How Does a Drawdown Occur?

A good quick and dirty explanation from Christian Baha’s Superfund (formerly Quadriga):

“There is no system which can immediately and accurately identify the difference between a short term fluctuation and a big, long-term, profitable trend. From time to time, the trading system enters trends, which despite promising signals, reverse very fast. These erroneous signals may cause losses if they occur cumulatively. In so-called sideways periods, when no clear trends can be identified, erroneous signals occur more often. As hardly any clear trends develop during such sideway movements, it is difficult to yield profits in these periods.”
Superfund Newsletter

Most of Wall Street expresses surprise with any decline in any market. Trend followers on the other hand know ups and downs are part of the game. They honestly talk about declines before they ever happen. What do you want? Honest talk about the ups and downs? Or would you rather listen to Wall Street’s silly predictions and cries of “what happened?” whenever there is a decline?