Contrarian Currents for Trend Following?

A couple of weeks ago, we published a newsletter called “Is Trend Following Dead?” We don’t believe it is, but the piece has generated a great deal of conversation in investing circles. Perhaps the best example has been the running commentary on LinkedIn. You can take a look at some of the feedback here, but generally speaking, there are a lot of folks out there who are buying into the obituary of trend following. Their reasoning?

  1. There is too much money in trend following now, distorting the trends in the markets.
  2. Continuous government intervention in the markets has stymied the development (expansion) of significant trends.
  3. Risk on/risk off trading has brought all correlations to one- there is no diversification anymore.
  4. Interest rates at 0% have made it too difficult to make money.
  5. High frequency trading has destabilized the natural progression of the market cycles.

However, as long-time trend following advocate put it, “You can find these exact same comment streams every time there is a trend following DD.”

Turns out, he was right- and has said the same thing before. You can find these sorts of time of death proclamations here and here, for instance. We could go on, but for our two cents, the eulogies being written today are premature. Given that these kinds of comments in the past have preceded a trend following resurgence, we’re hopeful they are a contrarian indicator. Past performance is not necessarily indicative of future results, of course, but if you ask us, trend following isn’t dead – merely resting.

One comment

  1. […] es no. La respuesta más complicado se puede encontrar en este boletín y en un artículo posterior aquí, y en una revisión de 100 años de seguimiento de tendencias aquí . Ambos lados de la moneda […]

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Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

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