Trend Follower John Henry Assets Drop 80% In Year!!!

[marketsurfer]

John Henry Assets Under Management Drop 80% in Year, WSJ Says
2007-05-29 05:52 (New York)


By Alan Purkiss
May 29 (Bloomberg) -- John W. Henry & Co., a U.S.
investment firm that's performed badly for more than a year,
will lose $600 million from Merrill Lynch & Co. this week,
leaving it with $500 million under management, the Wall Street
Journal said in its ``Heard on the Street'' column.
Only a year ago, the Florida-based firm, founded and led
by the man who also owns the Boston Red Sox baseball team,
managed more than $2.5 billion, the newspaper said.
John Henry's biggest investment fund, the Strategic
Allocation Program, has dropped 24 percent in the past year
and more than 9 percent so far in 2007; six other programs
have fallen more than 20 percent, the Journal said.
Henry is a so-called trend follower, who gambles on
significant market moves continuing; however, limited
volatility and a dearth of prolonged trends have hurt him
badly, the newspaper said.
The firm has had talks about affiliating with another
investment manager, but no transaction is imminent, the
Journal said, citing a person close to the matter; Henry,
meanwhile, says he has no plans to abandon the trend-following
strategy or to close the firm, the Journal added.

(Wall Street Journal 5-29, C1)

 

[marketsurfer]

I find the last paragraph where JWH explains the situation as a dearth of long term trends as an excuse most telling.

look at any charts of the assets JWH trades--- sure "looks" like substantial trends in these markets. Obviously, trend following is nothing more than guessing direction, holding and hoping.

JWH can't find the trend with all his resources, money and access----- even though these "trends" are very clear in hindsight.

The myth continues......


surf

 

[empee]

this is typically the best time to add money. JWH probably knows this and doesn't sweat it.

Once they recover start making new highs all the nuthuggers will pile in again.

Its interesting to note in one of the Market Wizard books he talks about this, how the investors of the top CTAs lagged their performance. Why? They took money out at equity lows and put money in at equity highs, pretty much the opposite strat recommended.

 

[marketsurfer]

Quote from empee:

this is typically the best time to add money. JWH probably knows this and doesn't sweat it.

Once they recover start making new highs all the nuthuggers will pile in again.

Its interesting to note in one of the Market Wizard books he talks about this, how the investors of the top CTAs lagged their performance. Why? They took money out at equity lows and put money in at equity highs, pretty much the opposite strat recommended.

I don't think he will be able to support his infrastructure with such a substantial reduction in assets. hopefully, for the sake of his loyal investors, he can pull it off.

surf

 

[jem]

I doubt he had trouble finding the trend, I suspect the problem was getting in and out.

 

[trend_guy]

I love this line...

"Henry is a so-called trend follower, who <b>gambles</b> on significant market moves continuing"

I guess he gambles and doesn't speculate! LOL

The big TFers are performing poorly recently, DUNN, HENRY, CAMPBELL (to a lessor degree)... seems like the smaller ones aren't doing too bad though.

I'm guessing that being nimble/smaller can have it's huge advantages sometimes.

 

[Rodney King]

Quote from empee:

Once they recover start making new highs all the nuthuggers will pile in again.

.. The old story. On 1/5 of his assets, he'll need to make 5x the percentage loss he suffered, if he's to pull the same $s out of the market as he put in. At the end of the day, all that matters to those on the other side of his trades is: is he taking out or contributing net dollars?

 

[laputa]

Talking of the rock bottom of low volatility...

 

[marketsurfer]

trend following is a severely flawed methodology, even in the face of overwhelming evidence, the true believers still point to the black swan survivors as proof--- sounds more like a cult or marketing tactic than a trading method.

surf

 

[Pa(b)st Prime]

Quote from marketsurfer:

trend following is a severely flawed methodology, even in the face of overwhelming evidence, the true believers still point to the black swan survivors as proof--- sounds more like a cult or marketing tactic than a trading method.

surf

Trading success will elude you until you change the rigidity of your belief system. You're full of untruths and duplicities.

Your pal Neiderhoffer employs a long delta, short gamma strat that's all about a continued rise in SPX accompanied by shallow corrections. To wit, he dropped 30% in a single month last year as stocks made a relatively mild counter trend concession in price.

When market's are readjusting valuations they trend. If participant's feel there's value in a small range of prices, markets chop. That's all there is to it.

Further any mathematician will tell you it's easy to "prove" trends. Do you think if I took the number of up ticks vs. down ticks of all U.S. stock and bond prices from 1983-1999 that there was a "random" preponderance of "up" data? Get real.

Trends in both the micro and macro are so prevalent in fact that I'd argue it's faders who are in fact seeking the "black swan". No doubt a flaw in most us is the willingness to explore the already known.

Old prices are like old friends. A fellow trader once described bond prices as like a soap opera. You can miss them for 6 months but the plot's easy to pick up again. Having the confidence to be initiative in terra incognita rather than be responsive is what trading is about.