Recently Barry Ritholtz posted about Michael Lewis’ new book. He was making a point about a dealing with publishers and Amazon. So true! Writing a book and navigating these waters is often a not fun experience. Just today I received a deal note that one of the foreign publishers for my book “Trend Following” was now set to release it in electronic format in Russian. Good news? Sure, but wow what a slow and inefficient process. You would think this could all happen in a concerted, organized fashion. It doesn’t. Bottom line, authors control very little except the content of the book!

I agree:

A Friday thought…

No one can predict a market trend, you can only react to them! Trend following never anticipates the beginning or end of a trend. It only acts when the trend changes. However, there is no need to figure out ‘why’ a market is trending — just follow it. You don’t need to understand electricity to use it.

There is a good chance that if you post here under different emails regularly, but the same IP, that your posts will stop showing up. My blog is not designed to become another anonymous chat room.

A trend following fund friend sent this along this morning…

Investment A example:
Average annual return: 9%
Standard deviation of return: 6%
Worst case drawdown of approximately: 12%

Investment B example:
Average annual return: 30%
Standard deviation of return: 20%
Worst case drawdown of approximately: 40%

His comment:

“Most people prefer the safety of a 9% return with a 6% fluctuation. However, both investment risk/return profiles are the same. They offer the same ratios between average annual return and risk. Standard deviation of return is 67% of the average annual and worst case drawdown is 33% larger than the average return. People’s natural biases tend to lead them into thinking lower returns means lower risk [but is that true?]. If you’re going to accept those risk ratios then why not shoot for the higher return in the process?”

Thanks.

A question in last night:

“What method is used to identify a trend?”

No one can identify a trend until it is over as a trend has a beginning and an end. A trend is not a moment in time so to speak. What you can know is where you will enter and exit before you ever enter.

Two links that may offer more insight:

1. http://www.michaelcovel.com/the-trend/
2. http://www.michaelcovel.com/2010/02/24/trend-following-day-trading-question/

Here are some questions received in the last 48 hours:

Q: Do you think the stock market rally will continue?
A: Markets always go up, down or sideways. I can’t predict the timing of either option, but neither can anyone else.

Q: Who is your favorite Market Wizard in your DVD collection?
A: They are all similar thinkers, but with different personalities. I don’t have a favorite, but really enjoyed each experience with each trader.

Q: Can I buy individual pieces of your trading system course?
A. We don’t provide our trading system course à la carte (see features). Why? We don’t view educational experiences provided to our clients as a ‘commodity.’ Personal support is an integral part of our educational method and there is no way that can ever be properly priced for every individual. That said, support is built into our price and so far for over a decade it has worked well for clients in 72 countries.

Feedback in today:

“Michael and staff, hello my name is [name] and I have been following your teachings for quite some time and have read “Trend Following” (new edition) and am now reading “The Complete TurtleTrader.” A little about myself Michael: I play professional basketball and played college basketball at the highest level and really have loved the idea of trading and investing for quite some time. With you Michael and the information that you have written about and spoken about IT JUST MAKES SENSE … especially when it comes to discipline, a strategy, and keeping things simple. I wanted to possibly get in touch with you or someone from your staff because I am very interested about taking the course and also taking the next step in establishing a successful trading business. Thank you, [name].”

Thanks for reaching out and thanks for the nice words. Feel free to drop an email or call and we will answer any questions you might have.

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