I'm missing something here. Clearly there is enough empirical evidence to suggest that a sub-group of traders consistently achieve returns greater than accepted yardsticks or Bogies (be it beating an index or T-Bills, ect.).Whether anyone wants to deride Buffet or not, IMO his 45 year track record defies randomness.Of course many other traders and managers have also enjoyed stellar careers that demonstrate that there are some who can anticipate the revaluation of a particular market,whether it's a security, a barrel of Crude or a nation's currency. If the thesis of this thread is "Can a Daily Bar Chart Predict the Future?", I would answer, perhaps randomly. However I would not make the argument that just because "chart reading" seems to generate random results (and I don't know that it does) that price changes themselves are random. What appears clear is that market's achieve a state of equilibrium and trade "randomly" so to speak around a band of participant defined "value." Then conditions either change suddenly(an earnings surprise, war, ect.) or some savvy traders envision that condition's could change and that proper R/R can be used to bet on the unforeseen. It's doubtful that Buffet bought American Express forty years ago because a channel was penetrated or that Soros sold the Pound in 1992 off a double top. What is obvious is that both these trades were made with the correct reasoning that there was a mis-valuation available in the market and the opportunity was seized. Not much random about that decision making.
the premise of this thread makes some assumptions i don't agree with. for example, you don't need to predict the future. Wong!
According to the "Millionaire Mind" only about 7% of all Americans earn over $100,000 per year across all industries. So it seems reasonable to me that in 85% of all industries people earn less than a market return. In the market, it is pretty clear that over a 10 year period 75-85% of professional money managers fail to beat the indexes. So there are 15% who do beat the the market, if that is skill, luck or inside information is a subjective guess at best. The first chart looks like the SP 500 to me, but then again I have a patch on one eye and a loud parrot whispering in my ear.
If you presented a random weather report (clouds, humidity, wind, temp etc.) and a real weather report to a bunch of weathermen, and most couldn't tell the difference, would you then conclude that weathermen should stop trying to use meterological data to predict the weather? Asinine analogy? Perhaps...
Almost 2:1 (13:7) right now in favor of Myster #1. I picked #1, and I wonder if that's good or bad if it has the majority. . .
It is amazing that this poll received as many votes has it has. I will now uncover the truth. Deadreader was correct. Mystery 2 was a chart of Ebay through late June 2003. Mystery 1 was the random chart. So, it seems that according to the polling whereas it was 2:1 voting for Mystery 1 as the real chart, that my assumption was correct. That is, if you cannot distinguish between a real stock chart of a company and a simulated one, then how can you (collectively) profit from the price movements therein? Especially to those who preach technical analysis. To those who point to investors like Buffett, for every Sage of Omaha there are many Vic Niedenoffer's. Remember, if everyone decided tomorrow to give their money to Buffett to manage, he would be unable to make any moves because then he would have no one to sell to.
May I ask how many random charts you have generated and observed? Might I also ask you to ponder if it would be worthwhile to develop a system that can trade a chart or many different charts like Mystery1? How would this help you trade Mystery2? Technical analysis wasn't first developed for the stock market. That it can and is applied to the stock market is just an example of how different people use different techniques for solving problems. The market problem is to obtain a profit.