When one thinks of a commodity guru they usually would have the false assumption that this commodity guru knows or can predict the future. This is not a commodity guru. I want to share with you an example of a commodity guru. He is not a PHD.. he is not a mathematician …he is not a rocket scientist. Actually he was a dentist in his career. He saved up some money and wanted a diversification from the stock market. He saw first hand what transpired in the 1973-1974 bear market in the stock market. The nifty fifty stocks were crushed as well as the fortunes of those who invested with them. Mr. Dentist invested a whole $196,000 in 1979 in a trend following program. Not a holy grail system but rather a simple robust trend following system. Fast forward after 32 years Mr Dentist is still trend following several different types of robust trend following models and his account size was compounded to a tremendous amount of money. Mr. Dentist went through all types of UGLY draw downs but eventually hit new equity peaks. He was patient and was disciplined. He followed a complete trading plan. He did not deviate nor did he let panic nor greed set in. He just followed the plan. To make it easier his trend following systems were traded by a commodity broker who followed exactly the rules of the model without any deviation. This made it somewhat easier to follow the plan. Mr Dentist was not entering the orders, he simply gave the system to the broker to run & manage. However Mr Dentist checked his statements meticulously everyday to make sure the broker was following exactly the system.
Today March 26 2011 Mr Dentist has pulled out over $12 million dollars in profits and still maintains a trading account appox $5 million dollars. What is the point here? The point is very simple if Mr. Dentist can do this, so can you if you have a plan, discipline and most of all patience. There will be ugly draw downs. Risk management must be put into place. Trend following and commodity trading is not retirement in a box. It all takes work but the fact is Richard Donchian was able to compound his way to wealth, Mr Dentist was able to compound his way to wealth and so can you.
Mr Dentist was a dentist…his name is withheld but he is my example of a commodity guru and one that I am emulating. You can trend follow yourself but you need to learn. Even the other choice of allocating to a commodity trading advisor does not make it easier. You will still have draw downs and tough periods. It is simple yet it is not easy. You will need to learn about yourself. If you do not want to learn or do not have the mental fortitude to go through the eventual ugly draw downs you should not start. You need to be patient and be disciplined. Mental fortitude is a must and not an easy trait.
Past performance is not indicative of future performance
Futures trading involves risk. People can and do lose money