Bill Cara: Why is Wall St selling out Technical Analysis?, Wed., Oct. 12, 2005, 12:12 PM

Bill Cara: Why is Wall St selling out Technical Analysis?, Wed., Oct. 12, 2005, 12:12 PM

October 12, 2005

Why is Wall St selling out Technical Analysis?, Wed., Oct. 12, 2005, 12:12 PM

I am asked every day or so why I think Wall Street is selling out Technical Analysis? I have the answer.

Technical analysis is a buy-side tool. Wall Street is the sell-side.

Wall Street is starting to acknowledge that clients are no longer duped into believing these investment dealers can also be fiduciaries for the buy-side. They are starting to say, “Better to wear one hat”.

They have known that for years mind you. But after Eliot Spitzer has reamed their personal bank accounts for several billions in the aggregate, they are starting to acknowledge that the next step will be class-action lawsuits for conflicted “advisory” services.

I hold the regulators accountable for this botch-up you know. Twenty-five years ago the dealers started replacing the titles of their sales force with the term “financial advisor”, removing the term “registered representative”.

You know, any idiot can call himself or herself “advisor” but only industry registrants can be called “registered” – but that’s another story I want to write about some day.

Did you know that anybody can call himself or herself “accountant”, so today there is no differentiation between the village idiot and the professional chartered accountant or certified professional accountant. And now you have the self-styled professionals encroaching on the turf of the real pro’s.

Who’s to blame? The regulators of course. They are the ones who allow this nonsense.

This is a real story. In 1982-83, I had been the rightful holder of two professional designations: the chartered accountant (CA) and the certified management accountant (CMA). I was a ten-year member in good standing, an Old Boy of both KPMG and PriceWaterhouseCoopers.

Then one day while working for Dominion Securities Investment Management (now RBC), I got to thinking about my life, and why I was paying these two accountancy institutions so much annual dues for the privilege of having my mailbox stuffed every day with marketing literature. So I called the Canadian Institute of Chartered Accountants and asked them to consider differentiating accounting professionals from the rest of us, and, by the way, considering low annual fees for the rest of us.

They respectfully declined. So too did the CMA organization. Both of them pointed out the importance to my career of holding such fine credentials.

In turn, I told them that the day I needed to wear a badge on my chest to show the public who I was as a person would be the day I got down on my knees to kiss their derrieres. They didn’t like that talk and, since they refused to at least listen to my arguments, I refused to pay my fees, and agreed forthwith to not use their credentials.

You see, the CA, CPA, CMA, CGA, etc, etc, are royalty plans for people in Ivory Towers, who by the way are dead from the ankles up. They have two jobs in life: (i) to tell the world how skilful their members are, and (ii) to deposit their members’ fees in the club’s bank account.

But, you know, a fact is a fact, so these people cannot ever hold me back from telling anyone that I met all the requisites for professional designation, and was a member in good standing for ten or eleven years until I (not they) decided to pull the plug, because of my personal values.

The securities regulators also know what end’s up with this issue. Maybe new SEC Head Chris Cox, who is not a former Wall St broker-dealer and NYSE chief, will get around to returning registrants to “registered representative” status one day.

So, back to Technical Analysis, and the decision by some Wall Street dealer firms to snuff their technical analysts: good on you. Terrific move.

And to Ralph Acampora, formerly of Prudential Financial, one of the good guys on the Street, whom I met about 20 years ago at a meeting of the Market Technicians Association, I wish nothing but the best. I cannot imagine the crap he had to put up with in his former position, and I know that, should be move over to the Buy Side, he’ll get back to teaching, and informing, and being more right than wrong.

That’s what the owners of capital need.

Posted by Posted by Bill Cara on October 12, 2005 12:14:01 PM | Category: Trader Tools