Equity Curve of the Stock Market compound annual rate of return of 0.39% over 10 years.

The Equity Curve of the Stock Market with a compound annual rate of return of 0.39% over 10 years does not seem to be a way to compound money over long periods of time.

Compare this with trend following. Trend followers and commodity trading advisors go through draw downs and long periods in which they do not make money as well. Trend following is not retirement in a box and is full of volatility.There are times in my own trading as well as with track records of even some of the well known commodity trading advisors that they have had 30% on average draw downs. I remember 2005 and 2006 and it was a very difficult period. There were 30% draw downs and it approx 2 years plus to recover.

However if one to look at an equity curve of some commodity trading advisors that understand risk & money management. They have compounded on average 15% over the years even with all the draw downs. Trend following is not for everyone and past performance is not indicative of future performance. No one knows the future. Bottom line is the future is uncertain and investing is a very difficult way to compound ones net worth.

Below are a short list of some exception trend followers who have been compounding money for decades.

Abraham trading Group CAR 18.86% from Jan 1988
Chesapeake Capital CAR 12.94% from Feb 1988
Eckhardt Trading Company CAR 15.19% from Aug 1991
Hawksbill CAR 22.08% from Nov 1988

The above is a short list and not representative of all commodity trading advisors. One can look at the complete list of commodity trading advisors on IASG.com website. Besides doing my own trend following I invest with other commodity trading advisors. Many commodity trading advisors do not have a full grasp on risk and money management. I invest with commodity trading advisors that think the way that I do about risk. Even with this said I go through periods of times that the managers I invest with have long and deep draw downs.

Trend following is a challenge. One must work and have the proper mindset. There is nothing easy about trend following. However for me it is a life time strategy. I have been able to compound money over time, it is liquid and transparent when having managed accounts.

I will be very shortly teaching students exactly how I trade for a living. It too is not the Holy Grail. You will learn how to think like a trend follower as well as will give you the exact ideas. There is nothing to hide. Richard Donchian’s trading was very simple and well known, yet very few have emulated his success. If you want to learn how to trade for a living, I invite you to be one of my students.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING COMMODITY FUTURES, OPTIONS, AND FOREIGN EXCHANGE (”FOREX”) IS SUBSTANTIAL.