@Wladimir:
"By having a quick mouse, that’s how. Click first, then ask question later!"
How quick exactly? How do you prevent subscribing to 100 systems and unsubscribing all of them with a small loss, which will eventually sum to a great loss? I assume that you resubscribe just as quickly when is performing again?
@Ross:
Steps 1 and 2 add up to just waiting 4 months, so I don’t see the advantage of distinguishing two steps. As ST and I have argued earlier, however (in the thread about the regression effect), the “luck factor” is still present after 4 months. Why not wait 12 months? Or 36 months?
I understand the logic behind your plan and it sounds perfect, assuming you know exactly when a system is about to fail or about to take off, but if you can do that why not just do it in the market?
What you are effectively doing is creating a trend following system of your own, you search for systems with good stats, when one has a good run you subscribe, when it goes flat or down you bail, and so on.
That’s great. Now, what do you think your own equity curve will look like? I’ll tell you. You will have lots of small losses and fewer large wins, welcome to trend following, in the long run you will hopefully make money. Good news.
But guess what, at some point you will have a run of losing subscriptions, or heaven forbid, a losing month, so tell me - will you then exercise the same ruthless strategy on your own system and bail as soon as it’s not working, or will you remain convinced of it’s longer term merits and stick with it?
Hi Ross,
50 years ago most folk thought smoking didn’t harm their health.
The fact that most subscribers rely on the equity curve does reduce the dangers of doing so.
I’m going to ignore most of your rant, but point out that “statistician” does not equate to “academic” - I’ve worked in business all my adult life (mainly marketing and company management in financial services) and currently own a business and trade professionally (5 years).
I completely agree with your excellent list at the end of your missive, re selecting good systems. My “Stars Of Collective2” list is an attempt to find those that persistently outperform (as per your item 2), with modest risk.
Re EXLENCE: as a subscriber it would still be on my best systems list, as it meets all the criteria, but it wouldn’t be in my active portfolio: I wouldn’t be trading it.
I completely agree with Wladimir on this point: as subscribers you have a good choice of systems on C2, and it makes sense to pull the trigger quickly, then ask questions later. Move on to a vendor who has good momentum.
EXLENCE has no momentum at present, but I would be tracking it to see which way the breakout goes - if the equity curve breaks higher, it’s likely to present another great opportunity.
Those systems on the watchlist are NOT recommendations - yes I agree many are too young to take seriously. They are like potential new trends in a stock: you have to track it a while to see whether it evolves into the “real thing”.
I thought I had made this clear on my web page, but maybe I should think about not publishing this list, as it seems to be creating confusion and misunderstandings.
My Stars Of Collective2 is meant to be a list of the best systems over the long-haul. It’s NOT a list of the best systems to be trading “right now” (yes I’m sure that would be of more value to subscribers). That’s a path I could head down in the future, but I want to further improve what I’m working on before taking the next steps.
Thanks for your feedback.
there is no rant. I am telling your the experience of people actually trying to pick and subscribe to a system.
Your method at best produces a preliminary starter set
It would do you well to try and understand what I said, rather than get defensive.
When you do, you will understand what I said it incredibly accurate.
"If the attitude displayed here towards vendors with failed systems were replicated in the real world then most if not all of the greatest traders who ever lived would never have made it. Early failure (and learning from it) is often what ultimately made them successful. "
---------------------------------------------------------------------------------------------
All skills are learned that way. The question then becomes: who pays for that educational period?
I would hope not an investor who is also losing money when his account is seen as training grounds for novice traders.
Apprentices can play with their money - on mine I want seasoned pros with history and results to show that they’ve already learned their lessons.
"If the attitude displayed here towards vendors with failed systems were replicated in the real world then most if not all of the greatest traders who ever lived would never have made it. Early failure (and learning from it) is often what ultimately made them successful. "
---------------------------------------------------------------------------------------------
All skills are learned that way. The question then becomes: who pays for that educational period?
I would hope not an investor who is also losing money when his account is seen as training grounds for novice traders.
Apprentices can play with their money - on mine I want seasoned pros with history and results to show that they’ve already learned their lessons.
Did you ever hear of Long Term Capital Management? Possibly the most prestigious group of ‘seasoned pros’ ever assembled in one company. It failed. Spectacularly.
Ross,
Clearly I don’t understand.
Are you suggesting I zoom through lots of equity charts, pick those that look nicest and stick them on a “best systems” list?
I’m not sure what value that would add, as you claim subscribers are already doing that. Feel free to create your own list on this basis.
Or are you referring to your comments: “systems that have not worked for 2-5 months, or had a brief spurt and were flat otherwise, ARE PROBABLY WORTHLESS”.
I could find a dozen good systems that fit that description: mvp-3 would be a good starting point (strong spurt early on, followed by a 25% DD).
Have Fun, Gold Survivor Energy, and Turning Points are another 3; and I haven’t even seriously looked.
I often find the comments you make in forums to be insightful and based on real-world experience that I can relate to. In this case you’ve lost me - can you be more specific about the changes you think need to be made?
Thanks - Murray
Jon, Jon,
What a great reply, always a sharp mind!
“Why not identify and follow market trends directly?” Ideally, what I am paying for by adding a layer of C2 systems on to the market is a relative positive bias.
So a system that is creating 10% when the market is at -2% is giving me a 12% leg up. Even if it fails in getting the 10%, the absolute return is likely still favorable to me.
Add a few more systems outperforming and the risk is divided, specially if they use different approaches and trade different things. So even if one fails badly, the others may still add up to a positive result.
I truly think of it as a team of stars producers that I get to select and manage. My job is to evaluate their ongoing performance and act accordingly. If I keep a stable of overperformers, balancing each others weaknesses, in the end I will have great results.
Which then leads to your last, great question:
"But guess what, at some point you will have a run of losing subscriptions, or heaven forbid, a losing month, so tell me - will you then exercise the same ruthless strategy on your own system and bail as soon as it’s not working, or will you remain convinced of it’s longer term merits and stick with it? "
If and when that happens, I will have to face up two difficult options: is it my “system of systems” that is inherently flawed, or am I the failure in it by not executing it well (by mismanaging my team)?
Sports history tells us that teams full of stars don’t always win. It takes the talent of great management to bring it all together and make them perform their best. Talented players and talented managers can form a powerful force. And then they mostly win, so I believe the strategy is sound. If it fails, well then, I will have to look in the mirror and ponder the mistakes I’ve made in executing it. Unfortunately, I may be its weakest link.
Yes, a trader is the combination of his system and his ability to execute it. The hardest part is in the executing.
Futurmajic,
You are also a sharp guy.
The reasons to use winning Mutual Funds instead of markets would be their inertia, in addition to the positive relative returns they are getting. So a winning fund in a previous quarter will likely keep on performing in the next one, maybe by not as much, but still ahead of the underlying market.
That is the conclusion of that study, anyway. It does not apply to ETFs or broad markets, which turn much faster, but to actively managed Mutual Funds with good superior returns and with diversification that leads to a more stable return.
If I can find the original study in my computer I will make it available somewhere, but that is the conclusion of it. The methodology is to look at last year winners and invest in them for another quarter. Compare to market returns. It wins. Point was that chasing returns works, to an extent. Every quarter you need to replace former winners by most recent ones.
Sorry if this sounds crass and ruthless to any Vendors who spend so much time perfecting his/her system, that it then become a part of him or her.
Unlike Lake Wobegon, "where all the women are strong, all the men are good-looking, and all the children are above average" truth in a competitive world is that not all kids can be champions.
sigh I pretty much explained this a couple of times.
"Are you suggesting I zoom through lots of equity charts, pick those that look nicest and stick them on a “best systems” list? "
I am suggesting the fact that you ignore this aspect greatly reduces the value of your list. Almost every subscriber uses this as a primary screening method. Murray ignores it.
Try looking at the most popular, Best Stock/Forex/Futures systems, and other best lists. Notice how many that are considered interesting do not appear on your lists?
— You basically seem to chain together statistics. That is not how people pick systems, it is one factor.
— You basically maintain a list that will drop off laggards. This is called cherry-picking. I told you twice, that is the main flaw of C2. Most good-looking systems don’t work; they were lucky.
Didn’t you get this from my clearly-explained posts???. People cannot make much money following your approach. All you are doing, is maintaining a crop of future failures.
— You didn’t fathom my statement about other systems from a vendor. You need to drop your opinions about this and reconsider. Other systems from a vendor’s performance are VERY telling about future performance. You are completely missing the boat.
Please don’t ask me to reexplain a fourth time, Murray. You need to study what has already been said, and do some homework. You need to rethink the inputs.
I don’t plan to create a list for others - that is not my particular interest. You thought you would do so. I am trying to tell you, you are about 30% or less of the way there
Well, that’s the reason we still talk about it 10 years later - it was an aberration, an outlier. Since then, hundreds of underperforming funds died of natural and expected bad results and none made the news or is remembered by us. Only the great one that failed spectacularly.
That type of human bias has a name I can’t remember. Although its impact is emotionally vivid, statistically it means nothing. The best still wins big, the worse loses big, the rest muddles through. But we pay no attention to it.
I’ll tell you what, Murray, I have a bias towards looking at C2 scores, and I would say you have one of the lowest ones. I wouldn’t give two cents to read what you have to say. It’s nothing personal.
Murray
I will give you one example of why a vendor’s systems matter.
Look at Gilbert (K C Partners, etc.). He keeps generating systems for a longtime, crashing them and creating new ones. He keeps claiming he reinvented himself He make a lot of false claims like he was president of an institution/school, Chief trader, and had over 7 year track record on his own site of 50% plus returns. But once tracked, he continuously flounders. The cold truth is, he cannot trade.
He also has Matthew delete my comments regularly, because he doesn’t like others to criticize his obvious approach to system development.
There is a saying that if it quacks like a duck, and walks like a duck… Where there is smoke, there is fire…
This kind of behavior alone is enough to yank a good system from a top 10. It is called a filter. The Gold Survivor Series does not deserve top billing with the struggling track record of this vendor.
Do you even CONSIDER the rating that every vendor has? Even if it is flawed?
So ETFs or broad markets have a shorter time period but more opportunities.
You are correct, more volatility represents more opportunities to those able to profit from them.
That study was done for ‘active’ (haha) mainstream investors who rebalance their IRA’s once a quarter by choosing a different mutual fund then forget about it for another 3 months.
I don’t think it applies to anyone who reads these threads all the way down here.
You saying nothing personal, does not change the fact you just made a personal attack.
It’s up to you if you want to listen to one of the filters I have for tracking systems.
I think it’s excellent that you recognise that if and when something/someone fails you must always take responsibility and look within, most people would not do that and look for someone else to blame. My subsequent LTCM post was slightly tongue in cheek and I agree with your response, you had effectively already answered it with your sports history analogy as ultimately it was their management that failed them just like it is with most failed systems.
