The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: purple monkey on April 01, 2016, 06:53:14 AM
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Hey there,
Anyone who knew little about technical analysis that learned a lot from a course and or a book?
Recommendations?
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What sort of technical analysis? Mechanical engunerring? Accounting? Veterinary? There are lots of "technicals" out there :)
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Oh, you mean the practice of drawing pictures on price graphs to try and divine what will happen next?
My recommendation is don't.
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Oh, you mean the practice of drawing pictures on price graphs to try and divine what will happen next?
My recommendation is don't.
Thank you for your recommendation.
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Hey there,
Anyone who knew little about technical analysis that learned a lot from a course and or a book?
Recommendations?
What I've learned from a book is to not do it. Buy-and-hold indexing is the best for 99.9% of people. And for the rest the best is to do in-depth analysis of the fundamentals of companies to find those that are fundamentally undervalued (and then hold those firms until overvalued fundamentally).
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If you're dead set on this, there really is no better book/course than the CMT (Chartered Market Technician). So either go through the program or just read the curriculum. Each level is $200 new, but you can probably get old editions for $30-40 if you look around Amazon or ebay
http://www.efficientlearning.com/cmt/
But as others have pointed out, I and others view this as a bunch of gobbledygook. My university embarrassed a bunch of CMTs once by having a class flip a coin a bunch of times -- if it was head's the value of "a stock" went up by 1%, if it was tails the price went down 1%. After 180 flips the professor presented the "180 day price chart" to 6 CMTs, and got almost 100% consensus that the stock was "poised to break through a ceiling, as the 30D MA crossed the 180D MA". The professor thanked them for their recommendation and explanation, then proceeded to flip the coin another 10 times in front of them, have the "stock" end 1% higher, and thanked them for their prescient investment knowledge. You can imagine how embarrassed they were to find out they just predicted price movements from a completely random coin flip chart.
Invest your time reading about fundamentals. Used curriculums of the CFA can be had almost free -- most people at my work ceremoniously chuck their textbooks in the trash once they pass each level of the CFA.
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A really good book that explains the difference between technical and fundamental analysis (and why technical analysis is so bad) is A Random Walk Down Wall Street, by Burton Malkiel. http://amzn.com/0393352242 (http://amzn.com/0393352242)
It's also very useful for a lot of other interesting things, like a history of asset bubbles (way more fascinating than it sounds), and index investing.