Skipper Gilligan Vents About John Henry
A reader calling himself “Skipper Gilligan” writes me today:
Your blog has been noticeably devoid of news regarding the recent heavy losses experienced by the trading methods you champion. Truth is these guys have been getting slaughtered. Your credibiity [sic] is being damaged by your head in the sand approach…face facts and acknowledge what is happening, as a “true trend follower” supposedly does. In your book you go on and on about Henry. Well, Henry has performed miserably for years now. At what point do investors there “cut their losses”? Wait, looks like they already have as he has lost over 75% of AUM since November. That level of redemptions means he is circling the drain. I hope you will be man enough to acknoweldge [sic] it when the fund closes. This isn’t to say that systematic trading doesn’t work or doesn’t have its place. However your devotion borders on religious zealotry with you coming off as a bit of a crackpot evangelist. System Breakdown is the achilles heel, where managers keep taking losses trusting their system will revert back to their historical models of performance (LTCM anyone?). Fact is that markets DO change over time. No not the underlying concepts of fear and greed, but trend vs non-trend. And much to your’s and trend follower’s chagrin, periods of non-trend often last much longer than your access to shrinking pools of capital.
I welcome vents from ‘Gilligan’ and anyone else.
Some thoughts on Henry:
1. His track record goes back to the early 1980s. I write about his losses and wins in my book. I write about his drawdowns. There is no hiding.
2. Many traders have assets pulled by investors. I write about this in ‘Trend Following’, I don’t run from it. I am sure many good (and bad) traders will see investors pull assets this summer.
3. I can’t speak to changes or adjustments inside John Henry’s money management firm. One of the common bits of feedback I receive about Henry? People ask how he is able to run both a professional baseball team and professional money management firm. My answer? I simply do not know. So far he has had great success with both.
