Not Even Close

From CNBC recently:

“Such [trend following] funds use computer models to predict trends in the prices of stocks, bonds, currency, commodities and other markets, betting that valuations tend to revert to a mean following swings up or down.”

On the basic description of trend following strategy how does he get it so wrong? Not even close. Predictions? Valuations? Mean reversion?

Note: My email exchange with the author:

Me: In your piece you say this: “Such funds use computer models to predict trends in the prices of stocks, bonds, currency, commodities and other markets, betting that valuations tend to revert to a mean following swings up or down.” On the basic description of the strategy how do you get it so wrong? Like not even close. Curious.

CNBC: Thanks for the feedback. What about it do you think is off?

Me: When did trend following become about predictions, mean reversion and value? If you did not know and got it wrong, ok. But should correct it.

The Author