A Century of Evidence on Trend-Following Investing
As an investment style, trend following has existed for a very long time. Some 200 years ago, the classical economist David Ricardo’s imperative to “cut short your losses” and “let your profits run on” suggests an attention to trends. Early in the last century, the legendary trader Jesse Livermore stated explicitly that the “big money…
As Obvious As The Nose On Your Face
Following on from the previous post on the gain you will need to recover from the current fall out I thought I would rattle off charts of the worst performers and ask a simple question for those who are still holding these issues. My view is the market never lies to you it is totally…
But The Market Always Goes Up
Along with the bleating of the crypto crowd that the current collapse is all a conspiracy – which tells you a lot about the psychology of people who take crypto seriously is the whinging of fundamental advisor types who are apparently telling their clients don’t worry the market always goes up. Apparently, they cannot differentiate…
How To Spot Luck
As everyone should know I am a great believer in luck playing an invisible hand in the success that many people enjoy. And there does come a time when you can spot luck deserting someone as the need for skill becomes apparent. The hedge fund Tiger Global has lost 66% of all investor gains accumulated…
Armchair Commentary
Commentary on matters financial has always fascinated me because it reveals a great deal about those offering it. During the pandemic, we had people who at one stage were complaining that their 10 years old science homework was too hard also giving commentary on matters ranging from the intricacies of immunology to public health. Currently,…
An Observation
Whilst scrolling through ASX listed ETO stocks I noticed something interesting – the performance of the top 20 listed stocks is quite mixed and different to the broader index. The chart below shows the S&P/ASX20 (white) versus the S&P/ASX200 (blue). The S&P/ASX20 is down about 0.59% YTD whereas the S&P/ASX200 is down 6.1% YTD. Given…
How To Stay Optimistic In These Dark Times
In 1979, President Jimmy Carter gave his famous “Crisis of Confidence” speech (also known as the “malaise” speech, though he didn’t actually use the word). Forty-three years later, it seems as if the country is stuck in at least as bad of a funk. In a recent article, Derek Thompson of the Atlantic reported on rising feelings of…
What’s The Fuss About
The chart below is of the RBA cash rate – if you blow the chart up and squint really hard you can see the recent rise in the cash rate. Apparently, this return to normal transmission where interest rates do something other than go down continually is causing a few people to have conniptions. Taking…
From The More Money Than Brains File
A Ford GT owner in Boca Raton, Florida crashed his recently purchased supercar into a tree Friday evening because he was “unfamiliar with how to drive stick shift,” police say. The driver, 50-year-old Robert J. Guarini, told cops he lost control after downshifting while leaving his housing development at around 6 p.m, a police report says. This…
The Destruction Of Wealth
Every generation bears witness to the destruction of wealth – all booms end in a bust that is the natural cycle of the markets. These busts always follow on the heels of what has become known as irrational exuberance and this exuberance is fueled by hubris. But as each investing generation learns price goeth before…
Averaging Down Is Friggen Stupid
One of the eternal truths about trading is that it is conducted by humans and humans are flawed. This is simply the nature of the universe. However, what this means is that all humans irrespective of culture, background, or education are prone to making the same errors. There is a great myth in markets that…
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