Location: Florida, United States
I’ve been a student of the stock market and have invested for over 40 years. After receiving an MBA from a top Midwest graduate business school, I moved up the financial ranks of two large corporations winding up my original career as the CFO for 20 years. Since 2001, I have pursued my long-term avocation and a second career of successfully managing the stock market’s turbulent path since the Tech Bubble Crash.
In graduate business school, I studied a journal article by Eugene Fama entitled “Random Walks in Stock-Market Prices”, a groundbreaker then and a classic treatise now. The paper became the cornerstone of the so-called “efficient markets” hypothesis and concluded as follows (my emphasis):
….. the theory of random walks in stock-market prices presents important challenges to both the chartist and the proponent of fundamental analysis. For the chartist, the challenge is straightforward. If the random-walk model is a valid description of reality, the work of the chartist, like that of the astrologer, is of no real value in stock market analysis. The empirical evidence to date provides strong support for the random-walk model. In this light the only way the chartist can vindicate his position is to show that he can consistently use his techniques to make better-than-chance predictions of stock prices. It is not enough for him to talk mystically about patterns that he sees in the data. He must show that he can consistently use these patterns to make meaningful predictions of future prices.
And my personal challenge and mission for my blog and book continues to be the same: proving that chart reading is not like astrology and that those who actively manage their own portfolios can produce returns greater than available from index funds (i.e., long run returns greater to the S&P 500 benchmark).