Not True About Technical Analysis

C

Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. It is based on the assumption that market trends, as reflected in price movements, can be used to predict future market trends. Here are the explanations for each answer choice:

A. It requires some subjective decision-making: Technical analysis often involves subjective interpretation of patterns and trends, as well as the use of indicators to identify buy or sell signals. These decisions may be influenced by personal biases and can vary between different technical analysts.

B. It requires much accounting information: Technical analysis is primarily concerned with analyzing market price and volume data, rather than accounting information such as financial statements.

C. Its success would mean markets are not efficient: Efficient market theory posits that all available information is immediately reflected in a security's price, and thus no investor can consistently outperform the market. However, if technical analysis were successful in consistently predicting market trends, it would suggest that prices are not fully reflective of all available information, and the markets are not entirely efficient.

D. Technical analysis is older than fundamental analysis: This statement is false. Fundamental analysis, which involves evaluating a company's financial statements and economic indicators, is a much older approach to investing than technical analysis, which emerged in the 20th century.

Therefore, the answer is B. Technical analysis does not require much accounting information.