A podcast about a recent interview I did with a southern trend trader.

A note on Dunn Capital.

Reviews of "The Complete TurtleTrader":

• Brett Steenbarger Review
• Bloomberg Review
• Your Trading Edge Review
• Bill Miller (Legg Mason) Review
• Trader Monthly Article
• MTA Review (Ajay Jani) (PDF)
• SFO Magazine Review (PDF)
• Deraktionaer.de Interview (PDF)
• All Press Coverage

Some claim that trend following trading is no different than the infomercial Wizetrade™. For those who do not know or those living overseas, Wizetrade™ is an infomercial running non-stop here in the United States. It promises clear "signals" for buys and sells. Wizetrade™ doesn't tell you how the signals are generated (it is a black box), it just tells you to buy on a "green" light and sell on a "red" light. This might sound very simple (and maybe plain stupid), but it is selling like crazy to those who think they have found a nice & easy alternative to buy and hold.

I don't see how trend following, as described in my book, is the same as the infomercial Wizetrade™. However, it makes me wonder that even if a strategy such as trend following is described in detail, can everyone get "it"?

NOTE: Wizetrade™ is a Trademark owned by GlobalTec Solutions, LLP. I have no association with Wizetrade™. We do not offer or supply Wizetrade™ products or services.

A good read posted at Barry Ritholtz's blog.

Q. What do you mean exactly with this excerpt from your site:

When examining example performance numbers realize annualized numbers for managers are all net of management and incentive fees. What does this mean? Those numbers reflect performance after the individual trader has taken their approximate 20-25% cut. Hypothetically, if one Trend Followed alone numbers would be nearly 25% higher since there are no performance fees to pay.

A. Good question. Assume a trader has generated roughly 23% a year for 25 years. The 23% is after fees. The trader takes 25% of all profits he generates. That is his fee clients pay him. The 23% number is after he takes his 25% cut.

Still not clear? Let's say the trader makes 100% on 1 million dollars over 1 year. He actually made 100% as a Trend Follower, but due to regulation is only allowed to report that he made 75% since 25% was his fee. By subtracting his fee it actually distorts how well he actually did.

Take for example a 20% one month return. It's not really indicative of how successful that trader did.

Take his return and divide it by (1 minus the incentive fee).

20% return for June divided by (1 minus 0.25)

0.20/0.75 = 0.2666 return or really 27% for the month of June!

Why do we dig so deep into this mind-numbing issue? When you look at public trend following money managers realize they always win much more than the number reported!

More on fees and performance.

Disclaimer

We can not promise you will earn like returns of the traders, charts or examples (real or hypothetical) mentioned within this site. All past performance is not necessarily an indication of future results. Disclaimers

All data on this site is direct from the CFTC, SEC, Yahoo Finance, Stark Report and individual disclosures by managers mentioned herein. We assume all data to be accurate, but assume no responsibility for errors, omissions or clerical errors made by sources.

The Wall Street Journal ran a tabloid-like article about Monroe Trout. The article spoke of a lawsuit between Trout and his brother. Why mention this article? The piece that ran in the Journal also poked fun at Trout for following the philosophical tenets of Ayn Rand. This seems like an odd thing to make fun of given that Ayn Rand is also Alan Greenspan's favorite author.

Rand's teachings and writings rooted in laissez-faire capitalism are the ground upon which successful traders must stand:

Man's mind, states John Galt, the protagonist of Atlas Shrugged, is his basic tool of survival. Life is given to him, survival is not. His body is given to him, its sustenance is not. His mind is given to him, its content is not. To remain alive, he must act, and before he can act he must know the nature and purpose of his action. He cannot obtain his food without a knowledge of food and of the way to obtain it. He cannot dig a ditch — or build a cyclotron — without a knowledge of his aim and of the means to achieve it. To remain alive, he must think.

Thinking is not an automatic process. A man can choose to think or to let his mind stagnate, or he can choose actively to turn against his intelligence, to evade his knowledge, to subvert his reason. If he refuses to think, he courts disaster: he cannot with impunity reject his means of perceiving reality.

Ponder her writing in the context of trading. Would not the quick fix of blindly following your broker's opinions, chatting at Motley Fool, griping at RagingBull.com, trading RSI or watching support/resistance levels -- don't these actions all involve choosing not to think? Would you not be allowing your mind to stagnate by evading the pure reality that these actions distort? To follow these hollow messages over the year indeed courts disaster. We are sure all readers know at least one person that went belly up by refusing to think.

Trading is a game where it's you against the world. It's not you and your friend or you and your broker fighting together. It's you. You are left to objectively use your mind to determine the best course of action in order pull a profit from the great ocean of other traders in the world that also play the game. You must dig deep to understand why one course of action is better than another and avoid decision making based on fear. Pure fear is why the Nasdaq rose so far and plunged so low. And those that controlled their fear made a killing.

Atlas Shrugged

Atlas Shrugged
Ayn Rand

No long comment here. Atlas Shrugged is considered by many top traders required reading. It is the capitalist manifesto. Read it.

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