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Sound Advice: April 10, 2024

 Dynamic charting and all kinds of goodies are now offered by a major brokerage house.  So what!

It comes as no surprise that one of the leading Wall Street firms has been beating its drum for its recently acquired online trading subsidiary.  On the heels of a robust six-month market rally, investors, as usual, are much more interested in getting a piece of the action than they were early last Fall.  That’s the way it has always been.

Over the nearly one century since the inception of the Standard & Poor’s 500 Index, the best of times to make commitments (to stocks, not mental institutions) has been when the market has been weak and prices are low. For most things, folks tend to have increased interest in buying low.  Strangely enough, however, the higher prices go, the more investors want to buy.

So here we are at a considerably higher level than late 2023 and we now have the opportunity to sign up for an online account to take advantage of a less than remarkable group of quasi-research tools from a company that would have you believe you have been given the key to the mint.  It is, unfortunately, anything but.

Dynamic charting is the lead hook for these commercials.  Charting, also known as technical analysis, appears to be a fascinating approach.  There are numerous signals and patterns to behold.  And, indeed, there are “esteemed” textbooks, the heft of which is aimed at convincing you that they offer special wisdom.  A far better use for them would be as kindling for a fire.

Along with the charts is a myriad of data to sort through and find especially worthwhile candidates for your portfolio.  All the data you would ever want has been available for years, so this is nothing new.  This data is what professional analysts spend all of their time digesting and evaluating in hope of pinpointing stocks with exceptional potential. 

The hitch is that the output from this crew ultimately ends up in the portfolios of major investment companies.  If interested, you, too, can do the same.  But it really doesn’t matter.

Why?  Because none of the pros have demonstrated the ability to outperform the indexes over extended periods.  Far better to focus on a proper allocation of assets between indexed equity mutual funds and fixed income holdings. 

And if you have nothing else to do, watch CNBC, but don’t take them seriously.

N. Russell Wayne

Weston, CT

Any questions: please contact me at nrwayne@soundasset.com

203-895-8877

www.soundasset.blogspot.com

 

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