A new Facebook friend from Singapore asked:
Can I ask if the present market condition driven by political decisions still makes [trend following] system[s] profitable? Because the markets do not trend healthily like last time. Is there any recommended modifications? for your kind advice please.
Trend following is trend following. What exactly is so special about human and governmental decisions today? Is there really some research to show that human nature has changed?
No, human nature has not changed, but liquidity from government decisions will affect the trends–interventions.
There is some new research in the last few years that absolutely quantifies that beyond a shadow of the doubt? I have not seen that research.
Most of the time markets do not trend, but move in consolidation…so the trend is not much. Am I right?
Most of the time means when? What exact time is most of the time? Last month? Year? When?
If we look at the charts in history–daily. Also these are written in books. Markets move sideways then push up or down then again consolidation. You can see many range [bound] markets. My humble question what do you think?
You are telling me things have changed. I am asking specifically when did things change? Or are you telling me trend following has never worked?
Nope. Before trends could last long, but now not as long. And we get more noise and spikes.
That supposedly started when in your opinion? An exact date please?
After 2008 crash when QE starts.
So there is research that says the markets have fundamentally changed since 08? Human nature has changed since then?
Humans no. But central banks yes, policies. Does [trend following] ignore fundamentals? Fully technical?
It seems to me central banks have been around for a long time and so have trends. There seems to be trends no matter what. Is there evidence that a fundamental change is underway? We won’t know for some long time into the future. All you have is now–the moment of now. Typically, and this repeats itself, right when people start thinking some new paradigm has started–massive trends reassert themselves and we find that nothing has changed. Trend following is not fundamentals.