Technically Speaking, November 2021

The value of the CMT designation has been a subject of discussion between my financial industry colleagues and me, both inside the Association and out, for the entire time I have been a member – that’s 20 years. Like Technical Analysis itself, some people think the usefulness of the CMT is debatable.

In this month’s President Letter, I want to share with you my perspective on how the CMT designation can advance your career and simultaneously add value.

I’m guessing that very few of you reading this letter are pure, technicals-only traders. I’m talking about people who don’t read the news, turn off the TV, and sometimes don’t even know what the company behind the ticker symbol actually does!

Instead, you are likely someone who has a role at a financial services firm and your job requires skills besides just technical analysis. Since you are likely well versed in technical analysis (with the CMT under your belt), you probably do a good job of blending technicals and fundamentals, and you can explain to others about how technical analysis bridges the gap between price and intrinsic value.

For most of my career, I was a sell-side equities analyst working at a boutique investment banking firm. As the company’s only CMT charterholder, I was responsible for writing technical analysis commentary for the daily newsletter and delivering my market outlook each morning at the sales meeting. Clients with market-timing or trading related questions were directed to me. Anyone at the firm who wanted to know about stock price performance came to see me. I performed this function in addition to my “normal” job role of doing fundamental analysis on covered companies (earnings estimates, buy/sell/hold recommendations, etc.). But, it was the technical analysis I was best known for.

I knew that my job as an analyst was not solely based on my CMT designation. Yet, having the CMT designation qualified me to provide a valuable, specialized service that no one else at the firm was capable of doing: blending technicals with fundamentals.

Of course, not all CMT charterholders are sell side analysts with a built-in stage for showcasing the value of TA in the investment management process. But, whether you are a portfolio manager, investment advisor, or a trader, you are very likely performing some kind of blended, “fusion” analysis that incorporates technical analysis, and your colleagues know you for it.

Now, evaluating whether the CMT designation is worthwhile should not be confused with whether any professional designation is worth pursuing. If the argument against getting the CMT designation were to include the premise “you can learn everything you need to know on the Internet,” then NO professional designation is arguably worthwhile. Moreover, why even go to college if you believe that?

Let’s assume that as financial professionals we share these basic objectives: 1) maintain and increase our incomes, 2) promote our reputations, 3) be ethical and help others to prosper. A well designed and high-quality professional designation will dramatically help to achieve goals 2 and 3. The CMT Program is a high-quality credentialing program, with a very well developed and highly regarded curriculum. Additionally, our ethics requirement is second to none, literally, as we use the code of ethics developed and used by the CFA Institute.

By quickly and easily proving to colleagues that you understand and can use technical analysis and that you adhere to a strict code of ethics, you support your efforts to achieve the number 1 goal of increasing your income.

From an outsider’s perspective – someone who only knows fundamental analysis – your use of technical analysis is probably perceived as entirely attributable to the CMT designation and what you learned from the curriculum. Without the CMT, you are left having to somehow explain your qualifications in the subject.

Finally, as you know, the field of technical analysis is always gaining in popularity and acceptance. The behavioral finance foundations of TA are now considered basic elements of financial analysis. Momentum is a well-established source of alpha in factor models. Cryptocurrencies as an asset class is rapidly being accepted worldwide, with technical analysis as the only tool available to trade them.

As technical analysis becomes more mainstream, branding yourself as a CMT charterholder tags you with the awesome legacy of price analysis, going back to the Dojima Rice Exchange and the writings of Charles H. Dow. Who wouldn’t want to claim that legacy as their own? Not to mention, associating yourself with the founders of the Market Technicians Association and all the important contributions they made to the field.

The bottom line is that the CMT designation is unique among professional designations, allowing you to differentiate yourself, while the increasing usefulness of technical analysis and the historical legacy of its place in Finance will elevate your status among peers.