Shorter-Term Feedback
A reader wrote in recently to complain that trend following doesn’t really work and that all trend followers are using “new” techniques today. He also expressed his view that shorter term methods are superior.
He believes this white paper (PDF) is the future of trading.
My comments:
1.) Jim Simons has no peer. He is the best. There are no other traders like him. The costs to do what he does, however, and no one really knows what that is exactly, are huge. His PhD staff, data, & technology far exceed the costs of a trend following operation. I have met no one that does not have the utmost respect for Jim Simons. The question really is: “Is it better to try and be Jim Simons or invest with Jim Simons?”
2.) How can you easily tell trend followers have not changed their style of trading? Trend followers by and large have strong correlations of performance returns. They make and lose in the same months. They trade VERY similar styles. There now exists a nice population of trend followers, trading for some years, to analyze. The idea that they have all “changed” is simply not true when you examine all quantitative and qualitative evidence.
