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Hey Michael,
I apologize in advance for the length of this email, but I am wrestling with two issues and hope you can provide guidance. I have read or listened to your Little Book of Trading, Complete Turtle Trader, Trend Following, Trend Following Master 1, and I am about to start Trend Commandments, and then go to the book you did with Basso. I am considering purchasing your course as well. I love the idea of trend following and have been doing it with stocks without knowing the appropriate name for it.
The first thing I keep coming back to is that almost every trader you have on talks about the importance of everything else besides entries & exits, often saying that it is the least important thing. They say it doesn’t matter as much as other aspects of trend following, such as risk management and the psychology associated with trading. They say there are no secrets and no holy grails. However, they then refuse to talk about their entries and exits. I can’t square that circle in my mind, and I am hoping you can help me. I understand them emphasizing the other parts of trend following, especially the money management/risk, and psychology. I also understand that you don’t want to share proprietary information, but I keep hearing the same refrain of there being no secrets and entries/exits aren’t important, and then on the other hand, not talk about it. Besides what Seykota said about not wanting people to just take those rules and run with them, and not learn the other, more important stuff, I haven’t heard a justification – or maybe I am missing something?
Second is this – I am sold on the concept of trend following – it fits my investing personality of taking small losses and riding the payoffs. I have a deep understanding of psychology (my background is in sport psychology, which is what I earned my master’s in), and I have coached high school and college football. I serve as a consultant for NFL and college teams and work with athletes on goal-setting, performance anxiety, and everything in between, so the cognitive biases are at the forefront of my mind. I don’t believe the markets are efficient, and it irks me when people say, “You can’t beat the markets, look at all these mutual funds.” Well, I am not a mutual fund that has to hug an index, and I can go to cash anytime I want. I have had great success picking stocks in my first three years of investing, beating the Nasdaq by double every year. It wasn’t particular skill – I was very lucky (I invested in two plucky little start-ups called NVIDIA and Palantir).
Anyway, I say all of this to say that I know I can beat the market by picking stocks. However, I am not sure I can beat the trend followers in the futures market. I am a MASSIVE Cliff Asness fan, and have spoken to people at AQR on multiple occasions. I worked with Larry Swedroe, who helped me select some of AQR’s alts for my alts sleeve, including their HV Managed Futures fund in my Roth. Unlike these massive mutual funds, the futures market is more limited, and AQR can do whatever it wants – it can go long, short, go to cash, etc. I know this might be a silly question, but can someone like me beat AQR’s (and its 400 PhDs) Managed Futures HV or Total Trend fund? Would it be worth just investing in their products, rather than trying to do it myself? What advantage would I have in doing it on my own? Is there an advantage?
Lastly, does the system you’re selling include the actual trend following systems with rules, entries, exits, risk-management stops, etc.? Does it have the tools to build them in TradeStation or similar platforms? On a sidenote, I got with George Pruitt, and I built my first systematic trend following system in TradeStation using the original turtle rules – I know they don’t work like they used to, but I wanted to test that I could build something and make it work first, and it has been a lot of fun!
I appreciate you taking the time to read this long ass message. I have really enjoyed your work! I hope to hear from you soon!
Vass
Thanks for the nice note.
Yes. All rules. All systems. Read here.
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