Let me start by saying thanks for taking trend following to the masses. The podcasts are excellent. Listening to how successful system traders started out, most of them quite modestly, reinforces my discipline and “belief” (Van Tharp) in trend following. I’ve been committed to systems trading for about a year now. I had researched Trend Following online and ultimately ordered Trend Following and The Little Book. After reading those I never looked back.
I’m definitely not high net worth, so the best I can do to support your endeavor is buy your books (done, done, done & done) and watch Broke (also done). I also left a good podcast review on iTunes a while back. I like your no bullshit delivery. Saying stuff like “hey guys, buy my books already” is so refreshing (or genius marketing). I got a kick out of your “amazon purchase” challenge in a recent podcast. Ironically, I had ordered Commandments and TurtleTrader only a few days before which I look forward to reading.
I also promote your stuff to anyone who will listen but I must admit that finding an audience is not that easy. Example, I loaned Trend Following (my bad, should have gifted) to a friend who is a computer programmer and talks about investing a lot, thinking it would click for him. I was disappointed when he returned the book unread. I was also hoping he might work with me to tinker with system development and testing. So much for that.
I’m currently trading a group of fairly liquid ETFs listed on the TSX offered by Horizons. They have interesting leveraged products with exposure to basic commodities, sectors, and indices. Both directional and inverse which allow you to go short without getting stuck not being able to borrow shares. My system is very basic and I believe fairly robust. I’ve back tested it manually, incorporating proper position sizing across all the ETFs that I track (major work) and it showed positive returns.
I love that the trading component of my approach only requires 20 minutes a day adjusting orders and stops. This really fits my personality, mindset and schedule since I have a day job. I have yet to be profitable (equity curve attached), but I think the fact that I’m sticking with it is an indication that I get it. My diversification needs improvement so I’m considering Futures trading to get away from high-ish correlation of the ETFs I track. First, I need to get some trades (and equity) under my belt.
Anyway, keep the podcasts coming, but please find time to write new chapters to your “bible“.
Discovering trend following is reward enough and I just wanted to say thanks.
More on the philosophy of Trend Following.
Hello Michael, Warm greetings here from Switzerland! I thought I would give you some feedback from a conference I attended last week in Geneva: The Opal European Wealth and Family Office Conference. It reminded me again of how much work we need to do to spread the logic of basic trend following amongst this group. The three-day conference was very much focused on issues of feeling, judgements and nothing short of predictions about asset classes, which countries they should be investing in and the general direction of the market. It is genuinely frustrating to find that trend following is still confined to and seen as a specialized CTA strategy, one of many others. Thankfully, there was a short section (discussed in a separate boardroom) about CTAs and their role in a portfolio, and it would appear that there was a greater deal of acceptance of trend following amongst this group. I also cannot help but feel that even though we are all in the same industry, actual fund managers and those who allocate assets (and therefore judge and analyze us) are in fact very far removed from one another. Michael, we are in the process of building our business and diversifying beyond our own single strategy fund. We have planned for some time to create a fund-of-fund of esteemed peers: the qualification simply being systematic trend followers who we respect from both a quantitative and qualitative point of view. As you know, there are some fancy software and websites which allow you to do quantitative analysis on these. However, we kindly want to ask your opinion and suggestions on the handful of funds here in Europe and the UK which you in your experience find to fit well with your idea of systematic trend followers (regardless of trading instruments, asset class or such variables such as AUM). Of course, there are people like [name] and the like, but preferably ones that are not as well-known as the more famous ones. We will treat your suggestions with confidence and will not hold you responsible for your suggestions; they will simply provide an interesting angle from which to begin our analysis, from somebody whose opinion we hold in high regard. Thank you so much and all the best to you Michael. PS: Thank you for the many updates on both your blog and Facebook. Sometimes you are the only reason for going onto Facebook!
Thanks for the insights and feedback!
I am an open book, however. My experience with assorted managers (by name) is across my websites, 4 books, film and podcast episodes.
It’s all transparent.
“Hi Michael, as you know I love your work and keep buying copies of your books for friends, family and clients. I know you say that persistence pays off and I am working hard on implementing trend following in my business and also in my investing life. I have been trying to hunt down those Winton Papers that Mr. Harding gifted to you. In Australia [name] has a Managed Account with Winton that they allow retail investors to invest in, so we have started placing client monies with Winton. I have had a number of clients call in happy that Winton and Aspect made 10% last year when Aussie equities dropped 10%. I have asked all the [name] associated with Winton if they have seen [The Winton Papers]. No such luck. This morning I attended a presentation where Winton was one of the managers. As usual Winton was last so I had to listen to two other fund managers explain how great they were even though their 5-year returns were negative (both fundamentalists). Winton was represented directly by staff. One was [name], who is a wonderful lady who had just started. I have spoken to her previously…and had inquired if she had seen the papers. She came back questioning if the “The Winton Papers” were a figment of my imagination. More importantly, employee number [blank] at Winton (that was used in his intro) was [name]. He managed to confirm that yes they existed (which I already knew; see your blog 2010/11/06), however, he did not have a copy. So I guess what I am asking is there any chance you have a soft copy of the papers? Or would you like to sell your copy? Or maybe I could rent them for a period of time? Anyways hope business and family are going well. Thanks in advance. Kind regards, [name]”
Yes, I have a copy of The Winton Papers, but I have not been granted permission to distribute.
Note: David Harding of Winton Capital is profiled in my book The Little Book of Trading. He also appears in my film Broke. He has made $1 billion USD from trend following.
Feedback in from Michael Gibbons of Gibbons Trading:
As with most things in trading, the least accepted methods are also the most efficacious. One of the least accepted trading methods by both academia and the financial media is the concept of trend following. In it’s most elementary form, trend following is about being long when markets are rising and being short when they are declining. There are no forecasts or shoulds. There is only the current trend and what is.
One of the most effective journalists to popularize trend following is author Michael Covel. He almost single-handedly has raised the consciousness of investors around the world to the effectiveness of trend following. He has brought many of the world’s greatest trend followers to light, and I cannot thank him enough for that.
If trend following was widely accepted, there would be no need for about 95% of the people employed in the securities industry. Needless to say, this fact alone is one of the main causal reasons that trend following is out of the mainstream. Most simply ignore it’s incomparable track record in both rising and declining markets.
Michael Covel has provided the research and the data to a mass audience to show what we trend followers are all about. I cannot express properly how grateful I am for Michael’s efforts. His impeccable journalism is rare in any context, but especially in the field of trading and investments. As a result of his work, the great achievements of trend followers can no longer be ignored nor viewed as just an anomaly.
Michael R Gibbons
Gibbons’ Trading LLC
From a reader:
Michael, I am interested in learning about trend trading and read a lot of amazing things about the turtles. However, I tried to find something online about Richard and his staggering losses during the late 80’s and 90’s. Maybe I am missing something here, but is there a reason that his system was not working after a certain period? Is there an article or resource you could point me to? Thank you.
Your premise/predicate is off. You got it correct that Dennis had losses, but you need to see the whole picture. The full story of these issues is here.
Lesson? The Internet is a limited source of knowledge. Find out more about Richard Dennis books here.
Hi Michael, this is [name] from Kuala Lumpur, Malaysia. What is your take on Gold and soft commodities for the present year and where do you think the Dolllar is heading to? Warm Regards, [name]
Hi, are you familiar with my trend following research?
Yes i have read your books namely Trend Following and TurtleTrader. For a fact you go with the trend, but just wanted to know as to how you see these trends goin…
But I am a trend follower, not trend predictor! Trend followers don’t make predictions. Both my books emphatically say that. It’s not a joke!