This is why I don't like technical analysis or the efficient markets hypothesis.
John Maynard Keynes, arguably the greatest economist of the 20th century, pointed to a much deeper similarity, that between investors and judges. Specifically, he compared the position of investors in a market to that of reader/judges in newspaper beauty contests, which were very popular in his day. The apparent task of the readers was to pick the five prettiest out of, say, 100 contestants, but their real job was more complicated. The reason was that the newspaper rewarded them with prizes only if they picked the five contestants who received the most votes from the other readers.
That is, they had to pick the contestants that they thought were the most likely to be picked by the other readers, and the other readers had to try to do the same. They were not to give undue weight to their own taste. Instead they had to anticipate, in Keynes' words, "what average opinion expects the average opinion to be" (or, worse, anticipate what the average opinion expects the average opinion expects the average opinion to be).
Read the whole article. Stuff like this is why I am a buy-and-hold value investor.
