Last night I gave a presentation to a lively group at Superfund’s Fifth Avenue office. Aaron Smith of Superfund had invited me up to speak a few months back. True to his word he provided forum space and let me cover whatever trend following topics I saw fit. I give Aaron (and ultimately Superfund’s CEO Christian Baha) credit as I brought up the full range of topics including positive stories about some of their competitors. Why do they allow this? In my opinion they are actively working at the big picture of providing education along with their hedge fund business model. Outside speakers like myself don’t like to be constrained and they accept that. It is refreshing.
After the presentation I spoke with a writer from Reuters who covers the hedge fund space (he had read 1/2 of my book so far). He was probing more as he was not really ‘getting’ trend following. I put a quick chart on the white board showing a move from 50 to 150. I asked if he cared what the market was and why it went from 50 to 150 as long as he could be long. He agreed that he would not care if he could catch that move. But then, seconds later, he says, “but how do we know why it went to 150?” We went round and round. He kept coming back to the idea that there must be a need for knowing why the market moved. He rationalized that if you knew the fundamentals you could surely add that knowledge to trend following and do even better.
It was a great example of a bright guy not seeing the trend following picture just yet. We agreed to continue the conversation as I promised to get him over the hump.