• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint

Key Points

  • Ed Seykota: Trends become more apparent as you step further away from the chart.

  • Surprise makes prices move.

  • Trend followers are generally on the right side of big moves.

  • The most interesting aspect of the Barings Bank blowout was who won. Everyone knew the Queen’s bank lost. Barings’ losses were won by trend followers in the zero-sum game.

  • People place too much emphasis on the short-term performance of trend followers. They draw conclusions about one month’s performance and forget to look at the long term. Just like a batting average, which can have short-term streaks over the course of a season, trend followers have streaks. Trend following performance does deviate from averages, but over time there is remarkable consistency.

  • Value-at-risk (VAR) models measure volatility, not risk. If you rely on VAR as a risk measure you are in trouble.

“Corporations make good and bad decisions every day” offers one dealer. P&G made a bad decision. But if they came in with a Pampers line that flopped, you wouldn’t have hearings in Congress, would you?[78]


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint