A friend who works with a trend following fund writes:
This is classic and I had to share it with you. This was the response I got from a CIO when I showed him our trend following strategy…damn those pesky 100% years! “I have never made a secret of the fact that I am not keen on your fund. My thoughts are that the fund has had two huge years of 70% and 150% and these figures blow out the averages. As of September I see the fund is down 10%, so it’s not for me.”
Exactly. Those who strive for the impossible dream of consistent month over month positive returns are always left holding the bag. Trend following delivers lumpy returns and over the long term compounded–that’s how you get rich.