Why Am I A Technician

Author: Raymond T Bridges CPA, Bridges Capital LLC

Let me start off with this statement: I love the markets. This isn’t limited to just financial markets; I love the idea of value being sought out by price in the real economy. This process addresses a problem that has plagued human advancement since the dawn of civilization, known by economists as the “Economic Calculation Problem.” To simplify, this problem seeks to answer: What does a society need? How much should it produce? And at what cost? The way markets efficiently affect the real economy and benefit people is why they fascinate me.

When it comes to the financial markets, they offer the most active and immediate view into the workings of our economy at any given moment. The price on a chart tells a story that cannot be summarized more efficiently, even if we filled every office building in Washington, D.C., with economists and CPAs analyzing an infinite number of economic reports.

Don’t mistake my sentiment: I believe we need smart people analyzing reports to gain an edge. But the financial markets summarize this information as it unfolds.

I often see debates on X (formerly Twitter) discussing whether the 2-year Treasury yield leads Fed policy or if the 2-year Treasury is seeking to anticipate where the Fed will be in the future. To some, this may seem like a distinction without a difference. To others, however, it’s a fundamental question of central planning versus free markets.

If there is a legitimate role for the federal government to employ economists and CPAs, it’s to collect and release publicly available economic data. The Economic Calculation Problem is far too complex for secret committee meetings to solve. Those who argue that the 2-year Treasury is seeking to predict where the Fed will be are essentially claiming that the Treasury has no mechanism for discovering value without those secret meetings.

Interest, money, and credit together are the fuel used to discover value. Price on a chart is the display. This is why trends and levels matter.

In our universe, a smart person once explained that, in general, everything is relative. This is why price charts in various markets fascinate me. One might claim that the Efficient Market Hypothesis (EMH) renders any edge futile. However, that very claim to efficiency also makes price the most up-to-date information about where we are as an economy. To forsake that information would be foolhardy.

People might shy away from technical analysis due to the misconception that it’s about trying to predict price movements. Prediction is not the goal. The goal is to use price to manage risk and understand the signals affecting the economy—signals that help us discover value. Price, in this sense, is a function of its own existence. Whether it’s the 2-year Treasury seeking the neutral rate, or an oil executive locking in a profit based on current inventory levels being above average, price is the signal that helps us understand how it all relates.