Citigroup and Common Sense

I've always tried to keep an open mind about technical analysis -- I don't use it, because I think it would distract me from fundamentals (which I can usually understand), but I respect people who've found techniques that work. However, most of what it offers is the same thing fundamental analysis offers: Confidence. I'll go out on a limb and hypothesize that whether or not there's any real science behind the discipline of picking stocks, people who are confident that they're right (and can admit it when they're wrong) will do better than the rest.

One of the crucial differences between fundamentals and technicals in this respect is that fundamental analysis is about taking a lot of data and applying a few rules, whereas technical analysis involves a little data (prices and volume) and a lot of rules. The notable effect of this is that the fundamentals-based confidence is a lot more contagious -- we can all agree that a company's sales are higher this quarter, but it's a lot harder to agree on trendlines and breakouts. So from that perspective, Citigroup's plan to cut their technical analyst division makes plenty of sense. Leave it up to the individual traders.