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Can’t Argue the Facts

Feedback in:

Hey Mike!

Just a quick one to say thanks for your podcast and your work. Just finished your book and have been listening to your podcast for about 6 months now. I’ve been studying in a share trading diploma here in Australia to get me started but as I’ve progressed I’ve noticed so many holes in the theories surrounding market timing in particular. I haven’t been content to just assume these methods work.

I’m a huge Oakland A’s fan and I’m a big sabermetrics guy. Trend Following looked like the most logical method of trading to me, but once you compared it to baseball it concreted it in my mind. It’s logical! You can’t argue a point (very well) with qualitative data. In my mind that applies to everything in life…. so why not trading?

Appreciate your insights.



“Listen, I surrender, you beat me Mr. Market, now where do you want to go?”

Feedback in:

Hey Michael,

Recently I started listening to your podcast and have been researching a bit of what you have been saying. I find your podcast I be extremely informative. I think sometimes it’s the kind of kick in the ass the public needs so I am glad you are out there speaking your mind on a lot of important topics.

I did find a lot of research verifying that trend following is a valid strategy and one where a lot of people have made a decent amount of money. However, I couldn’t find very good information as far as annual returns over the long-term goes. Can you send me some of this?

The trend following system, in general, makes a lot of sense. Trends happen, obviously. Those who want to be a passenger can be and can make a lot of money. Intuitively I like the idea. It appeals to my sense of logic. You’re not trying to figure out anything. You’re merely saying, I don’t know where this will go, it seems to be going somewhere, and you buckle your seat belt. The seat belt is the stop-loss in this analogy.

Anyhow, just wanted to send a kudos your way. Keep up the good work. Would like to hear you talk more about a lot of people that are in boats they never thought they’d be in. For instance, in my case, I got myself into a lot of debt via students loans. It’s not an easy ride in this economy to have a degree no one cares about (I have an MBA). Agree with the entrepreneurial lifestyle. I worked a dead-end job for a bit of time and now am ready to move on to something new and try to get out of the “zombie-like” mindset.

I have subscribed to a while to value investing and found lots of research to show it does work. The problem with value investing, compared to trend following, is that it takes a tremendous amount of work to try to figure out something the market doesn’t already know or find where the market differs from the underlying value of a company. Trend following seems to hold up the white flag and say, “Listen, I surrender, you beat me Mr. Market, now where do you want to go?”

Larry H.

Thanks! Data? See.

Give Me the Data; Don’t Whine

You have a trading strategy that works? Prove it. Give me the empirical data. Or you can go this direction:

When people see something they love is under threat, their first reaction is to build an “impenetrable” wall, a Maginot Line–and just to be extra safe they decide to enclose a bit more territory, a buffer zone, inside its fortifications. It seems like a good, prudent idea. It seems to protect us from the awful slippery slope, the insidious thin edge of the wedge, and as everyone knows, if you give them an inch, they’ll take a mile. Dig the moat! Build the wall! And as far out as you can afford. But this policy typically burdens the defenders with a brittle, extravagant (implausible, indefensible) set of dogmas that cannot be defended rationally–and hence must be defended, in the end, with desperate clawing and shouting.

Start with the data. Then clawing and shouting go away.


Source: Dennett, Daniel C. (2013-05-06). Intuition Pumps And Other Tools for Thinking (p. 204). W. W. Norton & Company. Kindle Edition.

Talking Loud and Saying Nothing

This email came in:

I am an avid listener of you podcast, I have read and seen much of your material and I have to say enjoy your controversial approach. I find it hilarious how you poke fun at the technical charting ‘fan base’, but like the many I have to say I would disagree that trend following is the only proven way. In short, I think we both agree risk management is the key to longevity whatever style you adopt, from many of the legends have been quoted that the style of trading is not the issue but finding a system which suits your personalty is critical. As 90 percent of any trade is psychological any system in the wrong hands is doomed to fail if executed emotionally even trend following. There are many famous technical traders all of which would have there profit and loss available to see from the same resources you produced when showing all the successful trend followers. I don’t think your argument towards the technicals is valid, but l do agree that trend following works and is a great trading strategy, l just think its a little naive to think its the only one. Keep up the good work, I really like your material.

Where is the data for the predictive technical analysis traders? Send me the decades of performance data. James Brown, and I say this with a smile, saw it:

Kevin Bruce: Silent Trend Following Pioneer

Kevin Bruce is a silent (and very successful) trend following pioneer. Who is he? For those trend following data freaks out there, check this out (PDF). The highlighted sections are Bruce. You ask who is “Signet”? Signet Bank was where Bruce worked. In one of those odd stories Bruce had convinced, due to his performance and his fortuitous timing, to let a regional bank back in the day let him trade a trend following portfolio ‘in house’. To hear him talk about how he managed this relationship is nothing short of amazing. Bruce also appears in my film Broke.

Note: I will be soon putting out the long form interviews of many of the traders in my film. Bruce is coming, but first I will release David Harding (76 minutes) and Salem Abraham (89 minutes). Both are timeless interviews.

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