Timing the Market Exposed!

SINGAPORE is prone to “chartists”. In local financial newspapers, in local financial magazines, and even on local stock market TV shows… you see people (”experts”) peering at charts…drawing lines and arrows here and there…claiming the past price pattern foretells the future.

It’s magic! Who could argue with a man in a new suit pointing to a chart saying, “clearly demonstrating resistance at $2 and support at $1, stock ABC will break-out on the upside from a classic McClellan Oscillator pattern with a strong Chaotic Energy Flow Indicator reading signaling a breakdown in the 30-day moving average…”

The Top 5 Quotes You’ll Never Hear From An Investment Guru On TV:

• I have no idea why technical analysis should explain anything?
• I know a chart can’t predict the future, buy they don’t.
• Of course I know fundamental analysis and Buy-n-Hold beats technical analysis and trading…but that will make for a boring interview.
• Our brokerage makes money the old-fashioned way, we charge outrageous fees, so the more short-term trading methods around the better.
• I’m making most of this stuff up as I go along… no one will check my accuracy later anyhow…and if I make enough predictions, some will actually be right.

Why Work So Hard?

 If you have followed the teachings of the Singapore Stock Sage, you likely spend hours of your spare time pouring through financial reports, long write-ups about company products, marketing strategies, expansion plans, exciting research developments on the horizon, studying and calculating numbers and ratios until your eyes glaze over… and even making calls and visits to local factories…all in a quest for “hidden value”.

A “Technical Analyst“, let’s call her Wee Mee, would shake her head, confused by your sorry waste of time and effort. You see, technowizards like Wee Mee can make money hand over fist without ever looking at a company’s financial condition, promise! Yes, indeed, Wee Mee can tell you what to buy without even knowing the company’s name, let alone their product or service…all she needs is the ticker symbol & a historical price chart. In a former life she used to turn water to wine and shit to gold…but times have changed and her magic must be less obvious today to convince the masses.

One thing Wee Mee cannot do… is return your money if she’s wrong!

Wee Mee scoffs at tedious analysis of number and business & management prospects to which Sage is bound, investing instead entirely in artificial schemes of perception. Sure, there have been piles of historical studies by respected analysts and professors of finance to show no meaningful correlation between past price performance and future price movements…but that’s not the magic…the real magic is convincing enough others to scoff the hard work involved in fundamental analysis and join in the scheme…and if enough join the scheme the perception can become reality, at least for a while.

If Only It Were So Easy. If only you need observe that it rained last Friday, and the Friday before…so I better cancel my golf game this Friday and take my umbrella to work. In October 1989 and October 1999 the stock market fell, so I will sell all my shares this September and buy them back at better prices in November. All my friends who got married on Saturday are divorced today, while all who were married on Sunday are still together…I’m insisting my wedding be on Sunday. The stocks I buy with “A” as the first letter in the ticker symbol always go up…I’m going to buy all the “A” symbol stocks this week and make a fortune.

Little Sages.. the past is History and the future is Mystery…only today is in your control. Don’t be fooled by schemes that claim otherwise. Do your diligent fundamental analysis to uncover hidden value… and encourage others to keep on with the senseless schemes and shortcuts… because it is these Mee Wee’s of the world who create the value we are looking for from time to time. When a company with a solid intrinsic value of $10 per share falls to $7, and Wee Mee convinces her followers it has “broken through a support level” or some other gobblygook…and they all sell forcing the price to $5 per share…we now can sensibly purchase this gem for ½ its intrinsic value and patiently wait for Wee Mee to announce it “breaks an upside resistence level” on its way back to $10+ where we knew it belonged all along.

Be thankful for their schemes, but use them to your advantage…don’t fall pray to them!