Wrong View on Trend Following

A reader writes:

I invested over $100,000 with a [well known trend following trader]. Two years later my investment is close to breakeven or even down a bit. Very disappointed obviously. I pulled half my money out. Do you have any advise on another trend trading fund I can use?

Why are you disappointed? You are breakeven 2 years later? But in advance of making an investment you stared long and hard at trend following track records to have a feel for the performance movement?

I’m disappointed because I let the professionals at [well known trend following trader], supposed leaders in trend trading, essentially lose me money! I didn’t do any trading on my own! Is there another fund … that you recommend I look at? Thanks in advance.

I just don’t follow your thinking. How could you think trend following is only up without draw down? I can’t recommend you a trader who makes money every month with no down months! Again, you essentially broke even in 2 years with a trend following trader and are unhappy? If that is the case…trend following is not for you. No other way to say it.

Note: I don’t recommend traders, nor did I recommend one to this reader. This was unsolicited feedback that randomly appeared.

2 thoughts on “Wrong View on Trend Following

  1. This is classic – he’s pulled out half his money and is shopping around for another place for it, and will likely pull out the other half – just in time for the fund to take off to a new equity high, while his money is now with the trader who is about to experience a drawdown.

  2. I have been investing in Trend followers since 1994. All one has to do is look at the equity curves of many of the most successful trend followers over decades.When I say successful trend followers I am referring to their audited real time results in the 12-20% range over time over decades. On that same note these “successful trend followers” will have draw downs probably on the low side of 20% and possibly even up to the high 30%range. More so on these equity curves you will see periods of time that for months and even up to 2-3 years they did not make money. Trend following is a marathon. It is not easy. You need to know what to expect if you want to make money over time with trend followers. 

    One thing I do is buy draw downs of trend followers including my own trading. 

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