I don’t know why, but I am not surprised:
The world’s biggest financial services firm on Thursday dismissed its entire stock market technical analysis team, including longtime analyst Louise Yamada, who led the group. Yamada had been with the bank for nearly a quarter of a century.
The firing of Yamada and her team of assistants is part of an effort by Citigroup to control expenses. Last week, Citigroup fired six other analysts, and the company is planning to eliminate up to 1,000 jobs from its global corporate and investment banking division.
Under technical analysis, charts and computer programs are used to project price trends in stocks, bonds and the broader market. The practice makes minimal use of economic fundamentals and is not without its critics on Wall Street.
"While a difficult decision, we believe focusing our research investments toward fundamental company coverage best positions Citigroup to succeed in an increasingly competitive environment,” said Bill Kennedy, director of global equity research, in a note to staff.
During her tenure at Citigroup, Yamada was quoted frequently by the financial press and often appeared on CNBC. In 1998, she published a book on market analysis called Market Magic: Riding the Greatest Bull Market of the Century.
I suspect the problem wasn’t Yamada or the quality of her work. Rather, the more likely issue is that anyone can learn basic technical skills; I cannot reall ever meeting a trader who didn’t use at least some form of charting software. Indeed, the ubiquity of powerful workstations on Main Street removed a big edge that Wall Street had.
Still, this passion play may not yet be over. Imagine how short-sighted this move will look if Yamada & Co. set up shop elsewhere, make a great market top call, while Citibank clients get slaughtered in a crash.
Saved a few dollars in salary, though . . .
Citigroup Eliminates Stock Technical Analysis Group
TheStreet.com, 2/17/2005 3:53 PM EST