Bubble Bernanke and Trend Following
Bubble Bernanke and his friends ( Greenspan) at the FED created the housing bubble back in the early 2000s. Bernanke even commented back in the mid 2000s that the recent home price increases “largely reflect strong economic fundamentals.” In retrospect they created a nightmare. Now with all the running of the printing presses what nightmare could they be creating? Inflation? Hyperinflation?
All the Stimulus programs and trillions of dollars have failed to help the US economy. As a layman if all of this money did not work the first time…why will it work a second time? Unemployment has not budged and the housing market is probably in a worse situation yet Bernanke wants to add more fuel of his “quantitative easing.” Basically that means flooding the world with ever more dollars by buying up Treasury debt in the hope that it will lower interest rates and ignite economic activity. How about inflation? All one has to do is look at some of the agricultural commodities as well as all the talk of currency wars.
So what does this have to do with Trend following? The fact is from August to now most trend followers have experienced some great profits by trading the grains,cotton,gold and the currencies. In times of crisis Trend following and commodity trading advisors flourish. It is hard to even fathom that there will not be any problems on the horizon. Not that I am predicting anything let alone inflation, with printing presses running at full speed it is hard not to believe there will be inflation. Even if there is no inflation…just the fact that the populations of the emerging markets want the same things we take for granted. Imagine if everyone in China wanted just one pair of jeans or a t shirt ( things we take for granted). Imagine also if their friends in India also wanted their first pair of jeans or t shirt. Is it any wonder that cotton has hit a record high. This is what trend following is….highs go higher…lows go lower…we do not predict…we are the crazy ones buying new highs if we can put on a low risk trade. Inflation is a wealth destroyer…Trend Following a large basket of markets can not only protect your net worth but help you compound your way to wealth. I have been trend following since 1994. First with commodity trading advisors only…and over the years I learned what has the possibility to work over time and trade with my colleagues. Trend following is not a get rich or easy thing to do. It takes tremendous patience and discipline to compound your money over time.
Futures trading involves risk. People can and do lose money