What is his volatility and sharperatio?

More on this:

http://www.edge-fund.com/Hard02.pdf

Don’t know Chris Clarke and he can’t say what’s typical of me. Also, have come to learn in life there are no stupid questions. Had expected more from this forum.

ONe June, two gentlemen, A and B, decide they would like to provide water to their thirsty, desert town (a problem which has plagued the town for several decades), Drywood. A decides that he will tap the aquifers with a mechanical design that fills up his 10,000 gallon tank one gallon a day, steady as a clock. At the end of May the next year A has 365 gallons to distribute to Drywood and believes, given the previous cost of water and his own costs that he will make a reasonable profit.

B creates a series of aqueducts over his land to the nearby mountains. His 10,000 gallon tank gets no water in July, August, September and October, but the rains begin to fall, and then the heavy snows of winter and he finds that by the end of May when all the snow has melted and the spring dry season has begun, his 10,000 gallon tank is full. B could not tell you when he would receive the most water, or whether this winter would be flush with water or very light (the snow could fall mostly away from his collecting device, it could be a dry winter, etc.), and the laws of chaos might determine that water which flowed his way for several years would take a different trend this year, but he knows that generally he will get the lion’s share of the rain fall and snow melt that falls in this area.

A and B’s costs of either drilling for or aqueducting water, and building a storage tank, are effectively the same. Supply and demand being what they are, Drywood only needs about 10,000 gallons of new supply of water and so the local price of water falls a bit. A barely breaks even, B makes incredible returns, even with the slight dip in the price of local water.

Both A and B decide to expand their operations to nearby towns and look for investors (and open up their ideas to potential imitators. In which way will knowledge of the Sharpe ratio in terms of their water collection technique help potential investors and imitators make their decision? Won’t the question really be, which technique is most likely to take advantage of universal (if irregular and chaotic) laws to create the greatest return? What would / should an investor / imitator care whether cash flow (water flow) had a high Sharpe ratio or a low Sharpe ratio?

It would take many, many drought years (where A was still steadily collecting his 365 gallons per year) for B to fall behind A’s “returns”.

At the end of the day. Whoever is making cash consistently from Trend Trading is my Nemeisis.
If you want to yalk about or discuss stupid this or stupid that, you are all wasting your time, as in that same time frame you could be very well making money Trend Trading, and cutting out all the outside noise..
The beneficiary from Trend Trading is one in which my Family and recipients will benefit from in my Trend Trading success.