Top Advisors Corner

Rick Bensignor: What's With the Zero Accountability, Chartists?

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Those of us who have for years strategized about markets and securities without doing standard fundamental analysis on them have often faced criticism and rebuke from analysts, portfolio managers, and research directors.  They see market timing, technical analysis, and the like, as useless horse crap. (Unfortunately, these same naysayers have virtually no understanding of the how, where, why, when, if, and what processes we undertake to come to our conclusions; they simply choose to knock what they have very little understanding of, and certainly prove that have little to no knowledge of Behavioral Finance Theory.)

 
At the same time, I am at my wit's end at seeing my own charting colleagues constantly post stock and other market recommendations on social media with absolutely zero follow-through or accountability for the many calls they get wrong. (Not surprisingly, though, they seem to always remind us of the ones they got right.) We should all be publicly calling out these people if they insist upon posting investment recommendations and then “ghosting” their losers. 
 
For example, earlier this summer a frequent CNBC guest technical strategist says on TV and then puts the spots link in LinkedIn, declaring, "It’s time to get long copper, and especially FCX". Unfortunately, for anyone who listened to him, that call came just one day before the 2018 peak in copper prices, and on the day of the highest close of the move in FCX.  They’ve both dropped 22% and 26%, respectively.  Have we seen any other posts about this call from the author since the early June LinkedIn post?  Nope; not a thing.  
 
And then there's a technical strategist (frequently interviewed on CNBC, too) who told viewers and LinkedIn readers in early May, “There is no reason to own AAPL. (It was trading at $165.)  Since that posting, the stock has never traded lower, and is now at $228.  Follow-up from this rotten Apple call?  None.
 
But wait… there’s more.  Some of our colleagues love to post something along the lines of “Stock XYZ may be due for a pullback from overbought conditions”.  Now what is anyone supposed to do with that information?  Should they sell the stock?  Where will it pullback to?  What price does it need to trade up to for me to buy back in, because it’s still likely going higher? (By the way, if you don’t know that a stock that hits an “overbought” reading in an uptrend is often the best time to be a buyer, then we’d suggest that you really haven’t yet learned how to properly incorporate technical analysis into your research process.)
 
As technicians, we have worked so hard to try to get recognition and equal status with that of fundamental analysis. (I was on the MTA’s committee, along with Ralph Acampora and a couple of others, to petition the SEC to grant the CMT designation the same status to a that of a CFA designation.  And we got that done!)
 
So please don’t hurt your colleagues’, our industry’s, and your own reputation by “posting and ghosting”.  In fact, here’s a few ideas that I think all of us can jump onboard with:
 
1. If you’re publicly going to make a recommendation, make sure it is clearly a buy or a sell. (Being wishy-washy makes you look bad, and even more so when you later come back and say “I told you so” to a two-sided recommendation you couldn’t be wrong with.) 
2. Make sure you give a target area and a stop-out, and most importantly;
3. Follow up on all of your publicly stated calls publicly. (i.e. not just the winners.)  So, if you made a recommendation on TV but haven’t had the chance to go back on TV to update it, then post the follow up on LinkedIn or the like.
 
Several years back I was on an MTA panel in Boston, along with three other well-known Street technical analysts.  My presentation was about this very subject (and it was made before Facebook, LinkedIn, and the like were used like they are now).  My point then and now is still the same: Own up to all of your recommendations – not just the ones that worked. (Not doing so remains one of the harshest and most frequent criticisms of technical analysts.)
 
Bensignor Strategies – the institutional capital markets consulting division of The Bensignor Group (www.thebensignorgroup.com) – only disseminates its recommendations to its paying clients.  We follow-up every single week on each and every trade idea we make – from inception to close out.  We take responsibility and have accountability to our clients for every trade idea we deliver. And importantly, we track our results and regularly show them to our clients, so that they can see the value we deliver. (In 2018 through August 31, we have an internal rate of return on invested capital of 22.56% with a Profit Factor of 1.95.)
 
In conclusion, take accountability for all public statements you make, and own up to the winners AND the losers.  You’ll see just how much more respect you’ll gain.
 
Rick Bensignor
Founder and CEO
The Bensignor Group
 
 
Rick Bensignor is the founder and CEO of The Bensignor Group (www.TheBensignorGroup.com), a consulting firm that focuses on capital markets risk management, corporate training development and delivery, and business performance coaching.  Rick is the former Morgan Stanley Chief Market Strategist and Head of Cross-Asset Trading Strategy at Wells Fargo Securities, as well as the Head of Futures, Commodities, and Technical Analysis sales and product development at Bloomberg, LP.  His weekly institutional client market report, “Supposedly Irrelevant Factors”, is read by some of the most continuously successful mutual fund, pension fund, and hedge fund portfolio managers and traders across the globe. Rick also recently created his InTheKnowTrader.com website, where he delivers individual investor clients institutional- quality market insights and specific ETF trade recommendations through his Tactical Trader Report newsletter.
 
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