands!
I’m all cash!
“Buy the dips.”
Do people ever actually think about what this means?
You don’t know when a dip is a dip and when it does become one, it’s already late.
The left side is done, it is finished.
Hindsight is 20/20.
Think people.
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You need charts most definitely.
The market does not move based only on fundamentals.
Herd psychology and sentiment is a huge part of how and why the market moves.
Fundamental Analysis
Market prices are dictated by perception than any actual value. Fundamentals are helpful to determine a baseline or fair price that is useful for risk management.
However, fundamentals are pretty useless in my experience to determine where a price will go, i.e. the upside potential.
Fundamentals are useful to determine the down-side risk, as equity assets are protected by their (ideally rising) “physical” book value, while its “perceptional” value is always fluctuating (market price).
Sentiment Analysis
The evidence is easy to spot. Elon Musk can pump and dump the price by just making statements on twitter, totally invalidating fundamentals on a regular basis. You need to pay attention to what the rookies (general public) is doing, because there’s alot of rookies, when combined together that create market-moving effects.
Most rookie behaviour is tied to sentiment, like grandma hearing on the news that Elon Musk said TSLA is gonna go up. The general public does very little technical (and almost never) fundamental analysis. They’re all controlled by sentiment, very unwise to ignore sentiment analysis.
Technical Analysis
Technical Analysis creates observable ‘herding’ behaviour.
Indicators don’t predict the future, but what they do effectively is herd people together at the same time to perform the same action that it creates its own self-fulfilling prophecy.
If everybody is watching a weekly MACD (example), as the lines begin to converge, everybody starts herding causing the indicator to converge even more, eventually causing people to act on it.
It’s not the indicator that predicted the future, it’s the people watching the indicator behaving the same way and becoming synchronized at the exact same time without realizing it.
You need technical analysis to buy at an intelligent price. You need to time markets, because the game is about buying at a good price and selling at a better price. You line this up with fundamental analysis. The fundamentals help you know what price is fair and the technicals tell you when to jump in on that price.
People who enter the market randomly because “you shouldn’t time the markets” are fools.
This dumb idea is propagated by mutual funds. It would be difficult to sell funds (and collect management fees) if investors began timing the market. So the idea of just buying randomly and “buy and hold” started, people buying funds at really stupid prices and consequently sitting in unnecessary drawdowns. This “buy and hold” is a cop-out by mutual funds to justify to rookie and naive investors that long extended drawdowns are normal, collecting management fees while the investor is trapped in a draw-down, good case scenario for a mutual fund.
Also, this idea (not timing markets, buy and hold) has been driven further by publicly traded companies, because they always want you to buy their stock, no matter what the price is, because buying always helps the price. If they taught that timing markets is important, most people would patiently wait, creating further risks of a sell-off of the share price.
The Hocus Pocus
The technical analysis that IS hocus pocus are these stupid “head and shoulder” patterns and what not. Any technical analysis that is prone to a subjective interpretation is ineffective.
This includes trend-lines because there’s plenty of subjective ways to create a trend-line.
Since, there’s many ways to do this, it won’t create the “herding behaviour” that I mentioned that creates self-fulfilling prophecy because not everybody is creating the trend-line the same way.
The best technical analysis strategies are where there is a universal objective criterion for making a move that can be seen (or computed) easily by everybody (or algos), thereby creating the herding behaviour and eventual self-fullfilling prophecy.
My algos are able to detect technical strategies from time-series data that are in most use.
If the approach to your technical analysis is subjective, it is going to fail miserably.
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Dude holy ■■■■■■■ ■■■■. Occam’s razor. Please. No body has time to read that ■■■■.
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For those who are arguing that we’ve on solid ground and the fundamentals support current elevated valuations, did you believe that in Q1 2020? A lot of analysts were betting on a downturn back then but then came Covid and the massive easing measures. If the fundamentals were f****** back in Q1 2020, how do you see the fundamentals to be aligned with current valuation levels?
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Well… If we use P/E as our relative measure of ‘elevated’ market valuation, P is is significantly influenced by liquidity, the price of money got insainly cheap thanks to Covid stimulus which is arguably why we seen such a quick bounce back in market prices. If we use E as our reference to fundamentals, we all know that E is significantly influenced by the discount rate used and the lower the rate the higher future earnings are valued.
If liquidity gets tapered and rates are going up, both P and E can be expected to go down. But should P & E fall at the same rate then the P/E ratio can stay the same and valuations can remain ‘elevated’ even if we see the market pull back 50% 
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Deleted my response, realized that I may be getting baited into an immature discussion.
Some people will read, some people won’t. That’s ok. I expect that.
For those that do, they may find my insight fascinating and I am glad to help.
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“My algos are able to detect technical strategies from time-series data that are in most use.”
It’s 2022, we all have this, and yet none of us ever think alike.
Also homie, there’s a lot of bad things in this world… swear words, ain’t one of em.
And please only insult me using lolcode from now on.
Kthxbye
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