Sticking to His Knitting

A classic excerpt from an article about Bill Dunn:

“By following his original [trend following] system, just as he [Bill Dunn] has been doing for the last 34 years, Dunn proved unflappable in the face of turmoil. ‘The best I can do each day is to follow my rules,’ he says. ‘So if it didn’t work out today, big deal. There was no guarantee that it would work anyway. We never override the system.’ Not one discretionary trade since 1974? (Well, there was one during Y2K.) That’s practically unheard of. Is Dunn never gripped by a desire to take a flyer once in a while? ‘No,’ he insists. ‘What’s the point? Why do people think they’re smarter than the market long-term? What gives them that confidence? I guess people feel dumb if they can’t predict what the market is going to do in the short term. They’re too proud to admit they don’t know what to do when they’re wrong. They don’t have the capacity to understand the digits that are scrolling by on the bottom of the television. I don’t. It’s too much noise. That’s why we rely on our system.’ Dunn’s approach to the markets has always relied on logic, order and numbers, leaving bravado and emotion for the suckers.”

Those words are simple. Straightforward. Easy to understand. However, how many non-trend following traders, those who have no idea how trend following works yet, would pause their daily fundamental/news addictions to investigate the merits of Dunn’s wisdom? If those words are brand new to you, if that thinking sounds like alien-speak, how do you feel?

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“Lying here, during all this time after my own small fall, it has become my conviction that things mean pretty much what we want them to mean. We’ll pluck significance from the least consequential happenstance if it suits us and happily ignore the most flagrantly obvious symmetry between separate aspects of our lives if it threatens some cherished prejudice or cosily comforting belief; we are blindest to precisely whatever might be most illuminating.”
— from Transition, by Iain M. Banks

“Still a man hears what he wants to hear. And disregards the rest.”
— The Boxer, by Paul Simon

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6 thoughts on “Sticking to His Knitting

  1. Offtopic : Have you seen this Michael. People are happy with Just breaking even.. 🙂

    Better keep your money in a pot and dig it in the backyard..

  2. “I guess people feel dumb if they can’t predict what the market is going to do in the short term. They’re too proud to admit they don’t know what to do when they’re wrong.”

    This quote is incredibly true in my opinion. As Red Green would surmise, the three most difficult words for men to say are “I don’t know.”. I also like the saying that recognition of ignorance is the first step towards the acquisition of knowledge.

    Fred

  3. If you have a precise mathematical trend following strategy, you don’t have to concern yourself about the impact of the election on the market, or if the Buss tax cuts are extended. If the market goes up, your strategy will get you in and if it goes down your strategy will take you out. I do not concern myself with the daily fluctuations of the market or listen to the predictions of the “experts”. For over 40 years my RIX Strategy has told me when to be in and when to be out.

  4. What cracks me up is here’s Jim Rohrbach, who has been successfully utilizing a trend following strategy for over 40 years; Bill Dunn, since the early 70’s, Jerry Parker, Ed Seykota, Salem Abraham, and on & on & on. And there are still people who say trend following doesn’t work. I guess two plus two is five and the world is flat.

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