What We Have Here Is ‘Failure to Communicate’

One reader writes on my Facebook [BTW, feel free to friend me]:

Michael, the problem I have with trend following is that it is successful only if – surprise! – markets are trending. You make it look as if you have the foolproof way of extracting money out of markets when in fact trend following CTAs / traders can easily suffer enormous losses, too. I also think you finally produced enough books for a while – no need to send out the same message in book after book.

All market participants only make money if markets are trending–surprise! You are welcome to your opinion, but clearly I disagree. If you don’t like the messages, don’t read. Further, an examination of the performance data of many trend followers is included in all of my books–the ups and downs. There it all is in black and white. Is that performance easy? That choice has to be made by each person, but at the end of the day too few people actually know of trend following–still. If you know about it, and you think it is hard, and you think somehow I misrepresent it–not here to sway you.

Bottom line, it should be clear by now that I polarize. I smile ear to ear when someone is frustrated with themselves and takes it out on me. That is a good day. Productive day. Make no mistake: trend following is not for everyone. Some will never get it, and some can’t be reached:

9 thoughts on “What We Have Here Is ‘Failure to Communicate’

  1. Mike just ignore him. I hear the same thing day in, day out.

    The amount of times recently I have been told by fund “analysts” that they won’t invest in TFs any more because they “don’t think markets will trend for some time” just amazes me. I almost take it as a contrary indicator now.

    So long as fear and greed persist to be human emotions, trends will emerge.

    I suppose the reader only invests in strategies that make money in all market environments, would love to hear how he does it!

  2. Mike: Most people don’t get it, you say some. I have been trying to help people for years with limited success. I am never disappointed when I get negative responses but I keep trying. I used to be a bit frustrated when I gave talks at Money Shows and nobody responded, but not anymore. What makes trend following (market timing) work is the fact that very few follow the strategy. I don’t want very large numbers of people following my Signals. Only a few smart ones.
    So let’s keep trying Mike!! The reward is reaching the few.

  3. What is it with people that they think one can ALWAYS make money? If you sell you need the market to go DOWN to make money. If you buy you need the market to go UP to make money. As there is only buy or sell to make money you need one or the other.

    If markets don’t do anything (=no trends) you can’t make money, as simple as that, whether you’re a declared trendfollower or not.

    One of my favourite quotes ever and a BIG heureka for me personally, supposedly from Jesse Livermore: “There is the plain fool, who does the wrong thing at all times everywhere, but there is also the Wall Street fool, who thinks he must trade all the time.”

    Of course you can always sell volatility but good luck with that (Hello Quant fool!).

  4. Not really a fan of Warren Buffet, but he’s responsible for one of my favorite quotes of all-time that can be directed toward the writer of that email:

    “There seems to be some perverse human characteristic that likes to make easy things difficult.”

  5. “I also think you finally produced enough books for a while – no need to send out the same message in book after book.”…..Keep getting those books out, Michael. As I recall there was another message that that seemed to do pretty well despite being repeated in book after book. Anyone remember Matthew, Mark, Luke and John? Same message ..huge impact!

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