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17% Per Year?

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Hey Mike, I’ve been wondering something about the returns of trend followers throughout the decades and I would like to hear your opinion. I believe I once heard you say that the average trend follower according to the data available indicates an average return of about 17% annually (Correct me if I’m wrong). However, I can’t help but think of the incredible returns of hundreds to thousands of percent that Jesse Livermore and others in day like Bernard Baruch (don’t know if he was a trend follower) was able to achieve. If I remember correctly, at one point, Livermore was doubling his money almost weekly. What do you think is the reason for such astronomical returns? I think there was more to it than just the 10 to 1 stock leverage of their era. Do you think it was because of Livermore’s poor money management? He did have a tendency to bet to entirely too much on his trades. Perhaps it was the combination of betting too much plus the 10:1 stock leverage. What do you think?

There is not some one set return number for Trend Following (i.e. 17%). Those old guys? You have their audited returns?

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One comment on “17% Per Year?
  1. Jonathan says:

    If there were funds compounding as a whole at close to 20% it wouldnt take long for there to be more than the handful of names we know to be dwarfe by heaps… and yet, we dont see a large number of multi billion dollar trend followers which may be because a) clients keep taking the gains out and/or b) only a few compound at that rate

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