The most important plot in finance

In this post we look at the one plot that proves that technical analysis is useless.

Technical analysis and horoscopes

As volatility has returned in recent months, investors have sought advice from asset managers and other investment professionals. In many instances, such advice includes technical analysis (TA). Even many highly respected investment firms and financial news sources promote TA:

Charles Schwab represents TA as an indispensable tool for active traders (examples: here and here). Merrill Lynch offers a Market Analysis Technical Handbook. Some Bank of America / Merrill Lynch analysts utilize technical analysis: here. Fidelity considers TA an advanced technique

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