This week’s newsletter is out, and following last week’s call to consider managed futures in light of global economic tensions is nicely complimented by a more in depth look at the asset class’ most prominent strategy: trend following.
We mentioned in our blog post last week titled Here’s hoping the markets “Go to Zero” that we half-jokingly expected stocks and crude oil to be up 3% this week because we had the audacity to say we wanted them to go lower, and wouldn’t you know it â€“ we finish today with gains of over 1.50% across stocks and Crude.
While we still hope the markets go to zero â€“ we don’t think it will happen without the bulls trying to push it back to the upside a few times. We just don’t want the moves higher to be significant enough to reverse the trend lower.
You see, even though managed futures growth over the past two decades has seen the dawn of other strategy types within the asset classâ€“ like options, agriculture, currency, specialty (fixed income, stock index, metals, etc), spread, discretionary, and multi-strategy approachesâ€“ trend following is still the bread and butter of the world of managed futures. In fact, in our recent breakdown of the CTA industry, trend following was far and away the dominant strategy. However, not all trend followers necessarily cut from the same cloth. We’ve mentioned more than a few times that there are numerous ways to skin the trend following cat (sorry cat lovers).
Forex trading, commodity trading, managed futures, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.
The entries on this blog are intended to further subscribers understanding, education, and â€“ at times- enjoyment of the world of alternative investments through managed futures, trading systems, and managed forex. Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts.
The mention of asset class performance is based on the noted source index (i.e. Newedge CTA Index, S&P 500 Index, etc.) , and investors should take care to understand that any index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices: such as survivorship and self reporting biases, and instant history.
Managed Futures Disclaimer:
Past Performance is Not Necessarily Indicative of Future Results. The regulations of the CFTC require that prospective clients of a managed futures program (CTA) receive a disclosure document when they are solicited to enter into an agreement whereby the CTA will direct or guide the client’s commodity interest trading and that certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA.