method
The chart is a map, not the company
The rule
The chart is a map of the price, not the business itself. Technicals tell you when; the accounts tell you what. Mixing them up is the main error.
Where it flips
But do not misread this as 'charts are useless, only the business matters'. That throws away a real tool for timing. The fix is to keep the two jobs apart and let each do its own work. The accounts decide whether to own it. The chart helps decide when.
Korzybski's line, the map is not the land, keeps chart-reading honest. A chart shows where the price has been. It does not describe what the company is, earns, or owes. It can tell you about timing, participation and mood. It cannot tell you if the business is sound. The common mistake is to let a pretty pattern stand in for a judgement about the company, treating the map as if it were the ground.
A worked example
A stock has a textbook cup-and-handle, so a reader buys it as a 'good company', never opening the accounts, which show falling margins and rising debt. The chart described the price, not the business. The two questions, what to own and when to act, got squashed into one. [illustrative]
How to spot it
- ·a chart pattern used as proof about business quality
- ·'what to own' and 'when to act' treated as one question
- ·a buy backed only by the picture, with the accounts never opened
Alfred Korzybski · Science and Sanity