Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email pete@allenwargent.com

Thursday, 28 June 2012

Can The Da Vinci Code crack the stock markets?

1, 1, 2, 3, 5, 8, 13, 21….
The Fibonacci sequence, created by adding the previous two digits to get the next one. Thanks to Dan Brown’s Da Vinci Code, most of us have heard of it.
Brown has Sophie Neveu’s grandfather write the Fibonacci sequence in his own blood when he dies. Later in the story, Brown (never shy of milking a good idea) has the heroes open a Swiss bank safe with the code ‘112358132’.
Golden section
The curious thing about the Fibonacci sequence is that the ratio of each number to the next gradually converges on a very special number: 0.618.

Fibonacci Sequence
Ratio of number to next number
1
1.000
1
0.500
2
0.667
3
0.600
5
0.625
8
0.615
13
0.619
21
0.618
34
0.618
55
0.618
89
0.618


The number 0.618 is known as the golden ratio or the divine proportion and is ubiquitous in nature, though nobody really knows why – the wingspan of moths, the design of a seashell, the skeletons of animals, the veins of plant leaves…it’s everywhere.
The golden ratio, sometimes presented as 1.618, is also known by the Greek letter phi or, in maths,  ϕ. This ratio has been known about for centuries, even by Leonardo Da Vinci himself.
In Angels and Demons, Dan Brown (never shy of milking a good idea) has Robert Langdon mention all of this in one of his speeches to students.
Relevance to stock markets?
Technical analysts – those who place a reliance on share price charting to drive their trading ideas - believe that they can use the golden ratio to predict the extent of a stock market retracement, and to help them time an entry to a share trade.
They believe that the human brain is so hard-wired to the golden ratio that share traders cannot help but respond to it.
My view? Look, I can’t write swear words because this blog gets emailed to dozens of subscribers and the profanity filter will send it right back to me. But it’s a load of tosh, isn’t it?
It is said that even if you give a technical analyst a totally randomly generated selection of numbers and put them into a chart, they start to see head-and-shoulders patterns, double-bottoms, dead-cat-bounces and charting patterns beyond number.

Your time would be far better spent resolving to take a long term view of the stock market and investing in a reasonably well-diversified fund or LIC that pays you dividends. Then forget about the share price for a decade or three.
Summary
Q. Can the Da Vinci Code crack the stock markets?
A: No.