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Author: zamyatin Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 71051  
Subject: Re: ARM - TA a Story Told Date: 2/3/2003 8:33 PM
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IMHO, TA if followed strictly, applies a set of rules to investing that may improve outcome since it forces sells and buys irrespective of love and hate, fear and greed, and the other emotions that play havoc with one's investment decisions.

Just one moment before the tea leaves! With all due respect to one of my favorite TMF-ers, I reread your post and I find this comment very telling, duma.

If your motivation to follow TA is simply because it imposes a logical discipline on your investment decisions because you are wary of emotional interference, perhaps it could be helpful to examine this.

There are all sorts of ways to impose rationality on your investing process, not the least of which is rigorous fundamental analysis. TA may make you feel more confident and allow you to avoid emotional bias, and that may indeed "improve the outcome". But I wouldn't make the mistake of giving credit to TA itself for that. (I don't mean to set FA and TA up as adversaries, but they are very different in their degree of basis in rationality.)

I would suggest that far from being free of emotion, TA is all about the need to control, the desire for predictability, which couldn't be more emotionally-based. To the degree that other people's faith in it can be a (contrarian) indicator, it might be useful. But for the most part, I think one is better off, and far more likely to be successful, in examining one's own unconscious biases rather than getting involved in other people's.

I'll follow my own advice now!

-z.

BTW: If it's control you want, fundamental analysis has the added advantage of being entirely within your own domain. (If your FA was wrong, you made a mistake, and you can learn from it. If your TA was wrong, you have a million other people to blame, and what can you learn from it? They might do the opposite next time!)
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