I need someone to help on video research. The research would involve searching CNBC online clips looking for particularly egregious fundamental predictions and other notable crazy statements since 2007. Not designed to be a paying job, but it would be a great project for a financial website and or small fund. I will make sure you are credited permanently with links back to your site — which is not without value. Drop me a line if interested.

Note: http://mises.org/daily/4547

There will be another fall 2008. Guaranteed. When? Who knows. But it will come. And there is only ONE strategy capable of making money when the unpredictable hits the fan. There is only one strategy that has strong historical performance during crisis periods: Trend following. That’s it.

However, being ready for it, and being prepared for that risk is hard for many reasons. Charles Faulkner (in my film ‘Broke‘) has talked of the problems inherent in the ‘Socialization of Risk’:

“Everyone thinks …”
“The street says …”
“It’s only/just …”
“Don’t worry …”
“It always does this …”

Do you think like that? Well, when the next crash happens you will be toast. Dead and buried. Broke? No doubt. Why does trend following do well during rough times? Consider wisdom from trend trading pro Ken Tropin about those unpredictable ‘events’ that sink mutual fund holders (edited down some):

“The reason trend following performs so well when equity markets perform worst is both straightforward and almost tautological: some of the best trends occur in financial markets when equity markets perform poorly. Trend following has a high negative correlation to equity markets during periods of perceived crisis in those markets…because a global consensus emerges about macroeconomic conditions which cause various markets, particularly currencies, interest rates and equities to move in tandem. When this consensus is further confronted by an event, such as a major country default, the event will reinforce the crisis mentality already in place and drive those trends toward their final conclusion.”

Further:

“Events do not happen in a vacuum. They are often defined as events because markets are already preconditioned to fear bad news. This is the reason trend following rarely gets caught on the wrong side of an event.”

Read Chapter 4 of my book Trend Following again. Event, after event, after event. All unexpected, all trend following winners. Don’t forget, no matter what the market is doing (up, down or sideways), risk lies dormant, but always ‘alive’. And when the chaos appears in full force again, and it’s coming, will you be extremely profitable or just another guy looking to the government for a handout:

“Gee Mr. Politician, can I have a food stamp?”

Forget that.

Note: Felt it was time for a re-post of this.

Watch.

From the AP today:

“Despite the onslaught of negative economic news this summer, they have barely reduced their estimates. The current forecast for the S&P 500 is an increase of 46 percent this year, then 14 percent on top of that in 2011. Such jumps would mean profits rising above their all-time high in 2006 during the boom. Not surprisingly, analysts are equally bullish on individual stocks. There are 9,936 analyst recommendations on stocks in the S&P. More than half, or 5,277, are recommendations to buy the stocks, according to Thomson Reuters. There are just 508 recommendations to sell.”

Millburn Ridgefield has been a trend follower since the 1970s.

Their July 2010 newsletter (PDF).

That doesn’t tell you too much if you are looking for ’secrets’, but it sure is different than CNBC banter.

From Carl Richards, a napkin illustration:

That gap is explained by this and if you want to avoid that gap and have a chance, trend following is it.

From Barrons today:

“…individual investors feel, as Alan Newman of Crosscurrents puts it, “the deck is stacked, the game is rigged against them.” And they feel that way because it is. As Alan laments, “The public has gotten the shaft from Wall Street, from the SEC, from short-oriented hedge funds and now from high-frequency trading.” The market everyone knew, he says, has disappeared, and in its place is an arena in which the long term not only doesn’t count, it doesn’t exist. Indeed, we suspect that the metamorphosis from exchange to casino is the root of individual investor disaffection. And the singular virtue—if that’s the word—of the ultimate meltdown Albert Edwards is yearning for would be to clear the air, restore the long-term to its rightful place in the investment quiver and eventually restore Jane and John Q.’s faith in the stock market.”

Nonsense.

Markets go up. They go down. They go sideways. Nothing new there. How in the world can buy and holders blame so-called high frequency trading for the Dow going sideways for 10+ years?