This chart is an interesting comparison of trend following trader Bill Dunn v. legendary trader Warren Buffett.
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Warren Buffett v. Bill Dunn
Jeff Bezos on the Moral Hazard
Bezos was on air this morning. He made a good point with a simple analogy. When the kids are sitting there striking matches in the bedroom, setting the bedroom on fire, you need to put the fire out and save the moral hazard debate for the time when the house has not burned down. If this is indeed the situation we are in, he could very well be right. My concern? What if the fire in the bedroom is extinguished, but the house still burns to the ground? Meaning, no one really knows if government intervention will work as the fires are moving too fast and coming from too many angles. It’s all a big gamble to think the government can douse this fire out.
“Thanks Mr. Congressman for My Job Digging Ditches!”
I know what it is like to swing a hammer. Manual labor, all kinds of it, was something I saw growing up. Today, my labor is different, namely all of the various entrepreneurial activities described herein. However, I have a real problem with the descriptions of “jobs” that will result from the stimulus bill. Intellectuals in suits are taking great pride in creating jobs that they themselves would never want. They are in ivory towers looking down on the “common” man pretending to “relate”. Doesn’t anyone see the problem with talking up jobs like laying asphalt, digging ditches and swinging hammers? Even people who have those jobs now are generally looking for something better. Let’s face it, many politicians view us as members of a union who should just be happy to have a steady dead-end job slinging hash. When did America become a land where a $12 an hour job was praiseworthy? Why not describe these jobs as stop gap jobs to something better? My point is not small. Why not make the focus on motivating people beyond hard manual labor alone? The political attitude now is all messed up.
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Lucky Survivors!
A critic has been on here recently with the argument, and I paraphrase, “trend followers are lucky survivors who were flipping coins with terrible Sharpe ratios who will soon blowup.”
His last post:
I’ve said it once and I’ll say it again. Risk is beta. Risk is the chance that you won’t meet your investment goals. The only way to quantify that in a portfolio is to use the long term variability in returns. You say Sharpe is bullshit because it penalizes good volatility, but the Sortino ratio fixes that. The Sortinos of trend followers are terrible. What else do I need to say?
This has been beat into the ground, but readers are free to comment. You too Geetesh Bhardwaj.
Note: one more post came in again after seeing above:
Let me guess Covel you had to look up Sortino ratio which is why you linked to it, right? My favorite part is that you won’t post what I write because you know it is entirely fact based and proves your trend following beliefs 100% wrong.
I do love it when the crazies think they have invalidated trend following technique and performance data. I saw these exact same accusations 15 years ago.
Winton Capital: Systematic Trend Follower
Winton Capital, a trend follower based in London, had a great 2008.
Michael Covel Models New Stimulus T-Shirt
I am getting ready for the new world order baby:
If you can’t beat ’em, join ’em!
Ed Seykota Words of Wisdom
Here is a recent Ed Seykota thought from his blog that is always ignored by the politicians:
Part of the effective way to fix things is to stop trying to fix things…
Simple wisdom ignored by every politician with a pulse. Why do they ignore it? Because, and let’s be perfectly frank here among friends, most people who vote for politicians actually think they can control the economy, change the business cycle or stop market crashes. The day is coming, and probably sooner than later, when President Obama will be responsible for the economy, fairly or unfairly. And when he does own it, and if it doesn’t improve, his current loyal army will be clamoring for someone else to fix things. That might be the only prediction worth betting on.