Most academics will tell you technical analysis is useless. For them I am sure it is. Read enough investment books like A Random Walk Down Wall Street and you’ll learn that fundamental analysis is the only way to go. Usually, most guests on financial entertainment will tell you that you cannot time the markets. Some stupid slogans like “It’s not timing the markets that matter, it’s time in the markets” will be thrown out there as “proof.” Then the idol worship gets injected when people discuss Warren Buffett and remind everyone that he is a fundamentalist investor. The inference is that to be a great investor like Warren you should shun technicals and focus on fundamentals. One of the biggest biases comes from Wall Street itself with the thousands of analysts, most of whom do nothing but study fundamentals. Never mind the scandals, the history of an overwhelmingly bullish rating system, the pathetic performance and all the other failures that are accepted and excused because the financial system believes in fundamental analysis.

The romantic view of investing is that long term is the way to go and short term trading is impossible and dangerous and wrong. Fundamentals are associated with long term investing….Technicals are associated with short term trading. Admiration and acceptance by association applies to fundamentals. Guilt by association applies to technicals. It’s just the way it is. I just heard…”stick to the fundamentals” by some moron advocating to “focus on the long term.” How comforting.

So, at times like these, I have to ask - How is the fundamental only approach working? Since July, how many times have you heard that stocks are cheap? Has it paid to buy on the fundamentals alone? They are getting cheaper and cheaper. Meanwhile, portfolios are getting whacked. As you probably know, I love fundamental analysis. But I am not in love with it. It has its strengths and weaknesses. Technicals help accentuate the positives of fundamental analysis and they help avoid the weaknesses. That’s why I do both at all times and that is why HEDGEfolios is not down for the year.

Others love to use technical analysis when they are desperate. I’ve written about this before (click here) and (click here). I don’t know about the Foxy Business Network since it makes me too sick to watch but CNBC and Bloomberg are showing way too many technicians. Worse yet, the reporters and anchors who don’t know shit about technical analysis are practicing the dark art. Shut up already - enough with the support level and trend line discussions, enough with the “retrenchments” (for the record Sue, it’s “retracements”), enough with the waves, shut up. If technical analysis is so useless and so dangerous, then just go back to believing that fundamentals are the only thing that matters. Because you know that once we are through this sell-off, that’s what the media will do. I like it better that way.