The new edition of Trend Following has gone from 100,000 words to 230,000. It is out now and it is the definitive effort on trend following. Other books have been written and they have given some good insights. However, this new edition is it. Today, Michael reads passages from the Preface and Chapter 1 of the 5th edition of Trend Following. This sneak peak gives listeners a flavor of how Michael is pushing the envelope in today’s world and further enhancing an understanding of trend following.
I wanted to take a minute to tell you your podcast is great. I ordered your book, “Trend Following” and received it a couple of days ago. Nice work.
You asked if we started to make money with trend following. First, I should say I made all of my money investing following a value (and often contrarian) philosophy so trend following does not come naturally to me. Still, I started experimenting and developing my own momentum tools (backtesting in Matlab) following some of Meb Fabers ideas and I am getting the hang of this whole buy-high-sell-low thing 🙂 I am taking my time and will go through your book and (and most probably your turtle book) before I decide how I will introduce trend following into my investing framework (I feel lucky as my portfolio is large enough to accommodate partitioning a portion for trend following). I will be sure to let you know how things are going if/when I make the jump.
The only advice I would give is to be careful that the enthusiasm and passion you have for trend following does not come at the cost of denigrating other ways of investing (e.g. fundamental investing a la Stan Druckenmiller) as it may make you seem closed-minded when in fact you really seem extraordinarily curious.
I loved your story about being recognized by a Singaporean cab driver. It reminded me of another Singaporean anecdote I thought you might appreciate.
I’ve been living in Bangkok for the last ten years and don’t really get out much. But I was in Singapore maybe four or five years ago on a brief visit with a friend who’s quite familiar with that city.
Knowing how much I love books, he took me to a gigantic book store. Place seemed like it was a block long. Easily ten times bigger than any bookstore I’ve ever been in. I had heard some very positive things about your trend following book from a 4X trader. So I walked right up to an employee at the bookstore and asked if they carried your Trend Following book. Guy went right to a computer and twenty seconds later his head pops up. “Yes sir. We have it here.”
And it was in my hands a few minutes later. As I recall, it was quite a walk from where we were in the store!
I don’t know the name of that store. But the next time you’re in Singapore, maybe Rogers knows!
Glad you’re digging Asia. It changes you. It’s all happening here. North America and Europe are comatose in comparison. I don’t think I could live there anymore, anyway. Too many rules!
Appreciate all your contributions. Even if you totally walked away from the podcast, don’t worry about it. You’ve already done plenty. Take care of yourself first with whatever you need and the rest will take care of itself.
On Meet the Press, one United States governor appeared confused: “If you care about democracy and what the everyday citizen believes, and you want to empower them, they don’t want the Social Security system to be dismantled, and they don’t want the Medicare system to be dismantled… this is a compact between generations to be able to make sure that all of our seniors have the funds when they retire, that they’re not going to be homeless, so they’re not going to have to go to a shelter.”
Did she know that the inflation adjusted return of Social Security is just 2 percent? A United States Senator on Meet the Press apparently did not: “Social Security is a program that works. It is fully funded for the next 40 years. Stop picking on Social Security. It’s not a crisis. Social Security is fine.”
Those politicians are not stupid; rather, they have ceased to think. Or, do they just need to tell a certain story to ensure power for whatever party with which they are affiliated? Waiting or hoping for your politician, on the right or the left or anywhere in between, to win an election is an investment strategy of your ignorance.
Behind the scenes and in the halls of Congress; drunks, perverts, and losers addicted to fame and power. Both sides. You can’t make money from them or social security. There are other options.
Michael, thank you very much for putting the truth out there! I was introduced to Trend Following about a year ago after trading (unsuccessfully) with the Elliott Wave Principle for eight (8) or so years. I lost a little capital at a time but in all, took losses of about $40,000 USD. Something had to change and it was when I was introduced by a trend following system being marketed to me via a pop up window while browsing the internet of all places. Well, I bit, tried it out, and quickly found it to be a more realistic view of the markets and it made rational sense. After a few weeks I saw potential and devoted many many sleepless nights back-testing and tweaking systems and the results now have been phenomenal to say the least. Over the past nine (9) months I’ve taken [blank] and turned it into just over [blank], fairly conservatively.
Your blog posts, your podcasts, and lastly your books have been there to mainly keep me going, remembering the plan, striving to do the same thing day in day out, win or lose. It’s so rare to have support as a trader and your message and content have helped immensely. My plan moving forward is to grow my personal futures trading account to over [blank] in the next twelve (12) years and along with using my current system, listening and reading your content is going to get the job done in time. I thank you very much good sir for your passion for common sense investing and your willingness to share and assist in an industry that is typically full of poor advice.
I have written multiple books. All from a different perspective, but still all having trend following connective tissue. Consider an excerpt from the preface of my first book Trend Following:
Trend Following challenges much of the conventional wisdom about successful trading and traders. To avoid the influences of conventional wisdom, I was determined to avoid being influenced by institutionalized knowledge defined by Wall Street and was adamant about fighting “flat earth” thinking. During my research, starting with an assumption and then finding data to support it was avoided. Instead, questions were asked and then, objectively, doggedly, and slowly, answers were revealed.
If there was one factor that motivated me to work in this manner, it was simple curiosity. The more I uncovered about trend followers, the more I wanted to know. For example, one of the earliest questions (without an answer already) was learning who profited when Barings Bank collapsed. My research unearthed a connection between Barings Bank and trend follower John W. Henry (now the majority owner of the Boston Red Sox). Henry’s track record generated new questions, such as, “How did he discover trend following in the first place?” and “Has his approach changed in any significant way in the past 30 years?”
For those that follows my work, you can see how my foundation has remained the same over the past 15+ years:
Would you please clarify the chronology of your 4 books? What order were they written and published? Thank you.
First off, as an avid listener to your podcast I would like to thank you for the free content you put out to spread the trend following ideology. I have benefited from your content greatly, and know other like minded people have benefited as well.
As a recent graduate with an engineering degree I had a lot of trouble carrying out a buy and hold (hope) type investment strategy. It was a big mental conflict listening to the advice of financial advisors that recommended a strategy with mediocre returns and excess risk. Why does the media, efficient market theorist disagree with the that mentality hard work = results when it comes to the markets? Why do people settle for mediocrity?
Being relatively new to investing, and being the results driven person I am, after hours/days of researching different investment strategies, trend following caught my eye. A system that relies on the hard numbers (price) rather than opinions and blind predictions is exactly what I was looking for. Despite the poor timing for me to adapt a trend following type strategy (sideways market), I am no less confident in my strategy than the day I started, however this doesn’t mean there isn’t room for improvement.
As someone who exclusively trades stocks/bonds/etfs which of your books would you recommend for me to improve upon my system? I am already aware of the many trend following principles the turtles have used, i.e. position sizing, entry, exit…