successful hedge fund manager and author, james althucher, states in his new book--"super cash"---- that the trend following funds will be history within the next 10 years. he cites the dismal performance of the major trend funds over the last several years, over leverage, and investors pulling out. his new book is fantastic reading into the cutting edge of hedge funds. definitely check it out! surfer
Interesting how he is predicting this downfall of trend following funds during a relatively trendless environment.... "its different this time"???
Surf, these claims are outlandish. Do you realize in theory all mutual funds are technically trend following funds. Are they all going to be gone too? Surf, historically all types of hedge funds go through periods of 2 to 3 years of very bad performance. They never disappear. They always come back. What about all the commodity funds in the 90's when commodities were dead. What about all the short only funds in the late 90's? I think all you will see is a washout of all the trend funds that underperform their peers. The best performing funds will always stick around. Surf, this might be hard to believe, but there were actually trend following funds that had record years the last 2 years.
i don't agree that the claim is outlandish. he is refering to a specific hedge fund strategy known as "trend following", not long only mutual funds. there are many strategies that no longer work in the markets--- the option arbs and witching plays come to mind first. trend following may just be another one of these strategies consigned to late night hucksters and the dustbin of history. surfer
To a disciple of the methodology, trend-following is beyond merely a strategy. Rather, trend-following is a descriptive term used to explain the behavior of the masses as it relates to markets or other phenomina effected by feedback loops and other self-reinforcing processes. Markets are alive and are governed by the laws of physics much the same as any other living organism. To pronounce the end of trend-following is tantamount to saying that human nature has changed. Trend-following as a stategy is the method applied to capture the "physics" of price movement.