Abstract
Financial economics research done on university campuses and fundamental analyses conducted in the financial industry have little in common with technical analysis in their respective methodologies. But one technique of research, statistical analysis, has been employed by all three approaches. Investment strategies based on fundamental macro and firm research use statistics to find regularities connecting economic and financial variables with stock prices; whereas technical analysis employs statistics to discover repeated patterns relating past market actions to future market prices. Given the accumulating econometrical work pointing towards the existence of forecastable patterns in market price dynamics, statistics may appear to be one starting point for the integration of different approaches to market analysis. However, the FVITA raises doubts on such a prospect, at least when considered under the existing methods being used in each of the three different research undertakings. This chapter addresses two prominent issues related to technical analyses: whether becoming public knowledge diminishes the effectiveness of technical analysis and how statistical analysis should be evaluated in light of the FVITA framework.
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