MLR - Trend following wizards collectively down in 2013 vs major averages up nearly +20%

Published : July 19 2013 at 1:01 ET

The trend following wizards are collectively down in 2013 vs NASDAQ Composite up +19.6% and S&P 500 up +18.4% year-to-date. These wizards are a group of top fund managers who have managed money for many years and been interviewed in Michael Covel's book "Trend Following" and some of the Jack Schwager "Market Wizards" books.

The wizards' underperformance over the last few years underscores the trendless, challenging nature of the markets where reluctant, grinding rallies ensue, and the number of leading stocks are scant. That said, such periods can contain periods where profitability is big. Windows of opportunity can open when least expected such as the big silver rally in 2011 which made a huge difference to our performance, enabling us to well outperform the major averages. Then there was August - October 2011 when the Market Direction Model, after a tough time in the first half of 2011, scored big gains over a series of signals, enabling it to well outperform the major averages.

Meanwhile, 2012 and 2013 have had a few opportunities in individual stocks. If you look over our report archives, while a number of stocks have not worked, the ones that have worked such as AAPL (long then short) and TSLA (long) have made big differences in certain members' performance. Thus, position sizing as always is critical. Cutting losses while letting winners run, or better yet, pyramiding winners, is essential.

This information is provided by Virtue of Selfish Investing, LLC (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2016 Virtue of Selfish Investing, LLC. All rights reserved.