Conspiracy Theory

There is a reader named ‘John’ who comes to this blog regularly. He also sends along emails regularly. He appears to operate under the notion that I have somehow created an illusion to dupe people about trend following trading. His latest email tonight was in response to this post. He offers:

“…you’re a front man for the trend followers and have yet to truthfully say anything contrary about same, but you might have more creditability [sic] if you’d give an unbiased view and include the bad and the ugly along with the good.

John conveniently ignores the fact that both of my books list MONTH BY MONTH performance data going back decades. The good and the bad? It’s all there for those who have their eyes wide open!

7 thoughts on “Conspiracy Theory

  1. Hi Mike! I think the first question you should ask John is; Is he a real trader or he’s just one of those critics that are not traders, but constantly look for loop holes?
    I’m a trend follower and my total portfolio currently up more than 27%. It was up 80% a month ago, and the large Drawdown was due to my own greed, and breaking my rule of ignoring correlation (i loaded my portfolio with energy stocks).
    So I really don’t understand why John is so bitter…

  2. I didn’t know that any serious students of the market felt that Trend Trading was hog-wash.

    It’s a staple of physics…

    Objects in motion tend to stay in motion.

    We’re not talking rocket science here, just taking advantage of the obvious.


  3. We’re not talking rocket science here, just taking advantage of the obvious.

    Which is why so many people don’t get it. Making money can’t be as easy as buying what’s going up and selling what’s going down, there has to be more to it.

    There isn’t, of course, unless you count the all important items of position sizing and risk management, but that’s about it.

    Simplicity works but so many people will never accept that fact.

  4. Yes, Michaels book shows the good years and the not so good years of trend following funds. So maybe its more about getting in those trendfollowing funds when the trend is clearly up, then taking your profits and getting out of the fund. Maybe its about not buying and holding a trendfollowing fund?

  5. I think in one (or both?) of Michael’s books, employees or managers of trend following funds state that they like to invest more of their money into the fund right after a huge drawdown because they know the money making trends are coming.

    Sorry, don’t remember exactly where I read that, but thought it was in one of Michael’s books.

  6. I am not talking conspiracy theories, I just noticed something smart brokers are doing here.

    Around here in Dubai we have ‘Market Makers’, here this term means a broker from which you can buy/sell currencies, commodities, stocks, etc… but with one deference: when you buy from them and the price moves up you make what they are losing and vise versa, nothing is bought/sold from the real market, example: If you buy 1 lot of crude oil you buy it from them, not NYMEX or DGCX (Dubai Gold & Commodities Exchange).

    These brokers do this because they are betting that 90%+ of all individual uninformed traders lose money.

    I have come to watch how around 600 accounts perform, they all lose money on trends and make money in sideways markets, therefore the broker makes money in trends and loses in sideway markets, its the same old story of people averaging losers and cutting winners short, and those brokers and betting on it.

    Imagine getting normal people (non-traders) and giving them accounts to trade and inverting their positions, they will end up winning.

    Trend following works, brokers around here know this very well, just as well as FXCM, GFT, Saxobank and almost all online trading services.

    Trend following works, people do the opposite by nature.

  7. I started reading trending following and the turtletrader last year. Within the last month, I began buying puts in LEH and WYNN since they were trending down. Although my investment portfolio is small and I was late in the game (trend started last year), I still made 35% within the last two days. I made other trades which I lost money, but the gains in LEH and WYNN totally made up the losses and more.

    I guess trend following is for me, but not for ‘John’.

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