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> I've learned the hard way that todays market maven is tommorrows
> forgotten trader. The key is to look at the trading style instead of
> the track record.
Absolutely and without question, **YES**. A track record is a symptom,
not a cause. It is one of the byproducts of the operation of a human
system. Deciding to allocate capital to someone BECAUSE OF past results
is just about the worst method one can use for picking a money manager.
Sometimes, a long-term track record that is consistent in its returns
(assuming that it is real for simplicity) can indicate some degree of
probability that the system will continue in its consistent behavior.
But the shorter the time frame, the less of an indicator it is.
180% every year for the first three years; do you go with the fund
manager? Do you care that maybe the system has double-down rules that
could end in catastrophic losses, but so far the system hasn't had a bad
drawdown streak yet? Do you care if the system is WAY overleveraged in
its allocation? Do you care if the trading program allows for 50%
drawdowns on a single trade?
I don't care what the past track record, if Niederhoffer shows up to
manage one of my mutual funds, that money gets the hell somewhere else.
It's not worth the risk to let him be coy with my money.
And for my personal reality, if I come across a CTA who won't discuss
their strategy in some way (e.g. "it's totally proprietary", or "It
looks for good opportunities in commodity markets"), I'd be pretty
careful because you'll know nothing going in the door.
Sticks
(no track record yet -- brand new method -- but at least I talk about
what I'm doing and I don't brag about future performance that isn't real
yet :-) )
--
Troutman, Defender of Sticks troutman@xxxxxxxxxxxxxxxxxxx
(aka) http://www.defendercapital.com/
Jonathan Matte, President No banner ads, no cookies,
Defender Capital Management, Inc. no sekrit sniffers!
Introducing Broker, Commodity Trading Advisor
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