Hitting New Equity Highs and Then….
August has not bee overly kind to trend following CTAs, myself included.I finally after a long struggle was hitting new highs in equity. I told one of my potential investors, it does not mean anything as this is a long struggle and similar to a marathon. Trend following takes a very strong mindset based on determination and the will to continue regardless how tough it gets. As David Druz wrote in my book
The Bible of Trend Following
Trend Following is getting knocked down and getting back up…Sounds easy right, nope…After getting back up…getting knock down again, and guess what, Having it happen once again, getting knocked down!
This simple statement accentuates trend following. This is why when I teach, I stress the emotional aspect. Trend following in itself is rather simplistic. Prices go up and we buy…prices go down and we sell….however there are so many aspects such as risk per trade…correlation etc….
Bottom line of my ranting…Trend following takes a great deal of emotional fortitude as well as humbleness. The markets are unforgiving. Once you think you are getting out of a draw down…boom…your equity curve swings….
This is the reality of trend following. More so the last several years have been the toughest I have ever seen. No one rings a bell…however with all of this money printing at some point I personally believe we will see rampant inflation that most are not expecting.