Trends Exist?
There are a few guys out there arguing away with the concept of trend following. Their argument goes something like this:
“No one has shown me a single accepted statistical test that proves the existence of a trend. Our tests indicate randomness in most every market series…What I’m looking for is a formulation of method aside from the luck that keeps the rare practitioner of an essentially random system from going broke.”
If you bring up the track records of numerous trend following traders, they attribute any and all success to “luck”. Sure is a whole bunch of luck!
The bottom line? They really don’t want to know that trend following works. If trend following works, they look bad. If you spend a good part of your adult life yelling that something is not true and it turns out to be true, you lose face. I compare these guys to Mark McGwire’s recent steroids testimony. By all accounts McGwire is a decent guy facing terribly hard choices. The anti-trend following crowd faces the same bad choices. If they admit it works, they look real bad. But if they continue to say trend following doesn’t work, they look bad too. People and their egos don’t change.
