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Michael Covel (FT Press)

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Michael Covel (FT Press)

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Michael Covel

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No Talk of Managed Futures

Trend Following | June 24th, 2009

At the panel yesterday with the Turtles and Richard Dennis all I heard was “trend following”. They all talked of trend following. I did not hear the term “managed futures”. But very few professional traders use the term “trend following” in their marketing and descriptions. To me focusing on an instrument (managed futures) over the strategy (trend following) doesn’t make much sense if a goal is to get people to understand this type of trading.

Note: No vulgarity or ugly attacks. There are other places for that.

  • Jefff

    Have you ever thought about asking one of the great trend followers whey they do this? Perhaps they want the method to remain mysterious to protect their potential fortunes. “Managed Futures” leaves you guessing. The term trend “Trend Following” may reveal too much.

  • http://michaelcovel.com Michael Covel

    I have asked them all this. All the big names. Arguments always. I think it has more to do with the clients. The clients are scared. They don’t by and large get technical analysis and don’t really try to learn. So trend followers used term managed futures (I guess) to quell fears. It is an awful term bottom line! Mystery could be part of it.

  • http://michaelcovel.com Michael Covel

    Also, I don’t like that term managed futures also includes other strategies not trend following. Those strategies encompass a small piece of pie though as managed futures are way majority technical trend following.

  • Jefff

    By the way, what was the stated purpose of this meeting? Was it part of a larger conference or simply a standalone meeting? Thanks.

  • Michael Covel
  • DG Dye

    People like the word “managed”…it gives them more comfort than “speculator” or “technical analysis.” It’s the same reason everyone but the receptionist at any investment house carries a VP title…people get to say, ‘My account is “managed” by the “Vice President” of the firm’.

  • Doug

    This seems a non-issue to me. Why? Because “managed futures” is managed futures, not trend following. It’s a question of comparing fruit and kumquats.

    Managed futures simply means that a manager will, well, manage the investment in one or more futures contracts, depending on how he, well, manages. Trend following is one of those management techniques, quantitative reversion to the mean is another, fundamental management is another, astrology is another. And trend following itself has a number of varieties, based on time frame and mathematical formulae used to determine what is a trend, when price breaks out of the trend and what (volatility, other) method is used to follow the trend with a trailing stop or take profits when an unsustainable (read hyperbolic) move takes place.

  • http://michaelcovel.com Michael Covel

    Doug, the vast majority of assets in managed futures are traded via trend following methods. It’s not even close. So if the idea is to win over people…sticking with an awful name (managed futures) doesn’t seem wise to me.


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