PT - JOURNAL ARTICLE AU - Bala Arshanapalli AU - Matthew Lutey AU - William Nelson AU - Micah Pollak TI - The Profitability of Technical Analysis during Financial Bubbles AID - 10.3905/jpm.2020.1.176 DP - 2020 Oct 31 TA - The Journal of Portfolio Management PG - 168--175 VI - 47 IP - 1 4099 - https://pm-research.com/content/47/1/168.short 4100 - https://pm-research.com/content/47/1/168.full AB - This article examines the use of technical analysis, namely, a moving-average technique, to improve upon a buy-and-hold investment strategy during financial bubbles. Econometric techniques can identify financial bubbles in real time, and these techniques successfully identify commonly acknowledged bubbles in the US stock market. The authors find that technical analysis significantly improves investment returns over a buy-and-hold strategy during three of the five financial bubbles since 1928 and performs identically in the other two. The authors also demonstrate similar results using three international markets.TOPICS: Developed markets, financial crises and financial market history, portfolio theory, technical analysisKey Findings• Technical trading techniques may be effective during periods of market instability, such as a financial bubble.• Econometric techniques can identify stock market financial bubbles in real time.• The combination of technical trading and real-time identification of financial bubbles can be used to significantly outperform a buy-and-hold strategy.