“Michael, your book Trend Following is outstanding. I have 5 speaking dates in early 2006 and I will give all of the attendees some homework…telling them that [they] must read your book. I thought that homework would end when I got out of school, but I know that doing homework never ends…Thank you for the education. In addition to being a Market Timer I am now a Trend Follower. Your book is a must read for every investor. Well done.”
Jim Rohrbach
Founder and President
Investment Models, Inc.

Here is the entire book jacket (PDF) for the new and expanded edition of Trend Following released this month.

The New and Expanded Edition of Trend Following is now available. This edition builds off of the original released in April 2004.

The November 2005 New and Expanded Edition:

1. New Forward by Larry Hite
2. New Afterword
3. New Table of Contents
4. New Acknowledgements
5. New Cover (PDF)
6. Original edition 311 pages. New & expanded edition 420 pages.
7. Beyond new material in “red” listed in the Table of Contents, this edition has an additional 50 side margin quotes throughout.
8. Fixes all typos in the first few printings of original edition.
9. The first printing of Trend Following in April 2004 used a very thin paper. All other printings after used a thicker more durable paper. The new expanded edition for November 2005 uses the much thicker more durable paper also.

Endorsements (More)

“For my staff at Hite Capital, Michael Covel’s Trend Following is required reading.”
Larry Hite, CEO, Hite Capital Management

“A mandatory reference for anyone serious about alternative investments.”
Jon Sundt, President and CEO of Altegris

“Michael Covel does an excellent job of educating his readers about the little-known opportunities available to them through one of the proven best hedge fund strategies. This book is like gold to any smart investor.”
Christian Baha, CEO, Superfund

The new edition is available now online and offline at Barnes and Noble and Borders stores.

From RealMoney.com comes this excerpt:

“Oh, there is one other number to be on the lookout for. That of course is Dow 11,000. With all the hoopla likely to accompany a move to this level, we should see a pretty good pullback follow the first pop to or through this big round number. Ultimately, Dow 11,000 will likely be taken out. But I look for the first attempt to fail and to be followed by a tradeable decline. Wednesday’s high just shy of 10,951 may have been close enough for the moment. A quick 40-point pullback to the 10,910 level followed in the final hour, as apparently there were too many bets already placed on an imminent assault on Dow 11,000. Whether it happens this week or next, odds are good the much heralded pop through Dow 11,000 will happen. But I suspect that when it does, rather than being the sign of a new bull leg beginning, it will be the sign of the last buyer buying.”

What are you supposed to do with this commentary? This stuff is all over the web. What in the world is the purpose of it?

Feedback received:

Buffett has spent so much time being Soros’ puppet to notice people arent buying Coke, BUD, and soon PG+WMT, he wants to bet against america with soros’ whose only goal is to get political control………..sorry, i choose america…and therefore i boycott buffett products, i’ll miss WMT, but i and my family are loyal americans.”

If you think like this, you miss the point of making money in the markets. While I understand this gentleman is trying to promote some type of pro-American view…that kind of talk is silly. The world is global. While this guy is chasing conspiracy theories, the great traders “trade”.

An interesting article on Hedgestreet and a conference to be held on prediction markets on December 2, 2005.

Yes, I am sitting in Google (GOOG) too. The trend sure is nice. But as a trend follower, you always need to have an exit strategy.

Feedback on Blackstar Funds white paper posted yesterday:

“Hi Michael! Thank you for your informative blog - I read it every time you place a new entry. I particularly enjoyed your recent post titled “Trend Following on Stocks”. However, at the very end of the publication the author makes a trading slip. It’s what I call the ’stock split bias’. In the article the author ends by mentioning that they filtered stocks that traded below an absolute dollar figure of $15 - to filter out undesirable trades/stocks. While the logic seems sound on face value, in back testing it filters out stocks without taking into consideration the stock splits. As an example, take Microsoft. With its current stock split history it doesn’t trade above $15 until around mid 1997, however, back in 1997 Microsoft was actually trading around $120! Therefore, neglecting MSFT prior to 1997 because of its current stock split history would not accurately reflect the performance of the system back in 1997 (where it would have traded MSFT). Of course if the back-testing incorporated stock split data this problem could be circumvented, however, using absolute dollar figures on price should not be used in back-testing if incorporating stock splits cannot be used. Thanks for your time and I look forward to reading more great trend following material (loved your book too!). From an avid reader and trader, Ryan”

The author Cole Wilcox wrote me back to clarify:

“He is smart to recognize this, however if he re-reads Appendix 4 he will see that we have accounted for this by maintaining 2 sets of data. Our minimum price filter is based on the actual prices that hit the tape, not the split adjusted data.”