thats a joke. The only game in town that beat trend following in 2008 was being short financials straight from Jan into Dec. Who has such exposure and nothing else? Very few. Secondly, the point is that for the retail investor (I stress investor!) trend following is THE ONLY WAY to maximize your investment over a long period of time. Name me ANYTHING else that an investor should do rather than trend following.
Actually, it's the opposite. It is FANTASTIC that such dumb (or disinfo agents) people like surf and other trend following or moving averages bashers exist - without these morons it would be impossible to earn money on trend following!
I tell you the right answer. If I traded the trend as an investor (which I do in my personal long term investment account) then I had the choice between a) putting on a hedge when markets got into the bear market rally or b) riding the bear market rally because the long term trend is still down. I chose to go with choice b which of course shows up as a drawdown of about 20%from the equity peak. I am very vigilant in observing how markets will trade in the upcoming couple weeks because this will give the major direction for the next few months. You dont need to believe in trends nobody forces you but the evidence clearly points to the long term track record of success for trend following.
Surf you are 100% correct because you base everything on theories and stochastic calculus. But markets dont care about theories...markets exhibit trends when there is a change in fundamentals on which the crowd reacts and drives prices. Because not everybody reacts instantaneously there is a feedback effect which results in sustained moves in the same direction. Now how is your approach to the markets any better? Why would any position you put on move in your anticipated direction? Even if you traded support and resistance, what is support and resitance first of all. Just because the market traded to a certain level in the previous x hours/days/minutes it has to bounce off that level next time? Why? If people panic they sell they dont care where the market was in the previous session. You dont need to believe in trend following, fine. But show me an idea that works better and BACK IT UP.
Those who try yo buy the lows and sell the highs lose fortunes. Only amateurs and idiots try to buy the lows and sell the highs.
And for the 109th straight time Surf can't back up his ridiculous theories and goes into hiding. It must suck being wrong 99.9% of the time huh Surf ?
Seeing how many posts and views this thread has generated I would venture a guess to say that Baron has made the request to increase page views again because Surf isn't interested in seeing the other side of this discussion, just throwing fuel on it.
You're right if #1 is poorly designed and you repeat too much on #4. But if #1 is well designed and have a reasonable number of try then what's wrong with that method since trend do exist (say a very few can be spotted and most of them are in hindsight and therefore #1 & #4 are critical for success). It's just a matter of how to spot it correctly (the toughest step) and have enough confident to sit tight.