We Repeat: No Fundamentals for Trend Following

The following individual is a good guy. He wants to help TurtleTrader better organize content and create new content. But his email exchanges prove he doesn’t exactly get what trend following is:

I’m ready to execute. I’d like to get moving on a sector view. I think entertainment would be a good one because of the problems at Disney and the inconsistencies at Viacom, AOL/Time Warner and Newscorp. [Also] a stock to watch [feature].

Keep in mind, this a technical strategy. Fundamentals are poison. Inconsistencies at Disney or Viacom are not relevant. The only thing that matters is the ‘price’. There is no prediction. There is no outlining ahead of time what will happen. Trend followers never know a trend magnitude until it’s over. In terms of stocks to watch, unless those watching know exactly the strategy to use, telling them to watch is akin to David Faber offering a pick. Telling them to watch without them knowing when to sell or how much to buy or sell is problem filled. Trend following is the absolute antithesis of all Wall Street represents.

After we countered his first response, he offered:

A perspective piece on a sector: for example, within media stocks the focus seems to be on Disney. But take a closer look and the price of other media stocks are rising. Example, Clear Channel is up five percent over the past week. This article could look at stocks that have moved significantly and analyze only pricing history, current conditions in its market sector and management issues. This would provide meaningful information to experienced Trend Followers without feeding them Wall Street bullshit. It would attract potential Trend Followers by introducing a new way to look at stock pricing, not performance…Stock to Watch: Example: Nortel is still in a down pricing trend. Bad news from competitors like Lucent could continue to affect adversely.

Even when we explain no fundamentals, for some, it just doesn’t register.

Trend Following Products

Review trend following systems and training:

Michael Covel Trend Following Products
Michael Covel Trend Following Products

More info here.