MLR - Quantitative easing (QE) market manipulation since 2009
QE manipulation has pushed markets higher since 2009. That said, MDM has well outperformed S&P 500 and Dow Jones Industrials prior to 2012, has outperformed small cap Russell 2000, and performed almost in line with the NASDAQ Composite. Outperformance is naturally more pronounced when using certain 2x and 3x vehicles.
That said, 2012 was the toughest year on record as the Market Direction Model and the trend following wizards, a group of fund managers interviewed in Michael Covel's book "Trend Following" and Jack Schwager's "Market Wizards" series, finished the year down, double digit percentages in many cases. Read point 4 here about the wizards: http://www.virtueofselfishinvesting.com/reports/view/mlr-why-most-nvestors-cannot-beat-the-major-market-averages-over-any-given-market-cycle
Such periods always come to an end. Patience is required to deal with such tough times, but there is some solace in knowing such periods always come to an end, often when least expected, such as in October 1998 and October 1999 when the markets looked as if they were going to fall off a cliff, but instead roared higher. This is also true in recent years when the market looked as if it was going to fall apart, yet found its footing, spurred on by QE.
The Market Direction Model remains nimble and flexible as the market is at an inflection point in either direction.
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