Winton, Eckhard, Transtrend, Tuplip, Lynx, AHL have "big" drawdowns? Please define big. Annual avg. ROR % = Max. DD % is not big IMO, but maybe you disagree. It's not a strategy type (trendfollowing, countertrend trading, value investing, gamma shorting etc.) that defines the drawdowns, it's money- and risk management.
Those guys are all running multiple funds-- some win some lose--one would need to look at the entire family over a reasonable time frame. looking at one fund doesnt make sense. trend followers who were short the stock market should be winning up untill now, those long would have been losing---same idea goes for any instrument--there is no edge here since there is no magic to buy/sell and hold--the drawdowns make it abundently clear that trend following is just a marketing term for buy./sell hold. surf
Winton, Eckhard, Transtrend, Tuplip, Lynx, AHL are all single trendfollowing funds. Not sure why you say all these guys are running "multiple funds"? These are their trend following funds and that's what we're talking about. We're not discussing their equity long/short funds or credit strategy funds. When I named these exact same funds 2 years ago you said I was using hindsight bias in evaluating their results and they were just 6 sigma events - like monkeys that got lucky throwing darts at a board to pick trades. Unfortunately all these funds - actually their entire class measured by the HF sub index - have made a killing in the last 24 months as all markets (currency, bond, stock index, commodity) have displayed strong trends with very little whipsaw. Your entire argument didn't change much over time despite the overwhelming success of trendfollowing as a strategy in volatile times. Why not just accept it for what it is: one valid strategy out of many? Nobody said that trendfollowing per se has an edge over any other trading approach. I claim it is as good or bad as any other trading approach. You however claim it is a non-viable approach from the get go. Let's look at AHL again in 2 years from now, and wait for the "big drawdown"
i don't believe its any more viable a strategy than any buy/sell hold approach. can it work?? sure. does it work in a big way sometimes-- yes. is it a good strategy for the average capitalized retail trader-- NO first we need to define the term trend following-- most would say its buying new highs and selling new lows across a myraid of instruments--- right? i believe the above definition of trend following to be an inferior strategy, regardless of the current relative success of some trend followers. there will always be success due to the very nature of buy/sell and hold. others will simply blow out. thanks for the chart, i agree with you that there is no edge in trend following. i would not invest dollar one in a trend following fund. surf
my 0.02, No trend following is not the above, well not according to my system or any workable system. ...buy the beginning of a trend, sell the end of a trend... I know what your next question will be...! "How do you define the beginning and end of a trend ...?"
Surf, please . . . This discussion has been dead for a long time. Trends CAN be defined you simply choose to ignore the HOW. You continually refuse to accept that there is any other form of "Trend Following" other than your dead concept of it. I agree that your definition of "Trend Following" of buying new highs or selling new lows is as inferior and worthless as peeing on your feet to get rid of athlete's foot. There will never be an edge to your definition of "Trend Following" simply because it is better called "Lemming Following".
Anyone in this guy's shoes has a definite set of problems. If anyone is reading the substantive content of this orientation, please take the time and trouble to think critically about its failings with respect to making money and how markets work. The traditions of the financial industry are not based primarily on using capital as a tool for making money. The financial industry is fees and commissions based. Money is made in a market by profiting from price change. Just a few simple principles apply. The above comments by the poster need to be thoroughly examined before they are taken as rational or logical.