From: Max More (max@maxmore.com)
Date: Fri Oct 22 1999 - 21:45:49 MDT
At 10:14 AM 10/22/99 -0400, Robin wrote:
>
>Perhaps I wasn't clear enough -- I know that "technical analysis" roughly
>means trying to infer future stock prices solely from patterns in recent
>time series of such stocks. And I know a lot of people lose a lot of money
>investing on such analyses. But I think it is completely unfair to dismiss
>Shiller's analysis (at http://www.econ.yale.edu/~shiller/peratio.html ) by
>throwing the label "technical analysis" at it.
Robin--to clarify my comments, let me know that I have not (yet) read
Shiller's paper, and it was not me who introduced the term "technical
analysis" to the discussion. I stand by my comments on technical analysis,
but I am not saying they apply to Shiller since I haven't read his paper.
According to what I just read by Hal, what Shiller is doing is more like
fundamental analysis, not technical analysis, so perhaps his procedure is
perfectly reasonable. So, I was not dismissing Shiller's work by throwing
that label at it. I was merely responding to someone else's use of the
term. If Shiller does not depend on technical analysis then I would have no
objection to his approach (though I might still think his conclusion
mistaken).
>them. Given those theories, he (and I) find it quite reasonable to
>suspect that high prices suggest a bad deal and low prices a good deal.
>(You know, "buy low, sell high.")
This can often be true, but there is also enormous evidence that it is
possible to follow rules that let you "buy high, sell higher". I am
thinking of momentum investing with high quality companies (not simple
momentum strategies that ignore important factors).
Shiller then *tests* this expectation
>by looking at real data. If you're going to then dismiss his analysis
>as "technical" because it refers to real data, then you seem to me to
>be saying that you are so sure that you are right about stocks that data
>is irrelevant.
Robin, I am certainly not dismissing his analysis because it refers to real
data. I don't see how you could make that interpretation from what I said!
I was criticizing technical analysis, and someone else said or implied that
Shiller was using technical analysis. Since I haven't read Shiller's paper,
I did not make any judgment about his work. My whole point was that
technical analysis ignores much "real data", so how could I be faulting him
for using real data?
Max
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