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 … Continue reading I-System and the 2020 oil price roller-coaster…
Articles
Inflation: lessons from last empire’s collapse
In spite of the obvious differences betewen the Soviet and U.S. economies there are disconcerting parallels between the systemic roots of their respective crises (USSR in 1980s and USA today).USSR's stalling GDP growth, growing 'defence' budget and balooning budget deficits ultimately led to currency debasement and high inflation. There's every likelihood that U.S. dollar will … Continue reading Inflation: lessons from last empire’s collapse
Sack your quant!
Last few years saw something of a gold rush into quantitative investment strategies. Their appeal is obvious as a way to put discipline into trading and take the emotion and stress out. Quantitative strategies might even help improve performance. Here’s how Black Rock President Rob Kapito articulated the industry hopes: “As people get the data … Continue reading Sack your quant!
Market trends are the most powerful drivers of long-term investment performance
In my April report I suggested that effective trend following required discipline and a good deal of patience. In this report we discuss the strategy’s proper objective, which leads compellingly to the conclusion articulated in this article's title. https://www.youtube.com/watch?v=crgudbifQNY We are after outsized, long-term windfalls Many individual traders obsess over short term gains or even … Continue reading Market trends are the most powerful drivers of long-term investment performance
Will bulls or bears celebrate? Probably the bulls, right off the cliff…
In April I suggested that, between the bear market and bubble reflation, the latter was the more likely scenario. So far so good.Presently economic data is the worst we've seen in the living memory and stocks close to most overvalued ever. Now we have mass riots. Nonetheless stocks rise...As David Zervos recently said, looking at … Continue reading Will bulls or bears celebrate? Probably the bulls, right off the cliff…
Trend following: the only valid answer to the problem of uncertainty
The most fundamental determining fact in connection with organization is the meeting of uncertainty. The responsible decisions in organized economic life are price decisions; others can be reduced to routine Frank Knight, "Risk, Uncertainty and Profit" Over the years I’d written many articles suggesting that price forecasting based on market fundamentals is a waste of … Continue reading Trend following: the only valid answer to the problem of uncertainty
Bear market or bubble reflation: what comes next?
In March 2019, I published an article looking at historical perspective on boom/bust cycles in SeekingAlpha. I suggested then that, “the (still) festering economic imbalances might get resolved along two alternative scenarios. Either we’ll have a full-blown deflationary depression that could see asset prices drop by 50% or more, or we’ll have a strong and … Continue reading Bear market or bubble reflation: what comes next?
The one force moving stock prices and what it tells us about the future
(Originally written in November 2019) Back when I traded stocks in late 1990s, I had a gnawing suspicion that beyond the nonstop noise of the news flow, there was some force pushing the rising tide, but I couldn’t discern what it was. By today I think I worked it out. The most surprising thing about … Continue reading The one force moving stock prices and what it tells us about the future
Why hedging is key!
Lately I got into arguments about the proper role of hedging with some individuslas who, I thought, should know better. Their belief, essentially, is that operative businesses - mining firms, oil & gas producers, airlines... - should always hedge their price exposure and focus on generating value on their operations. In other words, ignore the … Continue reading Why hedging is key!
Why trend following beats value investing
Benjamin Graham and Warren Buffett achieved their stellar performance by not following their own value-picking advice.
I-System Trend Following 