There are many tools of investing and also many types of investors. One of the most popular methods of investment for millions of individuals across the world is fundamental analysis that allows them to know whether the financial condition of the company they are interested in investing is sound or not. Very few investors take the route of technical analysis to invest their money. This is the method that has received a lot of criticism from experts and investors around the world. But there are also amazing success stories of investors who have made their fortune using technical analysis only. Technical analysis does not make an attempt to gain knowledge about the financials of a company. It solely relies on study of charts that contain movement of prices of stocks of different companies. You will be surprised to know that these charts are the only tool available in the hands of technical analysts. Let us know a little bit about these top 7 investors who chose technical analysis to strike it rich at the stock market. This list of super rich investors will convince you about the efficacy of technical analysis to use it as a tool for investment.
- Marty Schwartz
Marty Schwartz was an investor who started with fundamental analysis and later switched to technical analysis to ultimately strike it rich at the stock market. He used to work as an analyst, advising investors about companies whose stocks were overpriced. In the process of looking at the financial fundamentals of different companies, Marty developed his own technique of technical analysis. Applying this technique of mathematical probabilities, Marty achieve d stupendous success, taking his money from mere $40000 to a whopping $20 million in just a few years. Later on, he admitted that he worked at the fundamentals of companies for 9 years but tasted limited success only. It was only when he switched to technical analysis that he became super rich.
- Victor Sperandeo
Victor was an options trader who developed his own style of trading with technical analysis that brought rich dividends to him. In fact, technical analysis helped Victor to book profits consecutively for n o0 less than 18 years with average of return being a very high 72%. This string got broken in 1990 when his stocks gave him a cumulative loss of 35%. Later, he described his style of investing as one that required risk taking only when the odds were stacked in his favor. One of his interesting finding was that any swing during bullish trend on Dow was 20% (average) and chances of its further advance diminished significantly. Understanding this trend was crucial to make winning moves on stock market with technical analysis. The reason why most investors fail with technical analysis is that they fail to appreciate the life expectancy of a bullish or bearish trend.
- James Simons
With a net worth of $11 billion in 2012, James Simons is a living testimony to the spectacular success of technical analysis. As a student of Math (he studied math at MIT), he founded a hedge fund that makes use of mathematical models to make investments in stocks of various companies. An investor having invested only a few thousand dollars in 1990 with this fund would have increased his capital to nearly $4 million by 2007. His fund is today open for investment only to employees and his family and friends. The success of his fund is because of the people he hires. Most of the people working in his company are not MBAs but PhDs in math. Simons also looks for creative people who can identify interesting trends in charts.
- Ray Dalio
Not many people know the name of this trader who has net worth of $10 billion and ranks 88 on the list of Forbes for wealthy people around the world. He is an MBA from Harvard and placed his first trade at the tender age of 12. He founded Bridgewater Associates which is the world’s biggest hedge fund today with assets totaling $130 billion. His funds have brought an average annual return of 15% and investors have never suffered loss from his fund. He has pit his expertise to set up computer algorithms that search for opportunities in the movement of stock prices. Ray is believed by many to be one of the most successful technical analysts of all time. Ray makes use of technical analysis to identify stocks that are mispriced.
- Steven Cohem
With a net worth of $8.8 billion in 2012, Cohen obtained a rank of 108 in Forbes list of wealthy people around the world. His excellent performance at the Wall Street has made him a well known trader around the world. He is believed to have made $8000 on his first day of trading at Wall Stree through future options. He set up SAV fund in 1992 with a capital of $25 million. The net worth of this fund in 2012 was $13 billion. His funds produce a profit of nearly 36% annually and attract money from investors around the world.
- Paul Tudor Jones II
Paul is a technical analyst who started trading in commodities, in particular cotton futures options. He later switched to systems trading. Jones was a student of economics at the University of Virginia. He began by working under Eli Tullis who was a cotton speculator. He says he learnt how to keep control on emotions while trading. But surprisingly, Eli fired him as he was found asleep on his job after partying hard with the friends on previous evening. Jones started his own hedge fund called Tudor Investment Corp in the year 1983. The fund that was set up with a capital of only $300000 has today become a $12 billion fund. His fund has achieved an average return of 24% from the market.
Paul earned a solid reputation for himself when he predicted the big stock market crash of 1987. He was able to pull out more than 200% return from this crash that was equivalent to $100 million. Jones attributes his success to his ability to understand swings and follow trends.
- Ed Seykota
Ed Seykota belongs to the earlier generation of traders and it goes to his credit to have used a computer for technical analysis at stock market in the 70s. This was a time when no one had even heard of online trading. Ed identified trends of stock market prices of stocks of various companies and then made use of computers to come up with his formula to place his bets. He has become so adept at picking up stocks that are mispriced that it takes an effort of just a few minutes in a day using his computers. His success at the stock market is a result of his ability to cut down losses and the amazing accuracy of his technical analysis done using computers. He makes fun of fundamentals saying they are of little use for him.
It is clear from the examples of these extraordinary individuals that technical analysis works and one can hope to make lots of money using it from the stock markets.