Year: 2008

Amos Hostetter started Commodities Corporation (a trading incubator long before Richard Dennis and the Turtles). Who got their start at Commodities Corporation? Paul Tudor Jones, Louis Bacon and Ed Seykota were three prominent names. Seykota brought Michael Marcus into Commodities Corporation and Marcus brought Bruce Kovner into Commodities Corporation. All of these men in one way or the other made their fortunes via trend trading.

I have long found stories of Louis Bacon of Moore Capital interesting. Google him. Read up.

While Bacon is never classified as a trend following trader, he trades off price action and uses futures markets. That sounds a lot like trend trading to me. About 3 years ago I was talking with a top trend trader (who now manages over $10 billion). We were talking about “mystique” and “image” in general of some top traders (Bacon was not discussed). His point to me? Traders, who have consistently posted the big returns, almost invariably are trend following traders whether they publicly admit it or not.

One of the more under the radar trend followers is Sunrise Capital out of sunny Southern California. They have been at it for 30 years:

Sunrise currently manages over $1.1 billion for clients around the globe. Through November 30, 2008, Sunrise’s domestic fund is up 33.1% YTD and since January 1, 1995, Sunrise’s domestic fund has averaged returns of over 13% annually. By trading in a wide range of diverse global markets and utilizing other innovative risk management techniques, Sunrise has delivered positive results for investors in 87% of the rolling 12 month periods since January 1, 1995.

Those numbers compounded for 30 years would make most people who have been buying and holding very happy.

A few weeks back a few researchers put out a paper that essentially said trend following is bunk. I commented at the time that one of the authors was at AIG investment products and mockingly said, “next!” Turns out the lead author, Geetesh Bhardwaj, must have taken my criticism to heart, for his academic paper now says he works for Vanguard. Quite a switch in span of two weeks!

Old Screenshot.

New Screenshot.

I interviewed Paul Mulvaney, a UK-based trend trader, a few years back. He contributed material to my first book. His 2008 performance? Damn that’s some serious performance (PDF) in the face of everyone else seemingly losing their shirt.