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The Professor
Charles Pennington
3/31/2005
A Message from Mr. Seymour
Charts, by way of
Charles Pennington
Some of you have been banished from the Spec-List because you keep posting your tedious numerical studies. For your benefit, here I forward to the Open-List this representative example of the fine dialogue that we've been having over on the Spec-List on the topic Trend Following, Yay or Nay?
Mr. Seymour Charts writes:
I'd like to get this off my chest here and now, and give my two-cents worth on the topic of Trend Following, which is generating such great interest here on our Spec-List.. Now there's a lot of talk around here that a Spec-List posts should be a meal for a lifetime , that a poster should run off and do some kind of homework and maybe present some numbers, because there are many readers and their time is valuable. That squash-player fella even hunches over his desk and writes down numbers on the back of his account statement envelopes, and adds em up and makes guesses about what they all mean. Well believe-you-me, there is not a single number in this post (unless you count single). And is the readers' time valuable? Well by golly my time is valuable. And I've got years of experience. I've traded for a long time, and my account has grown. How much, you ask? A lot. And I can tell you that many of my trades have worked out. I don't do any of that counting stuff, so I can't say exactly how well, and then of course some of my account gains came when I inherited from my Aunt Kate from Beardstown, and I didn't really keep track of that. But I think you'd be best advised to listen to what I have to say while I speak my piece.
So what should you do, trend following or not trend following? Well, my answer to that is, here's what you shouldn't do. You shouldn't go out and actually try to test anything, like those thousands of engineers and scientists out there. Now you take those Watson and Crick fellas. They slaved away for years over some tiny molecule thing, and now what have they got to show for it? They didn't learn anything about anything, except for the one thing that they were working on. And do you know what? They still don't even understand everything about that one little thing! So what if you look at some numbers for some market, for some time frame, and you think you learned something. Well you listen to me it might be different for another market, or another time frame. So where are you? You're right back there at square one. You got zilch, nada. So don't go wasting your time poring over numbers or thinking about how to test something that you might want to say or claim. Be a man! Say it, and let the chips fall where they may.
There are some gems of wisdom that I can add to the discussion. The key to successful trading is this: cut your losses short, and let your profits run. Also you have to remember that bulls make money, bears make money, but pigs get slaughtered. So don't hang on too long. Nobody ever went broke taking a profit. Also remember that the trend is your friend, and to buy low and sell high. Those are the key investing principles; they are my core philosophical pillars that have stood me in good stead. I don't need to test them. They're foundational. So there's your meal for a lifetime.
Now, don't you see how much can be accomplished with a post for which I did absolutely no background homework? I say, "Can't we all just get along?" but if in the end we do have disputes, let's not kid ourselves, thinking that we can somehow define them and test them. Let's just keep talking, and keep reading our own posts and listening to the sweet sound of our own voices.
Just one man's opinion.
Charles Pennington trades stocks and stock index futures with Victor Niederhoffer's Manchester Trading in Weston, Connecticut. Before becoming a hedge fund trader Charles was a Full Professor of Physics at Ohio State University, where he taught for 13 years and served as advisor to eight successful doctoral candidates. He has published more than 40 scientific papers and won a Presidential Young Investigator grant (1993-1998). He earned his B.S. (1985) and Ph.D. degrees (1989) in Physics from the University of North Carolina at Chapel Hill and the University of Illinois at Urbana-Champaign, respectively.