Althucher guesses: trend funds to disappear within the next 10 years...

Quote from Vishnu:

You know, you have a nice big post here criticizing all the points in my post and yet every point you make is off. For instance - "25 billion" !? How can I take the rest of your post seriously? You're off by maybe a factor of 10-100, particularly considering when you add back recent losses.

All I'm saying is that trend following as an investable strategy has pretty much failed in the past 2 years. Yes, there are exceptions but the main players are largely suffering through their worst drawdowns ever. Will they come back? Who knows. But I'd rather focus on strategies with a little more staying power instead of relying on the myth that "the trend is your friend". With friends like that...
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<img src=http://www.trendfollowing.com/sep05/chesapeak_perf.gif>

<img src=http://www.trendfollowing.com/sep05/clark_perf.gif>

<img src=http://www.trendfollowing.com/sep05/drury_perf.gif>

<img src=http://www.trendfollowing.com/sep05/rabar_perf.gif>

Yeah, you are right, not a viable business model.
 
i always thought you were a pretty bright guy, maverick. however, the last post makes me wonder. why not just show charts of lottery winners? sure a few trend funds will thrive, pointing to this evidence makes as much sense as the lottery winners charts.

surfer :confused:
 
Quote from marketsurfer:

i always thought you were a pretty bright guy, maverick. however, the last post makes me wonder. why not just show charts of lottery winners? sure a few trend funds will thrive, pointing to this evidence makes as much sense as the lottery winners charts.

surfer :confused:
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Surf, these 4 of the more famous names in the industry. They were not taken at random. And again bud, you can use the survivorship bias to anything including arbitrage, long/short equity, and short only funds. Think about it. It has nothing to do with being bright. I could post a 100 of these. At what point are you satisfied? Is there such a point?

What about all the funds that sell naked puts (Vic included)? Do you think there is no survivorship bias there?
 
Quote from Maverick74:


Yeah, you are right, not a viable business model.
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Yeah, your charts prove it.

A. the drawdowns are immense and look to me like investors in some of those funds just saw several years of profits lost into the ether.

B. You didn't put up Henry and Dunn or Quadriga - probably the 3 funds most in the media.

Thanks.
 
Quote from Vishnu:

Yeah, your charts prove it.

A. the drawdowns are immense and look to me like investors in some of those funds just saw several years of profits lost into the ether.

B. You didn't put up Henry and Dunn or Quadriga - probably the 3 funds most in the media.

Thanks.
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Maybe I am not understanding your argument here. John Henry is a billionaire sir. Did you hear, billionaire. He has made billions over the years. The fact that he had a terrible year last year is par for the course. I know .300 hitters in baseball that occasionally will hit .220. I know many quarterbacks that will have the occasional year where they throw 25 or 30 interceptions. Your argument puzzles me as I still don't understand the foundation of it. Dunn is perhaps one of the most successful CTA's of all time. His numbers after fees have outperformed the sp 500 by 400% over the last 20 years.

And Quadriga is a few ticks away from making a new all time high. Last year was their first down year in 10 years and it was in the single digits.

Nobody is advocating putting 100% of your capital with John Henry or Dunn or Quadriga. Most people would allocate maybe 5% to 10% tops. So even if a fund where to suffer a 40% drawdown, it would only cause their portfolio to drop by 3% or 4%.

Some people like to have the upside of a fund that bring 40% to 80% returns. Especially when you have markets like Gold where many think its on its way to 1000. If your argument is based entirely on drawdowns, you have no argument. All long as these funds can offer 5 and 10 year stretches where they are making 300% to 500% returns, it's a moot point.

Let me ask you a question. Why do you think all these trend funds manage billions upon billions upon billions of dollars. Most of these guys started with less then 10 million, and in some cases less then a million. Think about it man.
 
Quote from Maverick74:

Maybe I am not understanding your argument here. John Henry is a billionaire sir. Did you hear, billionaire. He has made billions over the years. The fact that he had a terrible year last year is par for the course.
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This whole thread is getting boring. Yeah, he's a billionaire. He had a great run for many years, built up his assets to the point where he makes $50-100mm on fees alone each year - and hasn't made a dime for anyone since. In fact, some of his funds are probably net cash negative at this point because they had their biggest drawdowns at their biggest asset levels.

In any case, this is not a complaint against Henry. He's probably a great guy. And you're right, everyone has terrible years. All I'm saying is that probably trendfollowing is not a great strategy because of all the amount of money that flooded into this strategy after the bear market in equities. The strategy has not made any money since as a whole.

Is John Henry impressive? Yes. Is he a god of investing and business? Maybe. I have no idea. All I'm saying, and the facts are right in your charts and the charts of the other main players, is that trend following as a strategy has fallen apart. Nothing personal against any trendfollower. They are wonderful human beings who love their children very much.
 
i know a guy who's never had a losing month as a trend follower. in fact, he's only been down 5 different weeks in 7 years.

he must be REALLY lucky.


Quote from marketsurfer:

i always thought you were a pretty bright guy, maverick. however, the last post makes me wonder. why not just show charts of lottery winners? sure a few trend funds will thrive, pointing to this evidence makes as much sense as the lottery winners charts.

surfer :confused:
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Quote from Lights:

i know a guy who's never had a losing month as a trend follower. in fact, he's only been down 5 different weeks in 7 years.

he must be REALLY lucky.
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yep.


surfer
 
Quote from Vishnu:

This whole thread is getting boring. Yeah, he's a billionaire. He had a great run for many years, built up his assets to the point where he makes $50-100mm on fees alone each year - and hasn't made a dime for anyone since. In fact, some of his funds are probably net cash negative at this point because they had their biggest drawdowns at their biggest asset levels.
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Did you ever make a dime for your investors? Or are you just another hack who's trying to build up his own FOF assets to the point where you can generate that much in fees?
 
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