Commodity Trading & Trend Following

Last year the truth was exposed with Bernie Madoff and so many others. There were CDs out of Antigua that were sold as safe but simply a ponzi scheme. There was the so called safe factoring scam out of Michigan.All of those investors sought to mitigate risk however doing so they increased their risk to the point of an absolute loss. There is no free lunch when one invests. Probably the days of 10% returns with out volatility might be long gone. There are always risks. Commodity trading is fraught with risks, don’t delude yourself. The point is to manage the risk and accept the risk. One should only invest risk capital with stringent risk management in place. More so past performance is not indicative of future performance.

The question should be can Volatility be avoided? It is obvious it is not avoidable.There are some CTAs and trend followers that have been around since the 1980s or even earlier. They have gone through bull markets… bear markets… inflation…and this years deflation and have compounded annual rates of returns of 14-20%+. Yes… can you say that about your mutual funds or even your absolute return funds that were so popular with institutional investors whose goals was to avoid risk? The bodies of investors are littered with those whose goal was to avoid risk. It is almost like trying not to get wet when swimming. There are Trend Followers such John Henry… William Dunn… Millburn..or Sunrise capital that have been around since the 1980s. Along with these there are CTAs and trend followers that did not maintain proper risk or management and have blow up. Even the mentioned CTAs have had large draw downs. Some greater than 30%… but after what ever period of time they came roaring back to profit. As Bill Dunn has stated…ride the wild bronco. This is a good example of accepting the risks inherent investing.

Accept the risks…however manage them. Have a plan..

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