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Paul Theron of Vestact thrashes technical analysts

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Hedgehog
Frequent Contributor
I have heard Paul Theron on Summit and on Moneyweb thrash technical analysts referring to TA as a folly. Does anybody know what he actually does to analise the market, I am assuming it is fundamentals. There is a whole industry out there using TA. A folly? What are the thoughts?
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21 REPLIES 21
SimonPB
Valued Contributor
grubber, this isn't new. 20 years ago TA was seen in the same light as astrology, slowly gained some credence over the years. But most major investment house, fund managers etc. use very very little TA - if any at all.
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Hedgehog
Frequent Contributor
Hi Simon Thanks - but then are investment houses only using fundamental analysis? It appears as if most forumites are using TA. Are we really spending too much time on a folly? Any ideas what to use - bones maybe?
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For me it is all about money management. One must try to limit any losses and run with profits (get out of losing trades asap and use trailing stop loss on profitable ones). Try to identify trends and trade them - hopefully you will be more right than wrong (even a 6:4 ratio can be very profitable IF you get out of the losers early. Any comments? Oh - also never more than 10 percent of bank in any one trade, etc.
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SimonPB
Valued Contributor
yip they use fundamentals. One of the main differences between FA and TA is time frame, FA is no use for short term, hence people use TA, and this forum is mostly all about short term.
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What amazes me about people like Theron is their arrogance - imagine thinking that you know so much about the markets that TA is useless to you?
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Preston
Super Contributor
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Preston - any value to add re the topic under discussion except snide remarks
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SimonPB
Valued Contributor
wayne mccurrie always says he has never meat a billionaire chartist, well I always comemnt that I only know of one billionaire fundamentalist ...
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SimonPB
Valued Contributor
Greg, it is each to their own, some people use a coin, others TA or FA, one chappie uses astrology! Soem use a mix, whatever works?
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Hedgehog
Frequent Contributor
I agree with the money management principle and for me it is about putting odds in you favour for the short term while possibly allowing for a long term strategy if that is what you want to do. Fundamentals do not explain to me why Absa, for example, a financially sound company goes to R97 from R140 in a month. Which fundamentals have changed and I studied Financial management and fundamental analysis?
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Preston
Super Contributor
Not really,just messing you ? Dixie is in hospital.
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asylum
Super Contributor
Well if TA dont work there seems to be a lot of people making good money from it, just ask Mr C
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Not applicable
Quite right - whatever works for you, but I really don't think that most of the people who rubbish tech analysis have earned the right to do so - maybe if you're Warren Buffet or Jim Rogers you can, but not if you're earning all your money from managing other people's money in a small market like SA. I also find it very strange that you often hear of fundamental analysts rubbishing tech analysis, but very rarely does one hear of a tech analyst rubbishing fundamentals!!!
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Russ
Super Contributor
I'm sure Mr.Roffey must almost be a billionaire.
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asylum
Super Contributor
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Bank of America, fired about a quarter of the stock analysts in its securities unit in January 2008. I just wonder why?
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venice
Super Contributor
If the only thing that mattered in a market was fundimentals then all the low pe ratio shares should be the best to own and markets would move slowly up and down as these PE's changed. That isn't what happens emotion is the food of the market and therefore TA works, it is a graphic representation of sentiment. TA isn't a crystal ball but it offers an improvement in the odds. Go look at reversal patterns in candle stick charting then go look at 2/2/06, 11/5/06, 5/9/06, 29/06/06, 16/07/06, 31/10/06, all hammers and hangmen, double top 12/10/07 and 31/10/07 ect these work. I don't even look at shares names before I choose a share I scan charts and pick out patterns I like then look at the name and try to figure out why?, usually I never find out what is driving the share just that I want in and when the pattern is over I take profit and move on. So to summarise FA means zip to me.
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john_1
Super Contributor
Most fund managers underperform the index ( FA) and the FTSE returned at a comounded rate of 9.5% for the 20th centuary and start of 21st. A basic momentum stratergy ( TA) returned at 15.5%. over the same time. See London School of business for the refrence. I really don't see the point of the argument.
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