Ok - provocative thread title. For the record, I dont think this is the case. But some people might be believing this (again!) as the performance of main CTA funds has been turning south 2009 was mostly negative and the January performance of top Trend Following CTAs is still showing red negative figures across the board (average of -3.99% with a fund even losing 11%!) The surf's down: Trend Followers are having to paddle against the current. But trust them to catch the wave when the swell picks up! (ok they are not as cute as this surfer girl but the analogy is still valid ;-)
Most of them last year was kind of neutral comparing to some previous years, e.g. http://www.iasg.com/group/dunn-capital-management/world-monetary-assets-system-wma Theoretical question: how would world looks like after The End of Trends in all markets?
There are 2 kinds of markets... Trend and Chop. Most investors and managers have a strong bias for one and therefor don't do well with the other. The fact is now and has always been... to be consistently good, you have to be able to recognize both and trade them reasonably well. (Or, make lots of $$ during "your" kind of market and not lose too much in the other.)
"...be able to recognize both..." Words of wisdom. Perhaps the most important aspect of maintaining an edge in the market.
IMO trends only exist in hindsight it is true the last 20 years have been extremely good for trend followers but could have been the opposite. the dramatic surge in the monetary supply coupled with the commodity boom and the emergence of china, india, etc have acted together to set the stage for these major trends we've been seeing. it is quite obvious that no one knows whether these trends will persist or not or to what extend they repeat themselves in the future. the last two years CTA performance might be just an indication of poor management or a whole ball game that is about to erupt in the markets. btw, i benefited handsomely from some of these trends, especially in the last decade but i am humble enough to admit it was sheer luck, not a special skill on my part.
The indicator or system that can reliably switch between the two is my 'holy grail'. I'll let you know when I find it. Get back to you in 20 years or so. And that's not even including sentiment and fundamental following markets. Oh, I really long for the days when a 23 day moving average in the swissi was high tech.
and the DM was fun to trade PS: in general, most of us PREFER to trade either breakouts for trends (ish) or channel-range stuff. depends a lot on the price action. I have a way to get chopped up in ranges because i know who to trade them but just take to many of them...............breakout is my best area so i concentrate on that 90% of the time. Right now for example + only a handle on 3 trades in this chop...............looking for 1st hour breakout as manybe getting some gravy.............the range is not in yet i assume. Double PS: HA, Obama to speak so be alert for some bust-out of some economic miracle.
The trend is your friend. I don't get to see my friends whilst I trade, so I hold onto my only one available.