Talking Trends

Two things investors are always going to want: to make more money and suffer less drawdowns.

Romanticizing about a stock clouds judgement.

General Electric, once a darling of the Dow and pillar of innovation, has become a shell of itself. It has lost over two-thirds of it’s value over the last few years and ~85% since 2000.

Article: http://www.melissinostrading.com/investment-strategy/comparing-the-worst-periods-of-trend-following-to-buy-and-hold-index-funds/

Part 1) Derek Notman of Intrepid Wealth Partners and I co-write article on Trend Following.

Link: http://www.intrepidwealthpartners.com/blog/trend-following

Part 2) An inspirational story of a kid trying to buy a computer goes out into the snow to make some money.

Story from the young fella's dad: https://twitter.com/jackmurphylive/status/1084456663074131969

Yesterday's stock market sell-off presents a nice entry point for us to review our investments.

Are we diversified?

Are we too concentrated in tech stocks or large cap names?

Might we reconsider re-balancing into some other non-US stocks, or different industries or different strategies in general?

Do we have too much invested into the passive buy and hold strategy?

Might it be a good idea to look at other strategies to invest in so we can improve our long-term performance ride?

These questions and more give us good starting points to audit our portfolio and see if there are any simple and practical ways to strengthen it for the long-run.

This one dovetails off of the "How We Work With Investors" episode.

I believe in taking a thorough approach to learning about the investor, their risk tolerance and philosophy when it comes to not just investing, but life in general.

On my recent trip to northern Italy, my wife and I went on a two-day wine tour.

I asked a lot of questions.

I wanted to learn about the winemaking process and draw parallels back to investing.

Needless to say, they share a lot of similarities.

The big question I asked: What percentage of making good wine are you, the winemaker, responsible for? 

I wanted to learn if the weather, soil and other elements out of their control was mostly responsible for the taste in good wine.

In this episode, I outline my method for how I like to work with investors.

It doesn't always work.

There's the occasional bump in the road (investors want to add in when recent performance is hot and sell out when I've been losing; they forget the benefits of adding a strategy like mine in their portfolio in the first place; they forget the general performance behavior of trend following - namely, when it does and doesn't do well) but it has served me well in my short career so far.

My goal: shift the focus away from short-term returns to long-term discipline.

Honest pro-active communication is key.

Scrambling later when emotions are high doesn't work. Sooner or later, the manager and/or investors breaks their discipline and then all hell can break loose.

**To read this outline in blog and PDF form, please click on the link below.

http://www.melissinostrading.com/culture/how-we-work-with-investors/