The book also explores the mindset and traits of a successful trader via discussions of human behavior, decision making and the science of trading. The culmination of the book is a chapter devoted to developing a trading system, complete with a discussion of two topics that I'm always thrilled to see — position sizing and expectancy.
If you want to improve your trading results I highly suggest that you study this book.
P.S. One thing that the book left me wondering is how the average person can take advantage of the trend following money managers who were profiled. I'd like to know if there are trend-following funds that people could put their IRA money into, or does one need to be an accredited investor to buy into those funds. I plan to find some answers to those questions forthwith.
Update: Good news, apparently the average Joe can access at least some of these funds. Mr. Covel just sent me the following info about John Henry funds:
"But smaller investors can buy into a fund of funds that divides its money among several futures funds that may vary by risk profile and type of investment. The cost of entry is as low as $5,000 ($2,000 for an individual retirement account), with fees that run about 1% of assets and up to 2.5% of profits. The top performers this year in this group are John W. Henry's Millburn series of funds, with a 29% return, and the Dean Witter Portfolio Strategy Fund, up 28%."BusinessWeek
DECEMBER 29, 2003
Originally posted on TraderMike.net
Article comments
1 - Robert T DeMarco
Great post and review. It is too bad more investors do not have the time to identify and benefit from trends. Your suggestion of investing in a fund of fund is very good advice. Although, it is trickier than it appears. You have no control once in the fund of changes in fund managers. And the fees are higher than it appears. Not only does the fund of fund manager take a fee, but the individual managers also get their standard fee. So while it is not implicit in the returns the fees are very high and do make a difference.
Also, you need to correct your fee information at the very bottom. Most fund managers take 20-25 percent of the profit, not 2.5 percent.
You might also want to take a look at the overall performance of Dean Witter as a fund of fund manager over the last 10 years or so. It is not nearly as "rosie" as it appears here.
2 - Michael
Thanks Robert,
About the fund fees: I won't claim that the numbers above are accurate b/c I haven't done my own research on the fees yet. But I would assume that they're accurate given the source(s). Of course people should check those figures before investing in any fund.
But my point in including that information wasn't to get people to invest in that particular fund, I was just showing that the average person has access to those type of funds.
The Dean Witter fund you mentioned... are they trend followers?
3 - Robert T DeMarco
In a previous business life I did follow these funds but that is no longer true. So I can't make any accurate comments here other than the fees are high like I mentioned.
By the way, guys like Soros have funds listed in London and you can buys those like a stock. And, of course you can buy Buffett easily.
What really caught my attention was your specific mention of trends and the book. For example, if i could short a block in Manhattan right now I would. Although I would be bucking the trend at the moment. If I had enough time I would really be analyzing REITs and the building stocks to determine the worst of them. Some of them will fall 90 percent in the years ahead.
And speaking of trends and individual investors. Great companies like Intel, Cisco Systems and a long list of truely great companies are below the prices they closed at in 1998. And its 6 years later!
I will put an article I am writing for my All American Investor weblog on BlogCritics soon. If you see it, I would appreciate your comment.
Bob