Individual Investors Lose Money When Using Technical Analysis

Individual investors might be best suited to stick to fundamental analysis rather than technical trading, according to a new academic study.

Those using technical analysis “disproportionately prone to have speculation on short-term stock-market developments as their primary investment objective"

“We find that individual investors who use technical analysis and trade options frequently make poor portfolio decisions, resulting in dramatically lower returns than other investors, said researchers Arvid Hoffmann and Hersh Shefrin.  Individual investors who utilize technical analysis “disproportionately prone to have speculation on short-term stock-market developments as their primary investment objective, hold more concentrated portfolios which they turn over at a higher rate, are...