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It Has Been a Very Challenging 2 Years for Managed Futures & Trend Following

It Has Been a Very Challenging 2 Years for Managed Futures
For those that have invested in managed futures over the recent period, one word sticks out – TOUGH!
• Two Back to Back years of negative and sub performance
• Repeatedly Heard – Trend Following is DEAD!
• Received an Email – Find a New Line of Work!
• It is Never Easy!
• There are Always Losses & Long Durations of drawdowns.
The question is easily raised when will the sector return? The truth is no one really knows and as much as Past Performance is Not Indicative of Future Performance possibly we are at a new juncture? Natural Gas has been a strong performer as well as the stock indices in a bull move. To the contrary Gold has had a sharp selloff only to rebound sharply. The same can be said of the grains which caught some traders on the wrong side. Some shorter term traders however have benefited from this volatility while some longer term traders have been negatively impacted. The idea with managed futures is profits can be had on the long side as well as the short side. Depending on a manager’s time frame different results can occur.
Believe it or not, you only need several good trades over the year to produce positive performance. It is these outliers that no one expects. No one ever rings a bell when trends or favorable periods begin. The key is to be “Available”. I have been investing in CTAs since 1994 as well as became one in 2011. Periods in which we have encountered over the last two years are not unique. As stated above, there are always losses and long durations of drawdowns. Possibly this environment can continue for longer than we would like. Then again, possibly with every contraction there is an expansion. Wouldn’t it be nice to buy a unique CTA who has been around for various cycles on sale?
Don’t we all love to buy low and sell high?

Cover of Business Week in the late 1970s before a major Bull Market
deathofequities

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING COMMODITY FUTURES, OPTIONS, AND FOREIGN EXCHANGE (“FOREX”) IS SUBSTANTIAL.

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