Oil price has had a wild ride this year, crashing nearly 80% from January through April. I-System strategies navigated the event remarkably well, capturing more than $42/bbl in profits. At the time, I summarized this in my article, “With I-System through the storm… with flying colors!”
But trend following does less well during trend reversals and our strategies gave back some of those gains. The chart below illustrates the performance of the 10 I-System strategies included in our Major Markets report:
On average, the strategies captured $42.45/bbl in profits from February trough to April peak. They subsequently gave back $9.79/bbl. For the previous 12 months they generated a profit of just under $28/bbl. A few weeks ago I put together a chart summarizing the longer-term performance for a similar set of 12 I-System strategies we used under the AITF fund:
These experiences highlight once more that trend following is the only valid answer to the problem of uncertainty. A few weeks ago, none other than Paul Tudor Jones expressed agreement in his May newsletter:
“One thing I have learned over time is the best thing to do is let market price action guide your decision-making and then try to understand the fundamentals as they become more evident and comprehensible.”
The winners and the losers
This year’s turbulence has left many casualties in its wake: one airline reported losing $325 million on their fuel hedging; a large trading firm reportedly lost $1.6 billion and as many as 24 independent oil and gas firms filed for bankruptcy. Here is what they had in common: they did not subscribe to I-System TrendCompass and relied on price forecasts instead.
Don’t be like these companies. Subscribe to TrendCompass reports today. We cover over 200 commodity, FX, equity and fixed income markets with utmost reliability with a continuity spanning nearly 20 years now. The price of our service is a fraction of what in-house analytics cost so you can go ahead and Sack Your Quant(s)! save some money and navigate the coming market turbulence profitably, with confidence and peace of mind.
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