“I am not concerned about others. Should I be?”

Feedback in:

Listener: Thanks for your response. I am a great fan of trend following. As [name] always says, “The trend is your friend.” I know nothing about other trend following day traders. What I do know is that I am getting a tremendously high percentage return. It works with any security, but I use only the DOW 30 stocks. I tell all my acquaintances that all they need to know is that 50% is the best results we can get because 51% is a sure thing. If we had those odds in Vegas, we would own every casino there. I developed my own strategy of 2×1. Meaning I follow it foe two periods and then hold it for one period. Why 2×1?, because 50% is the best odds we can get. If you want any further clarification I would glad to detail it. Thanks again.

Covel: You know nothing about others? There should be others, right?

Listener: How would I know about others? I know only what I am doing. I am not concerned about others. Should I be? I do know that I am getting a higher percentage than any other day trader. Is that not enough? Being concerned about others would take my thoughts off of my strategy. Are there others getting the return I am getting? I doubt it.

Covel: How do I know about other long term trend followers and their performance records across my books?

Also consider:

American virologist David Baltimore, who won the Nobel Prize for Medicine in 1975 for his work on the genetic mechanisms of viruses, once told me that over the years (and especially while he was president of CalTech) he had received many manuscripts claiming to have solved some great scientific problem or to have overthrown the existing scientific paradigm to provide some grand theory of everything. Most prominent scientists have drawers full of similar submissions, almost always from people who work alone and outside of the scientific community. Unfortunately, none of these offerings has done anything remotely close to what was claimed, and Dr. Baltimore offered some fascinating insight into why he thinks that’s so. At its best, he noted, good science is a collaborative, community effort. On the other hand, crackpots work alone (source).

That doesn’t mean you are a crackpot, but you should be wondering where everyone else is in the day trading trend following game.

Filed under Feedback, Trend Following