Two Plus Two Older Archives  

Go Back   Two Plus Two Older Archives > Other Topics > The Stock Market

Reply
 
Thread Tools Display Modes
  #21  
Old 09-06-2005, 01:01 AM
bobman0330 bobman0330 is offline
Member
 
Join Date: Aug 2004
Posts: 52
Default Re: Random Walk

It's either you or me... I think it's you.

The point is that if the security price always equals its intrinsic value, the price can't change unless the underlying value changes. That being the case, chart patterns or other technical factors cannot predict future movements of the stock.

BTW, I don't believe the premise of this argument, I took it from the OP.
Reply With Quote
  #22  
Old 09-06-2005, 01:49 AM
lastsamurai lastsamurai is offline
Senior Member
 
Join Date: Mar 2005
Location: la la land
Posts: 222
Default Re: Random Walk

Those you believe in the random walk theory have probably never made money in the market. Good luck with your treasury securities.
Reply With Quote
  #23  
Old 09-06-2005, 08:58 AM
Sniper Sniper is offline
Senior Member
 
Join Date: Jun 2005
Posts: 704
Default Re: Random Walk

[ QUOTE ]
It cannot simultaneously be the case that the price of a security always reflects the best possible estimate of its intrinsic value and that technical analysis is profitable.

[/ QUOTE ]

Of course it can.. here is the most simplest of examples...

A stock breaks out to new highs on significant volume, because of an intrinsic value change. The insider and early institutional buying create the volume surge. Day Traders jump on the immediate breakout. End of day traders get on the bandwagon the next day. The institutions continue to push the stock up as they refine their analysis of the new intrinsic value. The uninformed public buys at the end of the immediate trend as the day and swing traders start to sell and take their profits when price approaches the new "perceived" intrinsic value. Simple!
Reply With Quote
  #24  
Old 09-06-2005, 09:51 AM
Dan Mezick Dan Mezick is offline
Senior Member
 
Join Date: Jun 2004
Location: Foxwoods area
Posts: 297
Default Re: Random Walk

TA and specifically trend following techniques do not attempt to predict, whatsoever.

This point is absolute. There is no prediction in trend following. Probability is all you have to go on. Letting go of predicting (philosophically) is essential to the practice of successfully following trends.

TA and specifically trend following techniques look to identify +EV spots to enter. What plays out after that is a question of uncontrollable events and the 100% controllable practice of applying specific trading discipline.

TA and specifically trend following techniques assign and act upon valid probability estimates of price moving in one of three directions (up, down, sideways) from the current price.

Let "act upon" include the action 'do absolutely nothing'.
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT -4. The time now is 10:33 PM.


Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2024, vBulletin Solutions Inc.