Trend Following. Ritholtz Barry

study on human behavior shows 90 % of the population can be classified into four basic personality types: Optimistic, Pessimistic, Trusting and Envious. Envious, at 30 %, is the most common.

Universidad Carlos III de Madrid

      The free market punishes irresponsibility. Government rewards it.

Harry Browne

      The absolute number doesn’t matter, it’s the trend over time.

Seth Godin

      Gaslighting is a form of manipulation that seeks to sow seeds of doubt in a targeted individual or members of a group, hoping to make targets question their own memory, perception, and sanity.

Wikipedia

      The joy of winning and the pain of losing are right up there with the pain of winning and the joy of losing. Also to consider are the joy and pain of not participating. The relative strengths of these feelings tend to increase with the distance of the trader from his commitment to being a trader.

Ed Seykota 66

      If you think education is expensive, try ignorance.

Derek Bok

      Nothing has changed during the 21 years [over 40 years now] we’ve been managing money. Government regulation and intervention have been, are, and will continue to be present for as long as society needs rules by which to live. Today’s governmental intervention or decree is tomorrow’s opportunity. For example, governments often act in the same way that cartels act. Easily the most dominant and effective cartel has been OPEC, and even OPEC has been unable to create an ideal world from the standpoint of pricing its product. Free markets will always find their own means of price discovery.

Keith Campbell 67

      He who lives by the crystal ball will eat shattered glass.

Ray Dalio

      Whenever we get a period of poor performance, most investors conclude something must be fixed. They ask if the markets have changed. But trend following presupposes change.

John W. Henry 68

      With the possible exception of things like box scores, race results, and stock market tabulations, there is no such thing as objective journalism. The phrase itself is a pompous contradiction in terms.

Hunter S. Thompson

      One of our basic philosophical tendencies is that change is constant, change is random, and trends will reappear if we go through a period of non-trending markets. It’s only a precursor to future trends and we feel if there is an extended period of non-trending markets, this really does set up a base for very dynamic trends in the future.

Research at John W. Henry 69

      Our ace in the hole is that the governments usually screw things up and don’t maintain their sound money and policy coordination. And about the time we’re ready to give up on what usually has worked, and proclaim that the world has now changed, the governments help us out by creating unwise policy that helps produce dislocations and trends.

Jerry Parker 70

      Ultimately, it is the dollar-weighted collective opinion of all market participants that determines whether a stock goes up or down. This consensus is revealed by analyzing price.

Mark Abraham

      Now walking into client meetings we hardly ever have a discussion around why trend following works – the battle has been won.

Anthony Todd

      It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.

Charles Darwin

      Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.

Paul Samuelson

      The trend is your friend except at the end when it bends.

Ed Seykota 71

      Defining a trend is like defining love. We know it when we see it, but we are rarely sure exactly what it is. Fung and Hsieh’s paper goes a long way to doing for trends what poets have been trying to do for love since time immemorial. They give us a working model that quantitatively defines their value for us. Traders will not be surprised to learn that trend following advisors performed best during extreme market moves, especially during bad months for equities. 72

      Change is not merely necessary to life – it is life.

Alvin Toffler

      The people who excel in any field are people who realize that the moment is there to be seized – that there are opportunities at every turn. They are more alive to the moment.

Charles Faulkner 73

      The four most expensive words in the English language are: this time it’s different.

Sir John Templeton

      They are like surfboard riders, who study the movements of the waves, not in order to understand why they behave as they do, but simply in order to be on hand whenever they surge, to catch them at their crest, or as soon thereafter as possible to ride them as far as they possibly can, and to dissemble before they change direction.

Morton S. Baratz 74

      Markets don’t move from one state to another in a straight line: There are periods of countertrend shock and volatility. We spend most of our time trying to find ways to deal with those unsettling but inevitable events. That being said, it is really not difficult to put together a simple trend following system that can generate positive returns over a realistic holding period and there are many, many commercial systems that have been generating strong, albeit volatile, returns for a long time. So there are definitely firm grounds for believing in Santa Claus.

Paul Mulvaney

      By honest I don’t mean that you only tell what’s true. But you make clear the entire situation. You make clear all the information that is required for somebody else who is intelligent to make up their mind.

Richard Feynman

      Warren Buffett says in the long run the stock market is a weighing machine and in the short term it is a voting mechanism. He exploits the weighing machine and we exploit the voting mechanism.

David Harding

      Ed Seykota is a genius and a great trader who has been phenomenally successful. When I first met Ed he had recently graduated from MIT and had developed some of the first computer programs for testing and trading technical systems… Ed provided an excellent role model. For example, one time, he was short silver and the market just kept eking down, a half penny a day. Everyone else seemed to be bullish, talking about why silver had to go up because it was so cheap, but Ed just stayed short. Ed said, “The trend is down, and I’m going to stay short until the trend changes.” I learned patience from him in the way he followed the trend.

Michael Marcus 75

      Be less curious about people and more curious about ideas.

Marie Curie

      The wisest trend follower I know has said that every five years some famous trader blows up and everyone declares trend following to be dead. Then, five years later, some famous trader blows up and everyone declares trend following to be dead. Then, five years later.. was the problem trend following or the trader?

Anonymous

      Trend

66

Jack Schwager, Market Wizards: Interviews with Top Traders (New York: HarperCollins, 1993).

67

Keith Campbell, “Barclay Managed Futures Report,” Barclay Managed Futures Report 3, no. 3 (third quarter 1992), 3.

68

Allison Colter, “Dow Jones” (July 13, 2001).

69

“Trading System Review” (Futures Industry Association Conference, November 2, 1994).

70

“The State of the Industry,” Managed Account Reports, Inc. (June 2000).

71

Jack Schwager, Getting Started in Technical Analysis (Hoboken, NJ: John Wiley & Sons, Inc., 1999).

72

Desmond MacRae, “Valuing Trend-Followers’ Returns,” Managed Account Reports, No. 242 (April 1999), 12.

73

Charles Faulkner, Futures 22, no. 12 (November 1993), 98.

74

Morton S. Baratz, The Investor’s Guide to Futures Money Management (Columbia, MD: Futures Publishing Group, 1984).

75

Schwager, Market Wizards.