A recent 4 star review of my new edition of “Trend Following” that appeared at Amazon:
The Trend is Your Friend so says this author. But wait, a lot of smart people say trend following doesn’t work. Look, if this were easy we’d all be rich. When I picked this up the first thing I saw was a quote by Eric Hoffer ! Who ? He wrote The True Believer and other philosophical books. If you trade these markets I guess you better be philosophical. Anyway this is mostly about trend following in commodity and currency markets but most people trade stocks. In Appendix A I found “Trend Following For Stocks”. A test was run buying stocks that made an all time high using a loose stop loss method over several years that worked. Of course we know that running back tests really might not mean a whole lot when it comes to the future. Predicting that future is tough. Folks like Victor Niederhoffer (The Education of a Speculator and others) believe that things that worked in the past often don’t work in the future because of changing cycles. I learned that at the race track. Here’s the beef, when the cover states “Learn How To Make Millions In Up or Down Markets” a lot of credibility is lost. It makes a serious book sound like another get rich quick scheme.
My response? I am confused. You say: “…a lot of smart people say trend following doesn’t work…” Who exactly says this? Victor Niederhoffer? Did you read the section in the book about Niederhoffer? Did you see the performance data for trend followers in the book? Thanks for the taking time to read the book, I sincerely appreciate the time, but don’t be surprised when this author (me) calls out incorrect information. The biggest thing I have learned about the subject of trend following over the last decade is that so many people simply either can’t or won’t wrap their arms around it. I can understand that. For 25 years Wall Street has plowed millions upon millions of investors into buy and hold/mutual fund nonsense, and when that bubble burst, fear, confusion and debate are not surprising.