Thinking in Pictures

Yields Up, Froth Down

Edwin Lefevre’s 1923 Reminiscences of a Stock Operator is a cult classic and testimony to the perils of “watching the tape,” which is to say reading anything predictive into charts of financial markets. In truth, prices are determined by supply and demand, not pictures. And figuring out supply and demand takes a lot of work. That said, I still stare at charts before making investment decisions and below I share what the pictures look like to me today.