Subscribe now and watch my free trend following VIDEO.

Francisco J. Vaca: Second Generation ‘Turtle’

For those familiar with my book The Complete TurtleTrader you know that chapter 13 is about trader Salem Abraham. Abraham is what I call a second generation Turtle — as he was heavily influenced by Turtle Jerry Parker. Another second generation Turtle? Francisco Vaca. Vaca (who I met a few years back in Florida) has been also influenced by Richard Dennis and Paul Rabar. He reached out to me last night:

“Hi Michael, I hope this e-mail finds you well. Since you like to follow those of us that came out of C & D Commodities [Richard Dennis’ original firm]. I hope you will find interesting the interview I had with Managed Account Research, Inc…released two weeks ago.”

Thanks. Here you go (PDF).


How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

Trend Following Podcast Guests
Frequently Asked Questions
Performance
Research
Markets to Trade
Crisis Times
Trading Technology
About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

Swing Baby! And Keep Swinging!

Ken at Top Breakout Stocks recently made a comment here about this WSJ article. What did he say?

“Replace the word ‘strikeout’ with ‘taking a loss’ and ‘runs’ with ‘profits’ and it’s a perfect analogy for trading.”

So I decided to try it. Here is the article:

There is no easier way to get booed in baseball than to end an inning with a swing and a miss taking a loss. For as long as the game has been played, hitters have been taught to make contact and put the ball in play, but a new generation of sluggers is finding success swinging from its heels on every pitch. The negative stigma surrounding the strikeout taking a loss has been destroyed. No player exemplifies this change more than Arizona’s Mark Reynolds. Last season, he became the first player in baseball history to whiff take a loss 200 times in a single season, and now he’s on pace to do it again. Arizona has been willing to live with long walks to the dugout because of what he is able to do when he does make contact—he’s hitting .440 with 40 home runs profits when the bat meets the ball. Other notable players with this all-or-nothing approach include Philadelphia’s Ryan Howard, the Nationals’ Adam Dunn, the Rays’ Carlos Pena, Oakland’s Jack Cust and Seattle’s Russell Branyan. Each of these five has racked up 140 strikeouts losses or more this season, a feat nearly unheard of 30 years ago. Bobby Bonds’s record of 189 strikeouts losses in a season held up from 1970 to 2004, but since then, it has been passed six times, and Mr. Reynolds is just about to do it again. Run scoring Profits have also increased as the strikeout taking a loss has become more acceptable. Statistical analysis has shown the strikeout taking a loss is no worse than any other kind of out, and the trade-off for extra home runs profits is more than worth it. Dan Plesac, a two-time All Star and current MLB Network analyst, says today’s players are “more rewarded if you hit .270 and get 30 home runs profits than if you hit .310 but hit 20.”

Works!


How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

Trend Following Podcast Guests
Frequently Asked Questions
Performance
Research
Markets to Trade
Crisis Times
Trading Technology
About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

A Trader’s Self-Evaluation Checklist

Some key questions asked by Brett N. Steenbarger, Ph.D. in his ‘A Trader’s Self-Evaluation Checklist’?

Are trading losses often followed by further trading losses? Do you end up losing money in ‘revenge trading’ just to regain money lost? Do you finish trading prematurely when you’re up money, failing to exploit a good day?

Do you cut winning trades short because, deep inside, you don’t think you’ll be able to make large profits? Do you become stubborn in positions, turning small losers into large ones?

Is trading making you happy, proud, fulfilled, and content, or does it more often leave you feeling unhappy, guilty, frustrated, and dissatisfied? Are you having fun trading even when it’s hard work?

Are you making trades because the market is giving you opportunity, or are you placing trades to fulfill needs — for excitement, self-esteem, recognition, etc. — that are not being met in the rest of your life?

Nice.


How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

Trend Following Podcast Guests
Frequently Asked Questions
Performance
Research
Markets to Trade
Crisis Times
Trading Technology
About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

Bernard Drury: “An Intrinsic Part of Trading”

Bernard Drury of Drury Capital writes in his May 10 newsletter:

“While trading losses are never welcome, we know that encountering price corrections is an intrinsic part of trading these markets. As ever, [our] Program employs a disciplined approach to trade selection, position sizing, portfolio balancing, and equity protection when adverse market conditions are encountered. During a period when markets are behaving in a manner contrary to positions, [our] Program gradually reduces risk in a systematic manner. In some cases, positions in the opposite direction of the original trend may be established, even while some trades in the same sector are still positioned in the original direction. It is a dynamic process that responds continuously to changes in market conditions.”

Wise insights from a long time trend follower who I was fortunate to spend time with.


How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

Trend Following Podcast Guests
Frequently Asked Questions
Performance
Research
Markets to Trade
Crisis Times
Trading Technology
About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

Wise Price Trading Words from William Eckhardt

From William Eckhardt:

“An important feature of our approach is that we work almost exclusively with price, past and current. One reason for this is that to make any progress in the early stages of quantitative investigation you usually have to reduce the relevant factors to one or two crucial variables. Price is definitely the variable traders live and die by, so it is the obvious candidate for investigation. The other reason is that in a system that’s making good use of price information, it is very difficult to add other information without degradation. Pure price systems are close enough to the North Pole that any departure tends to bring you farther south.”

Bill Eckhardt trader
The TurtleTrader Bill Eckhardt. Photograph from TurtleTrader.com

More from a conversation never heard on CNBC:

“Many systematic traders spend the majority of their time searching for good places to initiate. It just seems to be part of human nature to focus on the most hopeful point of the trading cycle. Our research indicated that liquidations are vastly more important than initiations. If you initiate purely randomly, you do surprisingly well with a good liquidation criterion. In contract, random liquidations will kill the best system.”

More from Pricetrader Bill Eckhardt can be found in my 2nd book.


How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

Trend Following Podcast Guests
Frequently Asked Questions
Performance
Research
Markets to Trade
Crisis Times
Trading Technology
About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

CNN Bias: Ali Velshi

Let’s be frank: Anyone giving a view to a significant audience is obliged to be truthful. Now, consider this excerpt from CNN today…noting the “angle” (and that’s being nice) that CNN reporter Ali Velshi takes:

KEITH MCCULLOUGH (GUEST ON CNN): I think what’s happening in Europe is just a preview as to what’s going to happen in the U.S. It all basically starts with debt. So if you believe as a government official that you can solve the problems that are anchored in debt with more debt you are going to end up with the same problems that the Europeans are facing. And I think that we are three to six months away from that coming home to roost here in the U.S.

VELSHI (CNN ANCHOR): Why is it that lots of people go out of their way, Keith, to tell us how the U.S. is not the same as Europe? Our debt issues are certainly are not the same as Greece’s, as Italy’s, as Portugal’s, why are you suggesting that we will get into the same pickle?

MCCULLOUGH: At the end of the day from a deficit perspective, the U.S. — the deficit as a percentage of your GDP is exactly like Greece. It’s going to be pushing close to 12 percent. And anytime we have an issue, like today, for example, with the jobs report what is the answer? The answer is more government, more government spending which is going to simply keep pushing that deficit?

VELSHI: Hold on. What are you talking about? When you have a jobs report like this week, the answer is more government, more government spending? Where did you hear that from? We’ve been discussing that endlessly. That has not been anyone’s suggestion.

MCCULLOUGH: Well I think that that is definitely going to be the suggestion. If you look at this mornings …

VELSHI: Keith, this isn’t an opportunity to just come up on TV and bash government. What are you talking about?

MCCULLOUGH: This morning’s number, if you look at the job ads, 400,000 of them were government-hired workers.

VELSHI: So no one has come out and said, oh my god, let’s have 800,000 government jobs next month. Everybody has said, this is not the way we actually want things to go. We want more private sector hiring. Christine, have you heard one person telling you that this is fantastic; we should have more government hiring? I don’t know what Keith is talking about.

VELSHI: I don’t understand what your premise is, Keith, because that’s not the answer. What should we be doing differently?

MCCULLOUGH: Well the answer will be, from a political perspective, that is a forecast, Ali. That is a forecast. That is what government’s do that have problems, they spend more and more money, taxpayer money to hire.

More from the transcript:

MCCULLOUGH: I think that, look, the market’s ganging up on the three of you because at the end of the day the market doesn’t lie, politicians and people do. And the American government said they were going to solve this than you can go do that. But risk management Ali, starts with watching what the market is telling you.

VELSHI: I hope the market is as cruel to me next year as it was last year. I hope I suffer through another 70 percent gain in the broader markets, Keith. If that’s your biggest plague that you wish on me, I’ll take it.

Consider those last few sentences of arrogance from Velshi as you read the stats that he forgot to mention:

The S&P 500 (SPX) closed on 5/22/2000 at 1400.72 and closed on Friday 5/28/2010 at 1089.41. That is a 22.2% loss in value in ten years of buy and hold investing not allowing for inflation. That means a buy and hold investor lost 22.2% of their money plus another 20% for inflation — a 42% haircut. The period of history the buy and hold advocates really don’t want you to know about is 1929 to 1954. The highest close for the Dow was 381.17 on 9/3/1929 before the beginning of the great bear market, and it took 25 years to get back to ‘even’ on a nominal basis (not counting inflation). The Dow closed above 381 for the first time on 11/23/1954 after the 9/3/1929 high.”

Does Velshi seem like an honest guy as he yucks it up about “suffering through a 70% gain” while failing to mention the real stats [the real stats of buying and holding being underwater for over 10 years]? No, he doesn’t. Is he the type of guy who should be educating anyone about money and markets? Clearly not. As a teacher, I resent Velshi’s reckless use of a CNN megaphone to preach to many who surely don’t know that he is full of it.

***

One reader responded to my comments above by saying:

Isn’t what you’ve written below libelous (not to mention an unnecessary personal attack)? ‘Does Velshi seem like an honest guy as he yucks it up about “suffering through a 70% gain” while failing to mention the real stats? No, he doesn’t.’

The libel is? The personal attack is? The unnecessary part is?

Since you have thrown out a very specific and unfounded attack against me (libel), and since you have failed to back your view in any way, it is assumed that you agree with Velshi (that is unless you correct my assumption).

With Velshi tossing out that 70% line he is saying clearly:

1. That he made that 70%.
2. That he is a buy and holder.

So if he is a buy and holder, and he says he made 70% while ignoring the prior 10 years where all buy and holders are still underwater — he is manipulative at best. Or, and I guess this is possible, perhaps Velshi perfectly timed the bottom from March 09 to May 10 and that’s how he made his 70%? And if he is this wonderful market timer, capable of nailing bottoms and tops perfectly, where is this all disclosed?

When someone appears on TV regularly to large audiences, when they preach money and markets, and when they make the statements Velshi does, I stand by my view. The fact that you are remotely sympathetic with Velshi, and since you seemingly see nothing wrong with what he is doing, you make my point better than I ever could.

Recommended Trend Following Podcasts and Articles

Trend Following Portfolio

Matt Smith Interview

50 year buy and hold

Trend Following Stocks

Trend Following Book Review

Billionaire Words


How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

Trend Following Podcast Guests
Frequently Asked Questions
Performance
Research
Markets to Trade
Crisis Times
Trading Technology
About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.