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The Zulu Principle: Making extraordinary profits from ordinary shares by Jim Slater

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8. Momentum And Relative Strength

About twenty years ago, I observed that chartists usually had dirty raincoats and large overdrafts. At the time I was thinking of an acquaintance who had fared very badly using technical analysis. Even now I do not know many rich chartists. However, since those early days, I have met one or two who have made their fortune and read about a few more, so I give technical analysis much more credence than before.

In essence, chartists believe that a chart showing the history of a share price reflects the hopes and fears of all investors and is essentially based upon the one indisputable fact – how the share price has actually performed in the market-place. A technical analyst would argue that the market’s perception ...

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