Editing 2101: Technical Analysis
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==Explanation== | ==Explanation== | ||
− | + | {{incomplete| Comic is still undergoing TECHNICAL ANALYSIS (this is just the prologue). Do NOT delete this tag too soon.}} | |
− | + | {{w|Technical analysis}} is a field which attempts to study stock markets, cryptocurrency markets, etc. statistically (without regard to the fundamental value of the assets), seeking to profit off the patterns that are found there. | |
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− | + | The theoretical value of a stock is the sum of all its future earnings, with earnings in the future discounted appropriately to account for the {{w|time value of money}}. Because these earnings are never fully predictable, traders may have different ideas about the true value of a stock, and buy the stock if they believe the currently offered prices are particularly low, or sell it when the prices are high. | |
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− | The theoretical value of a stock | ||
Technical analysis, however, does not even attempt to understand the earnings of the stock, instead focusing on the shapes and patterns that result from traders making their moves. While there is a human behavioral component to stock trading, it is not clear that one can extract much information from the shapes of stock charts. To the extent it does work, a substantial part of its success may be simply an artifact of the herd behavior of traders who engage in technical analysis, a zero-sum game. | Technical analysis, however, does not even attempt to understand the earnings of the stock, instead focusing on the shapes and patterns that result from traders making their moves. While there is a human behavioral component to stock trading, it is not clear that one can extract much information from the shapes of stock charts. To the extent it does work, a substantial part of its success may be simply an artifact of the herd behavior of traders who engage in technical analysis, a zero-sum game. | ||
− | The comic displays a {{w|Candlestick chart|stock price chart}}, annotated with labels which purport to be technical analysis. These labels are nonsense from the perspective of technical analysis, but do accurately describe the graph itself: "{{w|allegro}}" (a musical term used to set the tempo at the beginning of a score), "{{w|prologue}}" (an introductory section of a play, book, or similar), "{{w|lumbar}} support" (the thing in a chair shaped to better support your back), "bathtub" (possibly a reference to the so-called "{{w|Bathtub curve}}"), "{{w|uptalk}}" (a speech pattern). One label celebrates that "these two points define a line! Promising signal." (In geometry, any two points define a line.) | + | The comic displays a {{w|Candlestick chart|stock price chart}}, annotated with labels which purport to be technical analysis. These labels are nonsense from the perspective of technical analysis, but do accurately describe the graph itself: "{{w|allegro}}" (a musical term used to set the tempo at the beginning of a score), "{{w|prologue}}" (an introductory section of a play, book, or similar), "{{w|lumbar}} support" (the thing in a chair shaped to better support your back), "bathtub" (possibly a reference to the so-called "{{w|Bathtub curve}}"), "{{w|uptalk}}" (a speech pattern). One label celebrates that "these two points define a line! Promising signal." (In Euclidian geometry, any two points define a line.) |
− | The shape of the chart is similar to the exponential behavior of cryptocurrencies | + | The shape of the chart is similar to the exponential behavior of cryptocurrencies, where price (positional height on the chart) roughly increases while volatility (height of the bars or candles themselves, and of the peaks and troughs, on the chart) does the same. Technical analysis used to be an esoteric domain held by well-paid stock analysts, but as cryptocurrency has spread and taken down the many barriers to engaging in investment trading, people from all walks of life have begun staring at charts like this. |
{| class="wikitable" | {| class="wikitable" | ||
|+Graph labels and possible meanings | |+Graph labels and possible meanings | ||
|- | |- | ||
− | + | |Allegro | |
− | |Tempo notation in music: played quickly and brightly | + | |Tempo notation in music: played quickly and brightly - a series of very small changes in this region of the graph might suggest notes played quickly |
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|- | |- | ||
|Decline | |Decline | ||
Line 39: | Line 33: | ||
|- | |- | ||
|Spline | |Spline | ||
− | |A | + | |A spline is a mathematical means of generating a smooth curve, referring to the smoothed curve shown here |
+ | |- | ||
+ | |Prologue | ||
+ | |A prologue is an introduction to a book or other work; this presumably refers to the initial period of minimal growth which is moving toward a much more active period | ||
|- | |- | ||
− | + | |Lumbar Support | |
− | |A cushion or other device that provides support to the lower part of the ''spine'', a play on the preceding ''spline'' | + | |A cushion or other device that provides support to the lower part of the ''spine'', a play on the preceding ''spline'' |
|- | |- | ||
|Renewal | |Renewal | ||
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|Hmm! | |Hmm! | ||
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|- | |- | ||
|Hark! The cliffs! | |Hark! The cliffs! | ||
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|- | |- | ||
|Declination | |Declination | ||
− | | | + | |Another term for a downward trend |
|- | |- | ||
|Inflection | |Inflection | ||
− | |A point at which the slope of a graph changes | + | |A point at which the slope of a graph changes |
|- | |- | ||
|Uptalk | |Uptalk | ||
Line 63: | Line 60: | ||
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|Bathtub | |Bathtub | ||
− | |possibly a reference to the so-called "{{w|Bathtub curve}}" | + | |possibly a reference to the so-called "{{w|Bathtub curve}}" |
|- | |- | ||
|These two points define a line! Promising signal. | |These two points define a line! Promising signal. | ||
− | |In geometry, any two points define a line; also looks somewhat like a communication line between two towers. It is tempting when looking at market charts to draw imaginary lines that connect the extrema and hope it means something about the future | + | |In Euclidian geometry, any two points define a line; also looks somewhat like a communication line between two towers. It is tempting when looking at market charts to draw imaginary lines that connect the extrema and hope it means something about the future. |
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|Yikes | |Yikes | ||
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|- | |- | ||
|Wrong! | |Wrong! | ||
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|- | |- | ||
− | | | + | |Slope |
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− | + | |Could be an omen | |
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− | |Could be an omen | ||
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|- | |- | ||
|Red + Green = Christmas | |Red + Green = Christmas | ||
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|Likely to continue forever | |Likely to continue forever | ||
− | |This is | + | |This is the opinion held by everyone who buys at an all time high. It's been rising so much, surely it's the best time to buy! We could make millions! Such times are generally followed by a sharp downturn resulting in significant losses, as can be seen historically farther back on the chart. Cryptocurrency communities have significant members who call themselves "hodlers" -- these people always trust that the price will eventually go up even higher, because it has recovered so many times in the past. |
|} | |} | ||
− | The | + | The mouseover text is a quote from {{w|James Tobin}} (from his 1984 paper [https://economicsociologydotorg.files.wordpress.com/2014/12/tobin-on-the-efficiency-of-the-financial-system.pdf ''On the efficiency of the financial system'']) that raises a question of very talented people building systems to make themselves a lot of money without actually accomplishing anything worth money. The quote was about the stock market and high speed traders in particular. It comments on the 'financialization' of the economy, where activities like speculation and abstracted financial products have become an increasingly large part of the economy, as opposed to investment in productive industry. |
Interestingly, this comic appeared the day after [https://www.oxfamamerica.org/explore/stories/billionaire-wealth-grows-by-25-billion-a-day-while-poorest-wealth-falls/ Oxfam] reported that the world's 2,200 billionaires had added 12% to their wealth in 2018, while the 3.8 billion people comprising the poorest half of the world's population had lost 11%. Perhaps this prompted what appears to be Randall's jab at those whose business is merely making money. | Interestingly, this comic appeared the day after [https://www.oxfamamerica.org/explore/stories/billionaire-wealth-grows-by-25-billion-a-day-while-poorest-wealth-falls/ Oxfam] reported that the world's 2,200 billionaires had added 12% to their wealth in 2018, while the 3.8 billion people comprising the poorest half of the world's population had lost 11%. Perhaps this prompted what appears to be Randall's jab at those whose business is merely making money. | ||
==Transcript== | ==Transcript== | ||
+ | {{incomplete transcript|Do NOT delete this tag too soon.}} | ||
+ | |||
:[A series of red and green box-and-whisker plots form a line that starts in the bottom left corner of the image and wiggles up to the top right corner, with a series of peaks and troughs that resemble a typical stock market diagram. The diagram is annotated with lines, arrows and text.] | :[A series of red and green box-and-whisker plots form a line that starts in the bottom left corner of the image and wiggles up to the top right corner, with a series of peaks and troughs that resemble a typical stock market diagram. The diagram is annotated with lines, arrows and text.] | ||
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[[Category:Music]] <!-- “allego” and “prologue” --> | [[Category:Music]] <!-- “allego” and “prologue” --> | ||
[[Category:Comics featuring real people]] <!-- Title text: James Tobin--> | [[Category:Comics featuring real people]] <!-- Title text: James Tobin--> | ||
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