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CNBC Calls Trend Followers “Robots” and Yearns for “Gut” Traders


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.

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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.

Jean-Philippe Bouchaud: Tail Risk Premia vs. Pure Alpha

Jean-Philippe Bouchaud, Chairman of Capital Fund Management, passed along a new paper Tail Risk Premia vs. Pure Alpha.


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.

Ep. 286: Alex Greyserman Interview with Michael Covel on Trend Following Radio

Alex Greyserman
Alex Greyserman

My guest today is Alex Greyserman, Chief Scientist at managed futures firm ISAM. He is also a professor at Columbia University. He is a member of the ISAM Systematic Investment Committee. He has 25 years of experience in the Managed Futures industry, having starting initially as Research Director at Mint Investment Management Co.

The topic is Trend Following.

In this episode of Trend Following Radio we discuss:

  • Idea of young college graduates writing articles about the death of trend following while firms like Greyserman’s continue to have tremendous success
  • Alternatives to thinking only ‘long stocks’
  • Greyserman’s first meeting with Larry Hite and how they have come to have such a career together
  • Why trend following is about more than getting on the right side of the S&P trade
  • The difference between cross-sectional momentum and time series momentum
  • The phrase “crisis alpha” and why trend following does well in times of crisis
  • The cost of not having trend following in your portfolio
  • Benchmarking and diversification
  • Why the worst thing you can do is “trend follow a trend follower”
  • The science of trend following
  • Speculation
  • Trend following your life–not just the markets
  • Dispersion among trend following traders
  • Effect of a higher rate environment

Listen to this episode:

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alex greyserman

S&P 500 Trading System

Feedback in:

Hi Michael…

Thank you for your comments on the S&P500 in podcast 271. Very good insight into the nature of the index and how it is used (or misused). As one of your guests said, buying and holding is like getting in a car with no brakes. I quote that to my clients frequently. When clients ask me what I think the market is going to do I always reply: “I have no clue what the market is going to do. But I know exactly what we are going to do in response to whatever the market does and that will make all the difference.” Once a client asked me, “Doesn’t the market just always go up?” I replied “Yes, the market always goes up. Sometimes.” This summer I made some road trips with my wife and daughter and I listened to about 2 dozen of the podcasts in the car. I am pleased that my 13-year old daughter got to absorb wisdom from the likes of Walter Williams and others. Your podcasts are a priceless gift to investors. An important benefit that I receive from them is confirmation that I am on the right track. Being a trend follower in a world brainwashed by Modern Portfolio Theory can be lonely. I have attached the first 20 months performance report from trading the S&P leveraged index funds using a trend following strategy.

Thanks for all you do.
[Name]

You are welcome.


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.

The Scientific Method: An Explanation For Explanations

Nathan Myhrvold, CEO and Managing Director, Intellectual Ventures; Co-Author (with Bill Gates), The Road Ahead; Author, Modernist Cuisine, writes:

Humans are a story telling species. Throughout history we have told stories to each other and ourselves as one of the ways to understand the world around us. Every culture has its creation myth for how the universe came to be, but the stories do not stop at the big picture view; other stories discuss every aspect of the world around us. We humans are chatterboxes and we just can’t resist telling a story about just about everything.

However compelling and entertaining these stories may be, they fall short of being explanations because in the end all they are is stories. For every story you can tell a different variation, or a different ending, without giving reason to choose between them. If you are skeptical or try to test the veracity of these stories you’ll typically find most such stories wanting. One approach to this is forbid skeptical inquiry, branding it as heresy. This meme is so compelling that it was independently developed by cultures around the globes; it is the origin of religion—a set of stories about the world that must be accepted on faith, and never questioned.

Somewhere along the line a very different meme got started. Instead of forbidding inquiry into stories about the world people tried the other extreme of encouraging continual questioning. Stories about aspect of the world can be questioned skeptically, and tested with observations and experiments. If the story survives the tests then provisionally at least one can accept it as something more than a mere story; it is a theory that has real explanatory power. It will never be more than a provisional explanation—we can never let down our skeptical guard—but these provisional explanations can be very useful. We call this process of making and vetting stories the scientific method.

For me, the scientific method is the ultimate elegant explanation. Indeed it is the ultimate foundation for anything worthy of the name “explanation”. It makes no sense to talk about explanations without having a process for deciding which are right and which are wrong, and in a broad sense that is what the scientific method is about. All of the other wonderful explanations celebrated here owe their origin and credibility to the process by which they are verified—the scientific method.

This seems quite obvious to us now, but it took many thousands of years for people to develop the scientific method to a point where they could use it to build useful theories about the world. It was not, a priori, obvious that such a method would work. At one extreme, creation myths discuss the origin of the universe, and for thousands of years one could take the position that this will never be more than a story—how can humans ever figure out something that complicated and distant in space and time? It would be a bold bet to say that people reasoning with the scientific method could solve that puzzle.

Well, it has taken us a while but by now enormous amounts are known about the composition of stars and galaxies and how the universe came to be. There are still gaps in our knowledge (and our skepticism will never stop), but we’ve made a lot of progress on cosmology and many other problems. Indeed we know more about the composition of distant stars than many questions about things here on earth. The scientific method has not conquered all great questions – other issues remain illusive, but the spirit of the scientific method is that one does shrink from the unknown. It is OK to say that we have no useful story for everything we are curious about, and we comfort ourselves that at some point in the future new explanations will fill the gaps in our current knowledge, as often raise new questions that highlight new gaps.

It’s hard to overestimate the importance of the scientific method. Human culture contains much more than science—but science is the part that actually works—the rest is just stories. The rationally based inquiry the scientific method enables is what has given us science and technology and vastly different lifestyles than those of our hunter-gatherers ancestors. In some sense it is analogous to evolution. The sum of millions of small mutations separate us from single celled like blue-green algae. Each had to survive the test of selection and work better than the previous state in the sense of biological fitness. Human knowledge is the accumulation of millions of stories-that-work, each of which had to survive the test of the scientific method, matching observation and experiment more than the predecessors. Both evolution and science have taken us a long way, but looking forward it is clear that science will take us much farther.

Foundational to trend following success.


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.

The Trend Following Questions to Answer

Now, let’s get practical. Answer the following five questions, and you have a trend following trading system:

1. What market do you buy or sell at any time?
2. How much of a market do you buy or sell at any time?
3. When do you buy or sell a market?
4. When do you get out of a losing position?
5. When do you get out of a winning position?

Said another way (Bill Eckhardt inspired):

1. What is the state of the market?
2. What is the volatility of the market?
3. What is the equity being traded?
4. What is the system or the trading orientation?
5. What is the risk aversion of the trader or client?

You want to be black or white with this. You do not want gray. If you can accept that mentality, you have got it.


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.