Feedback in last night:
In “A Review From Mars“, Mr. Covel artfully dodged to address the real issue with his Trendfollowing advocacy: survivorship bias. Unless Mr. Covel can convincingly demonstrate that his profiled trades are not just “lucky monkeys”, I have a hard time suspecting that Mr. Covel is not just selling snake oil.
I believe that the notion that all trend followers who win are lucky survivors is not accurate. Sometimes those so love in math forget that you have to wake up each day and put your shoes on…and go make it happen. There are concrete reasons for failure and concrete reasons for winning. If we go down the logic I think you are heading, you would argue all great achievement in life is the result of the winning lucky monkey.
Michael, I think the point at which critics of your book and trend following in general get mixed up is the fact that you make the methodology of trend following sound so simple, especially in relation to other strategies such as fundamental analysis. The fact of the matter is that it is relatively simple, but that’s not the problem. What they miss is that trend following like any other successful trading strategy requires sometimes enormous amounts of discipline, patience, and persistence, and not everyone has it. Anyone who has spent any significant amount of time developing, testing, and/or trading a trend following strategy can see the potential of such a strategy (my guess is that your critics haven’t done so). However, these strong results in simulation or in ‘paper’ trading mean nothing without the qualitative tools to make it happen consistently in ‘real’ trading. The problem is it’s so much more comfortable for your “lucky monkey” critic to use and blame someone else’s blackbox strategy (fundamental analysis) when it fails, than to know that success or failure ultimately rests in your own hands. Keep up the good work.