Some reading that paints tougher times:

Warning: Goat Rodeo
Weaning Off ‘Alternative’ Investments
Japanese Population To Shrink By One Third, Size Of Workforce To Plunge In Under 50 Years
A Housing Bottom? What Are They Thinking?
The Slowest Non-Recessionary Growth Since 1947

I am not betting off their wisdom (it’s not needed to be a trend follower), but it is interesting to note smart people trying to figure it all out.

Below is one life path–attached to the nipple:

A better option? Be a linchpin.

Nell Sloane of Capital Trading Group offers insight into Integrating Managed Futures and Traditional Investments (PDF). Download and take a read.

Note: The vast majority of “managed futures” investments are trend following in nature.

From a student:

When I started the program, I was given the advice to read the first four books that you wrote before getting too involved in the course material. Well I made it to chapter two of “The Little Book of Trading” and then I promptly stopped. Why? I was reading about David Druz where a friend of his gave him some advice to finish medical school first and then concentrate on trading. I was in a similar situation. From early September 2011 to the middle of January 2012 I was going through the locomotive engineering program through the railroad I work for (BNSF). The stipulation of choosing to become an engineer is if you start the course and fail to complete it successfully you are fired from the company. That kind of pressure, together with the idea of having no job especially in this economy would have made me a terrible trader. So I took the advice from the book, successfully completed the engineering program and now the sword of Damocles has been finally removed. I figure that…training should have three phases. The first is to get the background by going through the four books. The second is to go through the course materials and complete the quizzes, and the third is to open up demo accounts and find ways to automate my trading as much as possible. I’ll have plenty of questions in the future about the best way to automate, what to look for in brokers, etc., but that will be after I complete the course material. My goal of this course is not to know market direction, but to internalize a proper reaction to the conditions presented before me.

Thanks Shane.

I will be speaking here in NYC in April.

So you think you need to be born with an Asperger’s memory gift to win at trading?

Wrong! Read:

The Talent Code
Talent is Overrated
The Complete TurtleTrader

For example, here are some of the Turtle backgrounds:

Collin’s Commodities – Commodities Accountant
Rosati’s Pizza – Kitchen help
University of Notre Dame – Philosophy/French

Budget Copy Systems, Inc. – Vice President
P.S.G Inc. – Manger
University of California, Los Angeles (UCLA) – Political Science
University of California, Berkeley – Law

Caterpillar Tractor Co. – Open Consultancy
United States Air Force Academy – Philosophy/Math
American Graduate School of Intl. Mgmt.

Continental Grain Company – Grain Merchandiser
Johnson Graduate School of Management – Finance (MBA)
Catholic University of Louvaine – Applied Economics
Brown University – Economics/Geology

Cushman/Wakefield CBT Security – Security
Central Connecticut State University – Marketing
Chicago Grain Inc. – Runner Phone Clerk
Produce Grain – Phone Clerk
Correctional Alternative Center – Counselor for Inmates

Wilkinson and Lester CPA’s – Staff Accountant
Virginia Credit Union League – Auditor
University of Virginia – Accounting
Ferrum – A.A

C&D Commodities – Clerk Floor Manager
John Marshall Law School – Law
Miami University (Ohio) – Economics
Loyola University (Rome)

Clayton Brokerage – Account Executive
E.F. Hutton & Co. Account Executive
Self Employed – Music Teacher
Paul Bamberg – Physics Teacher
Susan Kaplan – Teacher of prep. Courses
Don Mills – Kitchen Worker
U.C.L.A Medical School – Medicine
Harvard University – Science
New England Conservatory of Music – Piano/Music Theory

Hull Trading Co.- Computer Programmer
American College of Switzerland – Natural Science
De Anza College – No major

More in my book.

Jim writes:

Once more we hear that Greece needs more money or it will fail. If you are like me, you are getting tired of hearing that story too. I really do not listen to that stuff when it comes to making my investment decisions. And I really feel sorry for the investors who do make their decisions based on what they hear and read.

Wise.

From the wires:

…it appears the Fed is saying it won’t raise rates until 2015, since its statement said it was holding rates low through 2014.

Translation:

“F*** yeah we are gonna keep rates at 0 through 2014…staying there until we at least create another damn bubble! You f***ing sheep get long and start buying Miami condos again!”

I do take responsibility for the translation.

Courtesy of ZH comes David Rosenberg:

Q: Isn’t this still a “modern-day depression?”

Sure it is. And just as we saw in 1933, 1934 and 1935, the economy and the stock market can experience a brief cyclical recovery, especially given all the massive monetary intervention by the central banks, but the fragility and vulnerability never go away, and neither does the hardship for many. Yes, yes, the stock market has doubled off the March 2009 lows. Yet, since that time, more than 11 million Americans have joined the food stamp program, including 4.4 million in 2011 alone. That may not fit into your definition of depression, but it does for these folks, I am sure.

The labour force has contracted by over 800,000 since the recession ended — this too is unprecedented. Assuming that the 200,000 payroll gain in December was the real deal, it would take 30 more of these to get employment back to where it was when the recession began four years ago. Real per capita personal disposable income in the U.S. has not grown for six years — despite trillions of dollars of government stimulus. If that’s not a ‘depression’ outcome, then please come forward with your definition.

If you exclude the mountain of government social benefits, real income on a per person basis has rolled all its way back to where it was in 2001! Interest rates have been 0% for over three years and governments around the world have blown their fiscal finances out of the water in order to save insolvent banks and save economic activity from implosion. In fact, as a result, there has been such a radical decline in creditworthiness coming out of the Great Recession, that the pool of sovereign bonds that have unblemished AAA ratings has plunged to $4.5 trillion from $16.9 trillion (see page C12 of last Thursday’s WSJ). That is a 73% nosedive and a reminder for investors that in the name of owning “scarcity”, high-quality paper is noteworthy for its dwindling supply.

Don’t bet only off Rosenberg’s words as you try to make money in the markets. However, bet off his words, with sound strategy thought out in advance that doesn’t require you to parse mountains of fundamental data, because how else are you going to produce profit in the climate he describes? Do I think trend following is a wise to bet for the chaos he describes? Yes, I do. And if you want to call me nonstop redundant–go for it–but I am not stopping.

A line I caught at The Big Picture:

“I confess, I think about the future. So do my colleagues. If someone who’s spent decades investing doesn’t have an opinion about what lies ahead, there’s something wrong. I believe our clients want us to apply the benefit of our experience in gauging and reacting to the opportunities and risks that lie ahead.

But I have a mantra on this subject, too: “It’s one thing to have an opinion; it’s something very different to assume it’s right and act on that assumption.” We have views on the future. And they can cause us to “lean” toward offense or defense. Just never so much that for the results to be good, our views have to be right.”

–Howard Marks, Oaktree Capital Management January 10, 2012

Marks is not a technical trend follower, but wise words about not worrying about being right.

The Dead saw it too:

Drivin’ that train
High on cocaine
Casey Jones you better
watch your speed
Trouble ahead
Trouble behind
and you know that notion
just crossed my mind

Trouble with you is
The trouble with me
Got two good eyes
but we still don’t see
Come round the bend
You know it’s the end
The fireman screams and
The engine just gleams

Caught this excerpt floating in the ether:

Now the message is similar, except that all of the worries over European debt problems have pushed T-Bond prices up even higher toward “expensive” territory. And now with a deal reportedly getting worked out between Greece and its creditors over the size of the “haircut”, traders are concluding that the supposed safety of T-Bonds does not merit as much premium as it used to.

At the same time, commercial traders of both T-Bond and T-Note futures are getting to a point of being net short in the biggest way that they have been in years. Commitment Of Traders (COT) Report data is something that I address every Friday in the Daily Edition. And commercial traders are also net long the euro in the biggest way in the history of that future contract. So the big smart-money traders are betting on a euro rebound and a T-Bond selloff.

Want to bet off that?

From Wired:

The world is a complicated place. Reality is dense with patterns, but these patterns are often subtle and inconsistent. We think we understand how things work — X always causes Y — but then Z happens. It’s very confusing.

Trend following doesn’t try to understand. It doesn’t care. The article from Wired is not about investing you say? You miss the point.