Author: Jesse Barkasy
Covestor model: Trend Following
I was not pleased at how the trend following model performed overall in 2011. The markets had several trend reversals, making longer-term trend following very difficult. The European debt crisis drove the markets up and down at a very rapid pace. A few trading losses took away the gains we had. This is the nature of a dynamic trend following model. I’m hopeful that longer-term trends should soon establish themselves, as markets always eventually do enter long-term trending stages.
Even if the trend following model does score a great gain or several gains, I do not think it is a great idea to be pleased with the performance. Being pleased means being complacent and complacency can lead to disaster. I will always look to improve how I trade and how I protect the assets I have.
In light of the current market environment of constant short-term trend changes, I am adjusting the trend following model to look for more early stage changes in trend. I will also look to where the market is in the context of each investment, to add to the probability we are not entering a lagging issue or late stage trend.
I am always reading or communicating with very good traders and investors to see if they are doing something better than I am with their trading, and to see if they are missing something as well. I found a few good ideas and will implement them as soon as I see the opportunities arise.
I believe the advantage I have against hedge funds is the number of years I have traded and the amount of time I have spent watching the markets and learning about how they move. I also limit the amount of information I consume, so that I am not swayed by too many opinions about why the market is doing what it is doing.
I hope everyone has a great new year. Peace, happiness and joy to you all. Now I have to get back to work looking for great trends!
