Feedback in from my recent DVD offer:

Here is the picture of the main entrance of my university with the ‘Broke‘ DVD case as you requested for the complimentary copy of your documentary. Thank you for the free DVD. I really enjoyed your film and have found it (and your work in general) exceptionally enlightening. In particular I liked your Austrian/Libertarian perspective which is hard to find these days. I’m surprised you didn’t include any Ron Paul clips as he appears to represent very similar ideas. At Saint Mary’s I’m a member of IMPACT. This is a student run investment fund where I get the chance to work with some exceptionally bright people. However the concept of trend following is a little lost on most them. Here are some of the funnier rebuttals I’ve received:

- LTCM blew up using a mechanical trading strategy
- John Henry is in the middle of a lengthy draw down
- Day trading is risky.
- You make more money timing tops.

Once again thank-you for the complimentary copy of your DVD. I appreciate the resources and insight you provide and, as always, will continue to refer others to your website. Robert B.

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Feedback in:

Hi Michael, As you know, I have been converted to a trend following/risk managing trader. I have been keeping you up to date on the performance of my system as I trade it live. Anyway, the last few weeks have been interesting and I wanted to provide some feedback. An old friend of mine who is a floor trader pointed me in the direction of a supposed “day-trading” educator. Before I turned and ran the other way, I listened to what he had to say, and I researched the information. Needless to say I do not believe that you can “day trade” for a living. Just for fun, I reached out to these magic educators to see what they had to offer. They use market profile to determine the structure of the market and pinpoint trades based on different value areas based off of a 3 minute chart. When these “longer term” trades are not setting up, they have a so called scalp method to grab a couple ticks every now and then. By the way, they trade the S&P 500 e-minis (suckers market). After digging deeper, I was able to get the whole course for a tremendous discount. I chalked up the price as a way to do some research and provide people with honest feedback as to how you cannot make a living like this. So I sat down and dug into this course to find out the holy grail to making $200/day on a few trades. First thing I “learned” was how to set up my charts. Let’s go down the list…they have a 30 min. market profile chart. A 13 minute chart with a 9/13/56/89 SMA and a stochastic set to 5/3/3. Wait, there is more! A 3 minute chart (which you take your trades off) with a 9/13/56/89/377 SMA and a 13/3/3 and 56/3/3 stochastic. But, you also need to look at a 55 tick chart and time and sales to determine price action. After setting up my charts to attempt to follow along, I was lost. Not only that, you needed to look for 1 of any of the 3 very vague trade set ups to occur in order to actually take a trade. How in the world can you look at all of these charts with all of these lines and make an honest trading decision.  You can’t. Next I moved to the scalping method. I set up my 100 tick chart with a whole bunch of linear regression lines, volume weighted moving averages, and RSI indicators and patiently waited for all of the stars to align before trying to take a trade. Needless to say, very rarely did anything align. Not to mention a 100 tick chart moves at the speed of light, so if you were to get a signal, you cannot even act on it. Kind of reminded me of a quote from your book by Ed Seykota: “the only time frame missing is the minute, second and millisecond, as well as gamma rays for high frequency stuff.” This was a fun exercise for me and I would be willing to share more with you if you needed some research regarding these internet educators. Not to mention, I trade off end of day data, and I enter my orders every night and I go about my business since I have no clue where the markets are going to go. I react to price and manage my risk. As a side note, Michael Martin posted a great article on his site yesterday from the NYT about day trading. I have included the link for your viewing in case you missed it. Enjoy! Phil

Thanks!

Check this brilliant piece of wisdom from an article talking about how the government will sell its shares in Citigroup:

“Like any investor, the government will likely hold on to its shares if prices fall steeply. However, Citi shares have been steadily rising with the broader market in recent months, which means the government is likely to pocket a hefty profit.”

Marcy Gordon, AP Business Writer, please, please … keep writing! You make me smile!

The first edition of my book “Trend Following” was released about 6 years ago and as today’s screen shot below shows…the book has had some serious staying power!

A quick clarification: there have been essentially 4 editions of my book since 04. As each new event or market period happens, I update the book. It is a living, breathing work that I expect to keep on top of for the next 20 years!

What do the notes mean? Of all books available on Amazon it is the #4406th best selling book (out of millions). Of all books available on Amazon related to the stock market it is the 18th best selling book (out of thousands). The top 18 stock market related books by sales as of this afternoon:

1. How to Make Money in Stocks
2. The Intelligent Investor
3. Jim Cramer’s Getting Back to Even
4. Intelligent Investor The, Revised Edition
5. The Neatest Little Guide to Stock Market Investing by Jason Kelly
6. The Little Book That Beats the Market
7. A Random Walk Down Wall Street
8. You Can Be a Stock Market Genius
9. Market Wizards
10. Stock Investing For Dummies
11. Trading in the Zone
12. Trading for a Living
13. Liar’s Poker
14. Free Cash Flow
15. High Probability
16. Technical Analysis for Dummies
17. The Investor’s Manifesto
18. Trend Following (Updated Edition)

I have linked to the ones that I feel are worth reading. Many of these are absolute nonsense.

Put aside trend trading for a second and let’s consider economics. How in the world is there ‘recovery’ and a strengthening business cycle in the face of massive government intervention (spending, new debts and interest rate manipulation)? I just don’t get it:

That makes 73 countries. Now we have to update Latvia everywhere!

We will see the law of unintended consequences arrise from this:

“[Senator] Dodd’s 1300-plus page proposal includes a laundry list of items: a new consumer financial protection agency, new supervision of hedge funds and derivatives trading, a reshuffling of banking industry regulators, investor protection, new federal authority to handle too-big-to-fail financial firms meant to limit taxpayer bailout funds and the creation of a systemic risk council as part of an early warning system.”

Kids, repeat after me and tap your ruby red slippers three times: you can’t legislate away human behavior, you can’t legislate away human behavior, you can’t legislate away human behavior…Followed by: bigger bubbles will follow, bigger bubbles will follow, bigger bubbles will follow…

Seriously, doesn’t it appear the United States federal government is attempting to strap a diaper on all of us? I get the idea of a diaper’s job, but guess what: When everyone shits away it might not hit the floor, but it will still smell awful — diaper or not.