The Problem with Stock Charting (Why I Didn't Become a Psychiatrist)

Well, let's start with the part about psychiatry. Dedicating your career to helping others seems like a noble task, and that always appealed to me. What did not appeal to me were all the crazy antics therapists would take to "cure" their patients. Things like making patients run around naked to cure one's social anxieties, or having a patient sit below a pile of pillows while naked to simulate their mother's womb, only to have the patient slither out of the pillows to mimic birth (and yes, a lot of these crazy therapies revolve around nudity; no, I have no idea why). Too bad patients have suffocated to death under the pillows.

Why do such crazy therapies exist? Because almost everyone suffering from something will get better with time? Just got divorced? Give it a year. Suffering from a psychotic episode? You probably won't be in a month. Roughly 50% of the effects of any therapy can be attributed to this variable, time. As a result, even the worst therapists will see an improvement in their patients.

Now you're probably asking what in the world this has to do with people who chart stocks. I'm glad you asked!

People who use a charting method to pick stock piss me off. I liken them to the wacky therapists, but maybe that's unfair; after all, day traders have never killed anyone. But they will say things like "wait for this stock to reach $11; if it does, it's going right to $13"...Bullshit. This line of reasoning doesn't consider competitors, changes in costs, market demand, or anything else that is essential to making a good business decision. Market prices are not decided in a vaccuum; they're based on real world economics.

This awful thinking is exasperated, I think, because they put very little skin into the game with each stock (so they don't lose their shirts if one stock goes down) and the stock market generally increases in value over time. Every risk aversion equation I've seen in my investments classes would say that no one should be averse to investing if you have a long investment horizon. In other words, You can have the worst investment strategy and you still may be fine after a few years.

So there you have it. Rogue therapists and charters should be put on a tiny island together. They should not sit in the cube next to me.