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MLR - Market Direction Model outshines trend following wizards year-to-date

Trend followers are having a tough time this year because the market has been trading in a choppy and sloppy manner all year, with no sustained uptrends or downtrends as of yet. So far this year, the market tends to move in one direction for a few days only to have some news event cause it to reverse course. For example, it did this twice in January, then again in February.

Even the trend following wizards who have been tracked by the likes of Jack Schwager who wrote the classic "Market Wizards" book series and Michael Covel who wrote "Trend Following: How Great Traders Make Millions in Up or Down Markets" have been having a tough time, as most of these wizards are down for 2011, with a couple even down double digits:

http://www.automated-trading-system.com/trend-following-wizards-march-2011/

That said, our Market Direction Model which is more than just a trend following model continues to outperform: https://www.virtueofselfishinvesting.com/results

While year-to-date returns are solid as we are only 4 months into the year, the biggest returns come when the market starts to trend again. You'll notice that when the model hits a true signal as it did a number of times in years past, the profits are huge as it is able to ride the trend without jumping off prematurely. This accounts for how the model achieved returns of +157.3% in 2009 and +86.5% in 2010 using the 3-times ETF TNA which mirrors 3-times the Russell 2000. Incidentally, our studies have shown the Russell 2000 carries the best risk/reward among the various market indices since it tends to rise the most on a buy signal and drop the most on a sell signal issued by the model. So far, year-to-date, four months into the year, TNA is up +8.8%, so we believe the best is yet to come. Please note that these returns are based on our own calculations, and have not been audited or verified by any third party, but we believe them to be accurate for the illustrative purposes for which they are intended.

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This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (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. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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