EMC Commodity trading adviser legend
Too many investors in commodity trading advisers chase performance numbers and then when their expectations are not met they leave the commodity trading adviser. One glaring example of this is EMC Capital Management. Their Classic program has been around since 1985 with a CAROR of approx 22%. I am sure not many of us can list a group of managers that have been around since 1985 with a CAROR of approx 22%. You can look at periods of EMC and see distinct differences. In 1985 they returned 51%, in 1986 134% and in 1987 178%. Fast forward to the last 3 years 2009 -14.35%,2010 6.68% and YTD 2011 -9.88.
The AUM of EMC fell from 2009 of approx 236 milllion to approx 148 million. Investors bailed.In my opinion these investors really do not understand how to truly invest in a commodity trading adviser. Maybe it is human nature that they seek immediate gratification. However I point out again I do not know many CTAs that have the longevity nor the record of EMC. If anything this might be a good point to invest in them????
The key to successful investing in commodity trading advisers is to be patient, disciplined and let compounding of money work over time. No one knows the future nor ring a bell when there will be favorable trends. If you want to have the possibility of success when investing with commodity trading advisers you need an investment time horizon of years… do not look at your daily equity curve. Since 1985 EMC returned approx 20,000%. I promise you there were long draw downs through out this period. It was not simple retirement in a box. At one point EMC was down approx 45%. This surely was not a comfortable period. However they rebounded and eventually hit new equity highs. This is what you need to think about. If you focus on the long term goal the daily, monthly and yearly returns do not matter. What matters is what could your account look like in 10 years. However I want to point out in the strongest terms, Past performance is not indicative of future performance. My point is that trend following and investing with commodity trading advisers is not easy and success might only be achieved over long periods of time.
Personally my time horizon for trend following is ” for the rest of my life”. No other strategy is as liquid nor as transparent. There will always be bumps in the road but at the end of the road what is your account worth.
You do the math!!!!
$100,000 investment in 1985 returning 20,000%?????
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING COMMODITY FUTURES, OPTIONS, AND FOREIGN EXCHANGE (”FOREX”) IS SUBSTANTIAL.
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