J.C., over at www.allstarcharts.com recently did a great interview with Ralph Acampora. If you have any interest in technical analysis or the trading in general then you need to read this. My favorite investment book is a tie between the entire Market Wizard series and J.C.’s interview has the same tone. He does a great job and is well worth the read.
Here’s an excerpt:
Ralph – The first day on the job he grabbed me and takes me into the conference room and draws a big circle on the board. He says, “You want to explain the need for technical analysis along with fundamental analysis?” In the middle of the circle he writes out the letters GM, General Motors, and split the circle in half. On the top part of the circle he said, “General Motors is a company”, and he starts to write in that part of the circle: the P/E multiple, management, product, competition….”these are all the things that represent General Motors”. He said most people think it’s all they have to know. “But there’s a part two to General Motors”, and in the bottom half of the circle he wrote the word “Stock”. Stock of GM is the price, the volume, psychology, and time. You put them all together and you have fusion analysis. I think that’s the best way to explain it to people. You need both, one is not more important than the other. I tell people that for the P/E multiple – half the formula is technical, the P. Price is a fact, earnings are an estimate. You restate the earnings. You never restate a chart.
JC – That’s a great point. So then is this more of an art or a science?
Ralph – I think it’s both. The word science, I looked it up in the dictionary many many years ago. It’s a body of knowledge with its own language and its rules. Guess what? We technicians have our own language and we have our own set of rules. So we are a Science. But the interpretation is where the art form comes in. I look at it as doctors would look at an x-ray. I mean they’re all obviously well educated in their science of medicine, but when it comes to interpreting an x-ray – that’s the art form I think. That’s how I compare us with science.
Go read the rest: One-on-One With Ralph Acampora (All Star Charts)
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