Niederhoffer thinks "follow the trend" sucks

[i am nobody]

The tendency in stocks and stock index futures is to reverse, not trend.

You should ask Warren Buffett about this. He never "reversed" and got filthy rich. He was very very very lucky, because what he did and does is completely opposite of whta the oracle of Palm Beach tells. Clash of the giants.
But Buffett has of course not the authority that Marketsurfer has.

 

[marketsurfer]

I think you should watch a chart, not discuss about definitions of words. The charts are very clear. There are trends everywhere. But not always the same size and not always in the same timeframe. I know it sound stupid but you should start from every top and bottom, and then ask yourself: how can I catch these moves as much as possible? I know it is possible to take big chunks out of every reasonable trend.

When it is obvious that the goals cannot be reached, don't adjust the goals, adjust the action steps.

http://www.elitetrader.com/et/index...w-the-trend-sucks.292363/page-18#post-4140442

I think you should watch a chart, not discuss about definitions of words. The charts are very clear. There are trends everywhere. But not always the same size and not always in the same timeframe. I know it sound stupid but you should start from every top and bottom, and then ask yourself: how can I catch these moves as much as possible? I know it is possible to take big chunks out of every reasonable trend.

When it is obvious that the goals cannot be reached, don't adjust the goals, adjust the action steps.

http://www.elitetrader.com/et/index...w-the-trend-sucks.292363/page-18#post-4140442

Charts are very deceptive.

 

[marketsurfer]

You should ask Warren Buffett about this. He never "reversed" and got filthy rich. He was very very very lucky, because what he did and does is completely opposite of whta the oracle of Palm Beach tells. Clash of the giants.
But Buffett has of course not the authority that Marketsurfer has.

Buffett made the majority of his wealth in the insurance business --FYI.

 

[monoid]

That of course is complete nonsense. There is substantial evidence for strong (weak) stocks to remain strong (weak).

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=299107

"There is substantial evidence that indicates that stocks that perform the best (worst) over a three- to 12-month period tend to continue to perform well (poorly) over the subsequent three to 12 months. Momentum trading strategies that exploit this phenomenon have been consistently profitable in the United States and in most developed markets."

French's dataset going back to 1927 is here for anyone who wants to play around with it
http://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.html

There's a million scientific studies documenting the existence of momentum profits in stocks (and every other market on the planet). Yet here you are claiming the opposite. Go figure!

@Butterball: Come on now. You are not being fair to us (us: 'cos I had an epiphany last night, and have decided to become a self appointed "guard" to protect brother @marketsurfer from vicious attacks from people who's arguments have logical merit). Those papers have words like 'Factor models', 'confidence interval' etc. The only 'models' we know are those who walk the catwalk; and, the only 'factor' that matter to us when it comes to 'models' are their attractiveness!

Please don't confuse us with words that don't belong together.

@marketsurfer: Don't worry buddy I have you covered!

 

[i am nobody]

Buffett made the majority of his wealth in the insurance business --FYI.

Not true. He had a good start thanks to the insurance business. GEICO represents less than 10% of all profits. Watch the stocks he bought, when he bought them and where they are now. That reality will destroy your theory completely. I have data about all this but why do an effort to show it. You will always have any excuse to deny the reality. So better not waste that time.

Watch what the S&p did over the last decades. I think trend was better than reverse. Unless you put this chart upside down. You know what value represents the S&P?

 

[monoid]

You know what value represents the S&P?

@i am nobody: Please don't mock us (as to reason for 'us' i.e., brother @marketsurfer and me, see my earlier post addressed to @Butterball). We of course know how to read a chart. The values of S&P are 1963, 1978, 1988, etc. What doesn't make sense is the Y-axis. Please stop confusing us. What is wrong with you people today?

 

[romik]

Monoid is on fire LMAO

 

[marketsurfer]

That of course is complete nonsense. There is substantial evidence for strong (weak) stocks to remain strong (weak).

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=299107

"There is substantial evidence that indicates that stocks that perform the best (worst) over a three- to 12-month period tend to continue to perform well (poorly) over the subsequent three to 12 months. Momentum trading strategies that exploit this phenomenon have been consistently profitable in the United States and in most developed markets."

French's dataset going back to 1927 is here for anyone who wants to play around with it
http://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.html

There's a million scientific studies documenting the existence of momentum profits in stocks (and every other market on the planet). Yet here you are claiming the opposite. Go figure!

hmmmm, did you look at the date of Jegadessh's paper? it was published in 2001 right before the tech crash, basically, the paper is ancient in market time. How about recent works from the "millions" reaching the same conclusions.?

We did studies using the world's largest data base of U.S. equity trades when I worked with CG3--- over short term time frames, the opposite proved true. the results are published in how markets really work by larry connors.

Certainly momentum works sometimes-- but the problem is, you never know when that sometimes is--hence there is no edge to the strategy in the indexes.

surf

 

[debitspread]

hmmmm, did you look at the date of J'dessh's paper? it was published in 2001 right before the tech crash, basically, the paper is ancient in market time.

Yes, unclear why he posted the 2001 (!) paper. Maybe he doesn't know J&T updated their work in 2011: ... Figure 1 also reveals that momentum profits in the five year period starting in 2004 were negative...

 

[monoid]

hmmmm, did you look at the date of J'dessh's paper? it was published in 2001 right before the tech crash, basically, the paper is ancient in market time. How about recent works from the "millions" reaching the same conclusions. surf

Yea, @Butterball, look at that date. While you are at it, look at the date of merton-black-scholes paper too! That paper is ancient in market time. That work is invalid too! Awesome rebuttal brother Surf.