Stock investors tend to obsess about stock picks, with desire to discover the new Apple, Google, Tesla or some such stock that could make all the difference. But even when they discover them, most investors never take full advantage of these discoveries. The reason is rooted in human psychology. It's what psychologists Daniel Kahneman and Amos Tversky called "failure … Continue reading Investing is about STRATEGY, not about stock picks
Markets move in trends. This is a glaringly obvious fact for anyone with eyes to see. In fact, already 2000 years ago in his timeless classic, "The Art of War," Sun Tzu identified trends as one of the three great avenues of opportunity. In spite of that, the idea that markets move in trends is … Continue reading My University of Texas guest lecture on trend following
Tens of millions of individual investors worldwide took the step of setting up their own brokerage accounts to actively manage their portfolios. Unfortunately, most of them lose money: an 11-year study published by the UK regulator FCA found that 82% of them lose money. The data published by many of the retail brokers corroborate this. … Continue reading Warren Buffett and Ben Graham: momentum players, NOT value investors!
More than a century of empirical data covering 18 of the world’s largest stock markets show beyond a shadow of doubt that market trends are the most powerful drivers of investment performance. The foundations of a successful long-term investment management practice should rest on four pillars: TruthStrategyDisciplinePatience Truth is what we try to uncover by … Continue reading Market trends: far and away the most powerful drivers of investment performance
I recently gave an interview to Michael Covel of "Trend Following Radio" podcast which I found thoroughly enjoyable and stimulating. Over the years I've read much of Michael's articles, interviews and one of his books so I already knew we were very much on the same wavelength when it came to investment trading, but our … Continue reading My interview with Michael Covel on the “Trend Following Radio” podcast
At market close on 15 December, the Tesla’s market cap ($606.5 billion) surpassed that of Toyota, General Motors, Daimler, VolksWagen, BMW, Honda and Ford combined ($578.2 billion)! This underscores yet again the power of market trends and the momentum investing strategy. Let’s have a brief look at the way this shaped up. While the S&P … Continue reading Tesla and the power of momentum investing
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
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…
Benjamin Graham and Warren Buffett achieved their stellar performance by not following their own value-picking advice.