Trend Following is ranked #1 in the “Stocks” category, #1 in the “Options” category and #2 in the “Futures” category today at Amazon.com.

An excerpt from the white paper Emotional Intelligence and Performance:

“In his best-selling 1995 book, Emotional Intelligence, Daniel Goleman reported that research shows that conventional measures of intelligence – IQ – only account for 20% of a person’s success in life. For example, research on IQ and education shows that high IQ predicts 10 to 25% of grades in college. The percentage will vary depending on how we define success. Nonetheless, Goleman’s assertion begs the question: What accounts for the other 80%? Goleman and others have asserted that at least some of the missing ingredient lies in emotional intelligence – the capacity to acquire and apply emotional information.”

EQ is discussed extensively in Chaper 6 of Trend Following.

Ed Seykota on his web site offers insight into “trends”:

“All methods of defining trends compare various combinations of historical price points. All trends are historical, none are in the present. There is no way to determine the current trend, or even define what current trend might mean; we can only determine historical trends. The only way to measure a now-trend (one entirely in the moment of now) would be to take two points, both in the now and compute their difference. Motion, velocity and trend do not exist in the now. They do not appear in snapshots. Trend does not exist in the now and the phrase, “the trend” has no inherent meaning. When we speak of trends, we are speaking, necessarily, from some or another view of history. There is no such thing as a current trend. When we speak of trends we are necessarily projecting our own definitions.”

“The stock market is like sex. It feels the best just before it ends.”
Harvey Eisen
Dow and Jones: The Wizards of Wall Street
“Biography: A & E Television Network”

I found this video clip checking out Ed Seykota’s updates. It’s definitely worth watching.

BusinessWeek’s recent article on Jim Cramer was titled ‘The Mad Man Of Wall Street’. An excerpt:

“Cramer hits a button, and a haunted voice from above yells, “the house of pain!” to cue his cameramen to run to the right. From Cramer’s cartoonish-sound-effects console comes the roar of a bull. “O.K., home gamers, listen up: This is what the bottom looks like!” he hollers through a megaphone. “You need to start buying ’cause stocks are going to rise!” he says, later adding: “The Fed’s job, which is to kill the economy, is almost done! Pretty soon Greenspan is going to be in Sunrise Senior Living.”

Reading this article feels like a time transport back to the market froth of the dot com bubble in 1999. Everyone truly does get what they want.

From the Futures Industry Association comes an article about trading commodity indices and another article about commodity investing from a pension fund perspective.

Of course some will go to their dying grave whining, “but commodities are too risky.” If you think anything in life is “too risky”, whatever that means exactly, you are probably right for you.

Original promotional document from Long Term Capital Management (LTCM) at TurtleTrader.com.

Superfund, the [managed futures] fund employing trend following methods, has produced an interesting video promo. Given the rather reserved nature of most firms, Christian Baha’s efforts to bring the masses into the world of professional managed futures management is a new thing for Wall Street. Here is the promo piece (18.6 MG) and here is an interview with Baha (1.7 MG).

Hedge Fund Strategies, Performance, Risk and Disasters and their Prevention is a white paper worth examining. It is authored by William T. Ziemba.

Feedback received:

“…sometimes the “intuitive feelings” are right. Remember Jesse Livermore who had a hunch before the earthquake in San Francisco 1907 and sold big the shares of a railway company? Well, it was definitely an intuitive move. If you observe the markets for long, you develop sort of a sixth sense and you can guess even the weekly moves of stocks, although not 100% accurate. Sometimes hunches are good, but they cannot form a system.”

Intuition can definitely play a role in success. But the word “sometimes” is the problem here. “Sometimes” is not a term you can rely on. How do you quantify it? On top of that, why would it matter if you are 100% accurate or not? Trend followers, and other great traders of other styles, don’t sit around with the goal of being 100% right. Chasing “accuracy” as the Holy Grail is fool’s gold (MP3).

Ed Seykota includes a section on data verification at his web site.