Would You Take It?
Trend Following Food for Thought
Depth is the percentage loss from an equity peak to an equity valley based on a fixed reference starting equity. $ Depth is the dollar loss from an equity peak to an equity valley. Prior peak represents the last monthly equity high prior to the beginning of the Drawdown. Valley is the monthly date where the Drawdowns lowest level occurred. Length is the duration in months of the Drawdown, which is the number of months between Prior Peak and New Peak. Recovery is the duration in months starting from the first month after the Valley of the Drawdown to the month of a new equity Peak, which includes the new Peak month.
Definition from Trade Center
Hypothetical questions to consider:
- How do you feel about peak to valley drawdowns?
- How do you feel about recovery?
- How would you feel about an average major peak to valley
drawdown of -34.0%? - How would you feel about an average drawdown duration of 7.0 months?
- Would you run for the hills?
- But what if the average time to recoup the drawdown was only 7.0 months?
- Sound better?
- What if the average rolling 60 month (5 year) period gave
a return of +225%? - What if the track record showed NO 60 month periods resulting in a loss?
- Last but not least, what if a hypothetical $1,000 investment increased to $400,000 over nearly 30 years, but over the same time period the S&P 500 increased to only $40,000?
- A 10-fold difference in return? Yes, that is the example.
This is all just food for thought. Think about the Trend Following numbers. The numbers paint a picture.
Risk 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. All results are unique. Results will vary. Data presented is for educational purposes. This information is not designed to be used as an invitation for investment with any advisor profiled. 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.
