, 15 tweets, 3 min read Read on Twitter
1. I'm starting to see a disturbing amount of technical analysis in my feed (more than none), perhaps weirdly both here and on medium.

this is particularly worrying given most of it seems to be about #bitcoin.

thread time.

TLDR: you may as well consult animal entrails.
2. price in a free market is not a fundamental metric. it is an emergent property of the interplay of supply and demand over time. this shouldn't seem terribly controversial.

so far so good ...
3. supply and demand represent the ability of individuals with access to the market subjectively deeming some quantity of money to be comparatively more or less marginally valuable than the good or service on offer.
4. securities markets are especially interesting because the subjective assessment of comparative worth does not apply to some good or service but to the promise of an indeterminate stream of future cashflows, which is deeply uncertain.
5. it is uncertain because it essentially refers to the consequences of the behaviour of absolutely everybody, infinitely far into the future (or as far into the future such that any additional time is incrementally negligible to the current assessment of value)
6. and also because those engaged in the market may not be assessing comparative worth for themselves, but anticipating the assessments of others, or anticipating the assessments of the assessments of others, etc.

the price follows all of this. it has no life of its own.
7. in order to believe that some visual pattern you can identify in the price of a security has any predictive power, you need to believe that the exact combination giving rise to the pattern of: private assessments of comparative worth of those with access to the market ...
8. ... in the exact mental states following causes in the real world and expectations about widespread behaviour of others far into the future, facing the exact alternative opportunities, in the exact same temporal sequence, creating the exact liquidity conditions ...
9. ... will all repeat.

and moreover, has already repeated so many times as to provide compelling and un-falsified evidence for future repetition.

not repetition of price movements, but repetition of causal circumstances that give rise to prices.
10. you essentially need to believe that all economic activity can be captured by a set of equations with as many free variables as there are names for pretty patterns.

if you want a longer read, I dissected much of this nonsense here:

11. this is painful enough when spouted for regular equities, but why did I say it is especially worrying for bitcoin?
12. because bitcoin is supposed to represent the impetus for a renewed understanding of fundamental economic principles.

it is supposed to shepherd in an era in which one can only 'succeed' in capital markets by investing for the long term in productive assets.
13. it is supposed to force one to think in terms of individual economic actors who are creative and emotional: not mathematised (and mathematisable) automatons.
14. it is supposed to put an end to the numerological charlatanism that pervades modern finance, by which one can get rich quick by obfuscating the risks one forces on others, and instead to own risk - to bring it front and center and brag about it on the Internet.

(h/t @eiaine)
15. anybody touting technical analysis may be interested in getting rich quick, but they are not interested in investment, long term growth, capital formation, philosophy, or economics.

and they certainly aren't interested in bitcoin.
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