This week, I speak with John Roque, a highly regarded technical analysis. He spent the first part of his career on the sell side, working as a technical analyst for Lehman Brothers and Natixis. He moved to the sell side, joining George Soros at Soros Fund Management. He now works at Key Square Capital, a Soros-seeded hedge fund.
He explains the importance of objectivity when considering individual stocks or analyzing the market overall. He explains why the technical side is different yet complementary to fundamentals.
As a pure technician, he says he sees things faster than he would as a fundamental analyst: “Given the advent of machines trading at hyper speed, the less we talk on trading, the more likely we are going to be at our trend following discipline. I think technical’s are about “trend,” trend is the least understood investment concept because it is very hard to indentify.”
Roque channels famed Dow theorist Richard Russell, observing “The most challenging thing people in the market face is staying invested during long bull markets, and the second most challenging thing is not jumping into stocks that are falling in bear markets.”
He notes that “Charts are the language of Wall Street” – and regardless of the differences between sell side and buy side research, everyone looks at a chart prior to making a buy or sell decision.
In response to the observation that cheap ubiquitous computing power has put charts into the hands of everyone, he notes: “Technology has made technical analysis even more rigorous – it is no longer dominated y a handful of technicians who did their charts by hand each day; now it has been democratized.”
We also discuss potential issues with ETFs, which are “not problematic when we go up; they may be problematic when we go down. People do not realize how their risk profile changes when they own ETFs.”
All of the books Roque discusses can be found here.
Next week, we speak with Bruce Tuchman, who brought a variety of US cable channels such as Nickelodeon, AMC Global and Sundance Channel to a global audience.