Market Review:
I really don’t know what’s going to happen with the general market next week.
Current Holdings:
Here are my current holdings going into next week:
Interestingly, both my newsletter and my money management service have imploded by 80% this year, yet at the same time I reached a new equity all-time-high on Friday after recovering from a recent drawdown of just 3%.
Drawdowns and periods of underperformance are unfortunate realities in the world of Trend Following trading, as the equity curve from Dunn Capital shows:
So if you got on board a winning strategy like this, but jumped ship every time it ran into some rough waters, chances are you’d make nothing.
On the other hand, Bill Dunn has weathered each storm and is also at new equity all-time-highs today. While the average fickle client of his makes nothing, Bill Dunn himself has achieved a net-worth of close to $1,000,000,000.
But with so many fickle, whiny clients, how does he deal with these annoyances? How does he stay focused? Here’s a YouTube video that I put together that delves into the Trend Following mindset:
Probably one of the most disrespectful things you can do to a money manager is send him an email during a drawdown and suggest ways that he can improve his trading.
Bill Dunn has been trading the same strategy since October of 1974 and has thankfully eliminated all clients who have doubted him. Imagine if it was the other way around - that he changed his system every time there was a drawdown. Do you think he’d still be a billionaire today?
Finally, take a moment to let Bill Dunn’s longevity sink in. Trading since October 1974. How many other strategies - Elliott Wave, Gann, Fibonacci, Day Trading - have track records going back that far?
My advice to new traders would be to forget the hype of Twitter and find someone with a solid month-by-month track record and try to learn from him. Here’s a website where you can browse - absolutely for free - thousands of track records.
While new traders tend to gravitate towards recent hot performance, I personally am interested in the oldest track records. A trader who has followed a process and ground out returns for 10, 15, 20 years deserves respect. A trader who is up 300% YTD? Not so much.
Individual Stocks:
Here is a review of every stock that I currently own: