Disclosure
Sunrise management utilizes technical, trend-following systems, which trade a wide continuum of time windows. Most of these time frames are decidedly long term by industry standards. Pro-active money management strategies are designed to protect open profits and minimize exposure to non-directional markets. Their trading methodologies are executed pursuant to technical analysis emphasizing mathematical and charting approaches that have been either learned or developed by Dr. Davis, Dr. Forrest and/or Mr. Slaughter. Sunrise’s systems will attempt to detect a trend, or lack of a trend, with respect to a particular market by analyzing price movement and volatility over time. The system consists of multiple, independent and parallel systems, each designed and tested to seek out and extract different market inefficiencies on different time horizons.
More on Sunrise Capital
- Sunrise Capital Homepage
- Sunrise Capital was featured in The Little Book of Trading
Kevin Bruce: Trader
Excerpt from Trend Commandments:
Many trend followers do not achieve the highest returns possible, as they are often focused on accommodating clients who can’t stomach what is required to achieve the big returns.
Big numbers like those cause some irrational agitation. One person wrote me: “I am sorry but that performance is nothing amazing. I would say it’s ok, but not great.”
Don’t hate, congratulate! That critic’s thinking is not very bright. Passive aggressive you could say.
Better yet, consider compounding some of these numbers. For example, if you could make 50 percent a year, you could compound an initial $20,000 account to more than $616,000 in just seven years. Is 50 percent unrealistic? Of course it is. However, do the math again using 25 percent.
Think about this: Since October 1997, one trend following trader has produced annualized returns higher than 21 percent. To put that in context, if you bought Vincent van Gogh’s Irises in 1947, you paid $80,000. The next time it changed hands, in 1987, it was sold for $53.9 million. That seems like a huge increase in value. Compound interest is the 8th wonder of the world.
The Trend Commandments book is available here.
What the Sunrise Disclosure Reveals About System Design
The Sunrise Capital disclosure contains the essential architecture of a well-designed systematic trend following operation in a single paragraph. Multiple independent and parallel systems, each targeting different time horizons and different market inefficiencies, is the structural diversification that produces the approach’s characteristic return profile. A single-system, single-time-horizon approach concentrates all of the approach’s returns and drawdowns in the conditions that system is tuned to capture. Multiple independent systems distribute the exposures across conditions and time frames, smoothing the overall portfolio’s performance without eliminating the large return potential that each individual system can generate.
The “detect a trend, or lack of a trend” formulation is important. The system is not just identifying trends to follow. It is equally identifying non-trending conditions in which to reduce exposure or stay flat. This bidirectional awareness between trending and non-trending regimes is what the “pro-active money management strategies designed to minimize exposure to non-directional markets” describes. The system does not bet on trend following in all conditions. It applies trend following when conditions are favorable and reduces exposure when they are not.
The compounding mathematics in the Trend Commandments excerpt are the clearest available statement of why even modest consistent returns produce extraordinary wealth over time. The Van Gogh comparison is striking: the Irises increased in value by a factor of 673 over 40 years, producing an annualized return of approximately 16%. A systematic trend following program producing 21% annualized from October 1997 outperforms even one of the most famous investment stories in the art world.
Frequently Asked Questions
What distinguishes Sunrise Capital’s multiple-system approach from a single-system approach?
Multiple independent and parallel systems, each designed for different time horizons and market inefficiencies, distribute the approach’s exposures across a range of conditions rather than concentrating them in a single regime. When one system’s conditions are unfavorable, other systems may be in more favorable conditions. This structural diversification across time horizons produces a smoother overall return profile while preserving the large return potential of each individual system during its favorable conditions.
What does “detect a trend or lack of a trend” mean for position management?
It means the system actively evaluates whether current market conditions are trending or non-trending and adjusts exposure accordingly. During confirmed trending conditions, the system maintains positions sized to capture the full trend. During non-trending, choppy conditions, the system reduces exposure to minimize the cost of false trend signals. This regime-sensitive position management is what the “minimize exposure to non-directional markets” language describes.
How do the compounding numbers illustrate the value of consistent systematic returns?
A 21% annualized return from a $20,000 account compounds to approximately $147,000 in 10 years, $1.1 million in 20 years, and $8.5 million in 30 years without adding additional capital. The compounding effect is exponential: returns in later years are many times the returns in earlier years because the base is so much larger. Consistent systematic returns that appear modest in any single year produce transformative wealth over decade-length time horizons, which is why the approach is assessed correctly only over multi-year windows.
Trend Following Systems
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