David Aronson : STRUCK BY SCIENCE

technical analysis for 40 years and was a true believer. However, his faith in the effectiveness of technical analysis was shaken in the summer of 2000, just after the technology bubble burst. At the time, Aronson, 61, worked as a proprietary trader for Spear, Leeds, and Kellogg and had been profitable for four years. He used standard technical analysis techniques — interpreting classic chart patterns and standard indicators such as the Relative Strength Index (RSI), which he now describes as “seat-of-thepants analysis.” After losing money in the first half of 2000, Aronson compared his performance since 1996 to the Nasdaq 100 index and found surprising results. “My alpha — the difference between my performance and the benchmark — was basically zero,” he says. “I was floating up with the market.” Although his managers weren’t bothered by this fact, Aronson concluded that subjective approaches to technical analysis, such as chart patterns, Gann, and Elliott Wave analy-