Pequot Capital

At his keynote last week in Austin, Byron Wien of Pequot Capital laid out his 10 ‘surprises’ for 2006:

1. Crude goes to $80, but inflation stays low.
2. S&P declines 5%.
3. Fed funds moves to 5%, but US treasury yields stay at 4.5%.
4. Large cap stocks fail to gain ground.
5. Price of gold declines to $425.
6. Dollar gains another 10% against yen and euro.
7. International markets correct.
8. China keeps their currency undervalued.
9. Stock markets are sent reeling by pandemic or another US terrorist attack.
10. Mitt Romney is 2008 GOP candidate and Hillary is 2008 Democrat.

Wien said that he usually predicts 6-7 correct every year going back 20 years. His speech was engaging, but even if he gets 6-7 right we all still need a precise trading plan. If you follow his fundamental advice, you still need these answers before you ever enter a market:

1. How do you determine what market to buy or sell at any time?
2. How much of a market should you buy or sell at any time?
3. How do you determine when you enter a market?
4. How do you determine when you exit a losing position?
5. How do you determine when you exit a winning position?

While Wien’s economic advice might be very plausible, he doesn’t offer an exact trading prescription for entry, exit, bet size, etc.

You might like my 2017 epic release: Trend Following: How to Make a Fortune in Bull, Bear and Black Swan Markets (Fifth Edition). Revised and extended with twice as much content.