Risk is like gravity — it always there, but you don’t always feel or see it.

Today, we’re in between market storms. People have become more and more comfortable and complacent during the 8-year bull market. The relatively painless uptrend has lulled people into a false sense of security.

Even Janet Yellen says she doesn’t believe there will be another financial crisis in our lifetimes.

Collectively, we’re getting used to the way things have been recently — rising stock prices, low and declining volatility and little to no need for protection investments like hedge funds and macro CTAs.

I’m scared we’re getting used to things just in time for everything to change again.

https://medium.com/@mmelissinos/its-not-if-but-when-a634fda39879

Lately, many markets remind me of the 2011–2014 U.S. Dollar — not really going up or down but oscillating in a sideways manner. Many currencies, precious metals, energies, bonds and agriculture markets have behaving similarly.

The past few years have been particularly frustrating and annoying. But I believe we’re at a point again where trend following traders and investors are feeling doubt about whether to take the next trade and stick with the system.

The risk of quitting during drawdowns is that you do not benefit from the next round of positive performance when trends come back. The risk of not getting back in exists in all investments.

Many investors are still living with the frustration of not getting back into the stock market when the trend reversed in 2009–2010. Those who quit on trend following now, I believe, will likely experience a similar frustration.

https://medium.com/@mmelissinos/quitting-before-the-trend-occurs-b99b14b8d888

I believe the main reason why benchmarks outperform managers is due to their lack of discipline.

Medium post: https://medium.com/@mmelissinos/the-occasional-mistake-b1d02926fb95

I believe the main reason why benchmarks outperform managers is due to their lack of discipline.

Medium post: https://medium.com/@mmelissinos/the-occasional-mistake-b1d02926fb95

At the time, I’m sure people were wondering if Buffett had lost his golden touch or if he would ever outperform the market again. A near 50% loss for a stocks investor during the biggest bull market in history doesn’t inspire confidence. But he had the last laugh after the bubble burst, gaining 80% over the next two years while the NASDAQ lost 72% and SP500 lost 28%.

https://medium.com/@mmelissinos/warren-buffetts-worst-loss-came-during-the-dot-com-bubble-546fb56a8f2e

At the time, I’m sure people were wondering if Buffett had lost his golden touch or if he would ever outperform the market again. A near 50% loss for a stocks investor during the biggest bull market in history doesn’t inspire confidence. But he had the last laugh after the bubble burst, gaining 80% over the next two years while the NASDAQ lost 72% and SP500 lost 28%.

https://medium.com/@mmelissinos/warren-buffetts-worst-loss-came-during-the-dot-com-bubble-546fb56a8f2e

As a copier, you cement your position of always following the crowd and competitors.

You forgo understanding how the product you’re copying actually works; the reasons behind it’s design; the problems it addresses; why it performs the way it does.

You blindly put your faith in the person or product you’re copying and, thus, give up your ability to develop and monitor expectations.

http://www.michaelmelissinos.com/blog/copying-skips-understanding/

As a copier, you cement your position of always following the crowd and competitors.

You forgo understanding how the product you’re copying actually works; the reasons behind it’s design; the problems it addresses; why it performs the way it does.

You blindly put your faith in the person or product you’re copying and, thus, give up your ability to develop and monitor expectations.

http://www.michaelmelissinos.com/blog/copying-skips-understanding/

Reduce the rules in your investing strategy to make it more robust and easier to execute.

We all hear that simple is better; that complex doesn’t work as well and is harder to execute over the long run. Complex rules tend to promote confusion and second-guessing – things that can wreak havoc on any investing strategy.

Investors insist on making things too complicated. Many even believe that simple rules cannot make money over the long run; that the only way to win is be some kind of genius math whiz or have super-human intuition. No. No. And no. Simple and effective works.

http://www.michaelmelissinos.com/blog/a-half-vs-half-assed-product/

Reduce the rules in your investing strategy to make it more robust and easier to execute.

We all hear that simple is better; that complex doesn’t work as well and is harder to execute over the long run. Complex rules tend to promote confusion and second-guessing – things that can wreak havoc on any investing strategy.

Investors insist on making things too complicated. Many even believe that simple rules cannot make money over the long run; that the only way to win is be some kind of genius math whiz or have super-human intuition. No. No. And no. Simple and effective works.

http://www.michaelmelissinos.com/blog/a-half-vs-half-assed-product/