The history of British trend following (PDF).
More on David Harding and Martin Lueck.
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Man, AHL, Harding, Lueck: A History of British Trend Following
Paul Tudor Jones Insights
A few pieces of Paul Tudor Jones’ insights. First on school:
“In 1976 I started working on the floor as a clerk and then I became a broker for E.F. Hutton. In 1980 I went strictly on my own as what they called a local and did that for about two and a half years and had two and a half wonderfully profitable years, but I really got bored. I applied to Harvard Business School, got accepted and was about to go. I literally was packed up to go and then I thought, ‘this is crazy’, because for what I’m doing here, they’re not going to teach me anything. This skill set is not something that they teach in business school. So I didn’t go, I stayed, but I was really bored because there wasn’t the personal interaction that was something that I craved and having colleagues and being in a clean atmosphere and that was when I started my fund. All through growing up I’ve been involved in team sports and fraternities and in school I was involved in a whole variety of activities all of which were team oriented and when I was on my own I was printing money every month, but I wasn’t getting the psychic satisfaction from it.”
On the ups and downs:
“He was the toughest son of a bitch [Eli Tullis] I ever knew. He taught me that trading is very competitive and you have to be able to handle getting your butt kicked. No matter how you cut it, there are enormous emotional ups and downs involved.”
How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.
Also jump in:
• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us
Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.
Blast from the Past: 1986
An article from Futures Magazine dated 1986 (PDF) from Tom Willis’ web site. The article titled, “Do Trading Advisors Run Into A Dollar Trading Barrier?” shows some fears have been around for quite some time.
Sell What You See, Not What You Think
A good excerpt from Yahoo Finance:
The main rule for selling is to sell what you see, not what you think. This rather difficult concept is counterintuitive, because stocks often climax and fall off the cliff even while their fundamentals, earnings history and future look spectacular. Chipmaker Marvell Technology Group (NASDAQ:MRVL) breezed past Thomson First Call consensus estimates in each of the past 13 quarters, by 2% to 11%. Earnings bounded 50% or more and sales 31% and higher in the past eight quarters. Double-digit earnings and sales growth are expected through next year. Profit margins have also been strong, while cash flow has been growing. So why is the stock 52% below its all-time high?
You don’t need to know why it is 52% off its all-time high. You just need to know that it is.
Barbara Dixon: Donchian Student Wisdom
Barbara Dixon, a student of famed trend follower Richard Donchian, wrote twenty years ago in Commodities magazine:
Donchian is one of the most respected technicians on Wall Street – especially in commodities. He began his career on 1930 and says he became hooked on markets when read Edwin LeFevre’s fictionalized biography of Jesse Livermore, Reminiscences of a Stock Operator. His interest in technical analysis arose after he suffered some losses following the 1929 crash. This led to his discovery that only the chartists made sense and money. Donchian wrote his first market letter in 1930 at the age of 25, and Shearson’s present ‘Trend Timing’ commodity letter originated in 1960 when Donchian joined Hayden Stone. These letters have served as primers for countless commodity traders. The ‘Twenty Trading Guides’ make a fine supplement to the letters and will probably survive and prove valid for the next 44 years as well.
General Guides
1. Beware of acting immediately on widespread public opinion. Even if correct, if will usually delay the move.
2. From a period of dullness and inactivity, watch for and prepare to follow a move in the direction in which volume increases.
3. LIMIT LOSSES, ride profits – irrespective of all other rules.
4. Light commitments are advisable when a market position is not certain. Clearly defined moves are signaled frequently enough to make life interesting, and concentration on these moves to the virtual exclusion of others will prevent unprofitable ‘whipsawing.’
5. Seldom take a position in the direction of an immediately preceding three-day move. Wait for one-day reversal.
6. Judicious use of stop orders is valuable aid to profitable trading. Stops may be used to protect profits, to limit losses and to take positions from certain formations such as triangular foci. Stop orders are apt to be more valuable and less treacherous if used in proper relation to the chart formation.
7. In a market in which upswings are likely to equal or exceed downswings, a heavier position should be taken for the upswings for percentage reasons – a decline from 50 to 25 will net only 50% profit, whereas an advance from 25 to 50 will net 100%.
8. In taking a position, price orders are allowable. In closing a position, use ‘market’ orders.
9. Buy strong acting, strong background commodities and sell weak ones, subject to all other rules.
10. Moves in which rails (now the Transportation Index) lead or participate strongly are usually worth following more than moves in which rails lag.
11. A study of the capitalization of a company, the degree of activity of an issue (a varying factor), and whether an issue is a lethargic truck horse like Consolidated Edison or Exxon or a spirited, volatile race horse like Teledyne (NYSE) or Resorts International (American) is fully as important as a study of statistical reports. (Volatile stocks are 1978 counterparts of two issues mentioned in 1934, Aluminum Co. of America, then on the Curb, and Case Threshing Machine, now J.I. Case, a part of Tenneco.)
How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.
Also jump in:
• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us
Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.
More from Boone Pickens
I posted a quote the other day from Boone Pickens. Some more:
Be willing to make decisions. That’s the most important quality in a good leader. Don’t fall victim to what I call the ready-aim-aim-aim-aim syndrome. You must be willing to fire.
T. Boone Pickens
I’ve always believed that it’s important to show a new look periodically. Predictability can lead to failure.
T. Boone Pickens
Keep things informal. Talking is the natural way to do business. Writing is great for keeping records and putting down details, but talk generates ideas. Great things come from out luncheon meetings which consist of a sandwich, a cup of soup, and a good idea or two. No martinis.
T. Boone Pickens
Work eight hours and sleep eight hours and make sure that they are not the same hours.
T. Boone Pickens
Read about the Michael Covel Hours of sleep patterns.
Maybe We Should Leave That Up to the Computer
From the NY Times, an interesting read (PDF). An excerpt:
Models have other advantages beyond their accuracy and consistency. They allow an organization to codify and centralize its hard-won knowledge in a concrete and easily transferable form, so it stays put when the experts move on. Models also can teach newcomers, in part by explaining the individual steps that lead to a given choice. They are also faster than people, are immune to fatigue and give the human experts more time to work on other tasks beyond the current scope of machines.