Ask Colin

There is one cynical question that must be asked of not just you, but all share chartists. If the charts work as well as they do at assisting you in making investment decisions (I understand that they are but one tool of the trade), why aren't you all sitting on some tropical tax haven trading the hell out of the market and living off the fruits of your knowledge & charting ability?

The answer to this is very simple really. It is very difficult for anyone to beat the market over any significant period unless they are an investment genius (and there are very few of them in each century, it seems). Technical analysis at best adds value to the basic fundamental analysis techniques that underlie all rational security analysis. The best we can hope for is that technical analysis adds value to the fundamental approach and may help us to get a margin of a few percent over the market if we are good at it.

Anyone who tells you that technical analysis alone will help you beat the market by a big margin consistently is fooling you or themself or both. Only a few really gifted people may be able to do it.

It is important to understand that almost all private investors and most professional fund managers struggle to beat the market.