A critical problem within the standard practice of market analysis is that the methodologies often beg the question: the assertions assume the conclusion within the premise. For example, it’s not uncommon to hear experts talk about price-to-earnings ratios of 15 being “good value” or a head-and-shoulders pattern being “bad” for the target stock price.
Is the chart pattern or financial ratio a legitimate example of that which is being asserted? And if so, what is the empirical evidence that the event in question is predictive? Often, the answer is some dressed-up version of “just because,” which then becomes a self-referential loop.
