The Case for Ignoring Jennifer Lopez When Making Trades

If you're a technical analyst who's been burning the candlestick patterns at both ends, you may want to sit that rounding bottom down because this may cause you to blow your spinning top. Regardless of whether you spot a bullish abandoned baby or a Jennifer Lopez pattern, these critics are convinced it's mostly all a big fakeout. Arvid Hoffmann of Maastricht University and Hersh Shefrin of Santa Clara University have a forthcoming paper for the Journal of Economic Behavior and Organization that argues individuals who use technical analysis make bad decisions that result in "dramatically lower returns than other investors." The finance professors studied traders using a Dutch discount brokerage from 2000 to 2006 and found those employing technical analysis have more concentrated portfolios and face greater non-systemic risks.



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