Key Takeaways From My First CMT Symposium

I learned a lot from this experience and am extremely grateful for the CMT Association and the work they do to help advance this field. In an effort to keep this post short, I've only touched on a few of my key takeaways from attending, but will likely do additional posts in the future once I figure out how to organize my notes into something useful.

With that said, let’s get into it.

Best Session and Key Takeaways: Although every session offered value, Matthew Verdeouw’s presentation on the scientific methods of technical analysis really encouraged me to dedicate time in 2018 to improve in the area of statistical/quantitative analysis. This is a topic with which I’ve struggled, and after seeing the tools that Optuma offers, I knew I could do two things with consistent work and patience:

1. Improve my workflow dramatically.

From my time working in Internal Audit I learned the importance of having a clear, understandable process, yet I’ve never taken the time to overhaul my workflow. It wasn’t until I sat down with a clear mind after the symposium did I realize that my workflow really didn’t have much flow at all. By using the tools and quantitative methods Optuma offers like watchlists, backtesting/signal testing, and scripting tools, I can broaden my universe of securities while still maintaining a high level of quality.

2. Narrow the gap between the subjective aspects of my process and the need to quantify certain aspects of what we do as technicians.

You’ve heard it before “Technical Analysis is an art, not a science”, heck, even I say it all the time. While that may be true, I think it’s irresponsible to dismiss the merit of statistical / quantitative methods entirely. Every method has its benefits and drawbacks, so being open-minded is key to improving your process and reaching your goals.

With that said, in 2018 we have a ton of data available to us and the technology we need to process it is reasonably accessible as well. John Bollinger closed his presentation on Day 1 by encouraging us to challenge all assumptions, including our own. Our jobs involve making assumptions every day, so we have an obligation to ourselves and to our audience to make sure we have sufficient evidence to support what we say before putting it out into the world.

A great example of this is the effect of rising interest rates. How many times have you heard “higher rates are going to wreak havoc on the stock market?” The argument sounds logical, but the data doesn’t support its conclusion. My point's been made, so I won't get into it any further. If you're interested in what the data suggests, Ben Carlson and others have done great work on this and I’d encourage you to check out their posts.

On a more personal level, this past weekend I noticed that the CRB Index was breaking out relative to the equal-weighted CRB Index and was trying to figure out what the implications were historically for various markets. I had no idea how to even approach that in an effective/efficient manner. Should I run a correlation analysis, regressions, or something entirely different? I don’t know and I’m not comfortable making an assumption on what I think the conclusion “should be.”

I may not have known what it meant for the market, but I do know what it meant for me. I need to do better, and I will.

3. There’s no one “path” to becoming a technician.

In High School and college we’re presented with what appear to be very linear paths to achieving our desired career outcome. Want models and bottles? Do well in high school, get into an Ivy League school, get recruited by an Investment Bank, put in your two years of grunt work, and then the world is your oyster. Exit opportunities galore.

The real world doesn’t work like this. At the symposium I met people from all different walks of life who are using technical analysis for a variety of reasons. Individual investors looking to gain an edge in their own accounts, sales traders who specialized in fundamentals but needed technicals for risk management, folks using the CMT Program as a means of changing career paths entirely, etc. It’s okay to plan so you have a general direction in life, but shit happens and you’ll have to adjust. The path to what you want in academia is clean, but in the real world it’s messy. The CMT Association and organizations like it are extremely important in helping advance their respective fields and giving people the resources they need to reach their professional goals, regardless of their starting point.

Oh, and one more thing. The market doesn’t care what your age, gender, ethnicity, or anything else are. Technology has revolutionized access to financial markets and given more people than ever the ability to access and compete in the greatest game ever invented. It's never been harder or more competitive, but if you put in the work you can accomplish whatever your reason for being in the market is.

4. There's still a lot of work be done by the investment community and Technicians. 

At the Symposium, Phil Roth was presented with the CMT Association's Service Award for his contributions to the organization and the field of technical analysis. A lot has changed since Phil started in the business 40+ years ago, but our work's not done yet. Although we'll never "arrive" in the sense that a perfect investment strategy has been developed or that nobody loses money in the market, but we can all work toward improvement of what we do as market participants. How that's expressed in action is going to be different for each individual person, but there's room for everyone to get involved. Write a white-paper on a new or improved method of technical analysis, share your experiences with the next generation of technicians by writing a blog or visiting with local colleges, join one of the many CMT Association boards to help the organization reach its mission, etc. Do something. We all have an obligation to contribute to the field we've grown to love so dearly. I'll be looking for more direct ways to help advance this discipline and I hope you all will too.

The bottom line: Attending this year’s symposium was an incredible experience filled with familiar faces, new friends, and a lot of learning. I'm excited to "officially" start my career in this field and look forward to contributing to its success in the years ahead. The symposium will be something I look forward to each year and can’t wait to see what’s next for the CMT Association and the field of Technical Analysis.