The Illusory Validity of Subjective Technical Analysis
The difference between a crank and a charlatan is the charlatan knows he is dealing in snake oil, the crank does not.
The chapter has two purposes. First, it is intended to encourage an attitude of skepticism toward subjective TA, a body of propositions that are untestable because they lack cognitive content. Second, it underscores the need for a rigorous and objective approach to knowledge acquisition, to combat the human tendency to form and maintain strong beliefs in the absence of solid evidence or even in the face of contradictory evidence.
Besides what we take on faith, most of us are under the impression that our beliefs are justified by sound reasoning from good evidence. It can be said that we know something when we have a belief that is true and we hold it because we have drawn a correct inference from the right evidence.1 We know that ice cream is cold, gravity is real, and some dogs bite, on the basis of first-hand experience, but without the time or expertise to acquire all requisite knowledge directly, we willingly accept wisdom from secondhand sources we deem reliable. However we come by it, we do not adopt knowledge willy-nilly, or so we believe.
Unfortunately, this belief and many others that we hold are erroneous. Without realizing it, by a process that is as automatic as breathing, we adopt all sorts of beliefs without rational thought or reliable evidence. According to a growing ...