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Forwarded message:
Subj: Re: Long term trend following? Short term hit and run?
Date: 97-07-04 14:26:19 EDT
From: LHonigAtl
To: cheevid@xxxxxxxx
Pretty good analysis, although by definition any method that "follows a
trend" will be profitable while the trend lasts. The major issue is
DRAWDOWN, i.e., how much are you willing to risk after you enter and the
trend goes the wrong way? No trend-following method I know of gets you out
on ANY reversal from trend, i.e., all methods rely on some calculation of
when the trend-following system has received a signal to reverse or get out.
So it's often an issue of deep pockets. If, for example, you were to check
out Russell Sands's latest "Turtle" newsletter (he is the most illustrious of
the publicly advertising trend-followers), you will see that virtually all of
his trades so far this year have lost very big dollars (because of huge
drawdowns until his system throws in the towel), except for VERY big profits
in Coffee and in the S&P. So overall, he looks good. His guts and his bank
account are larger than mine.
Good luck.
Larry
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