Baron von Lotsov

Most of the money invested in the markets is done professionally. That means they use computers to analyse trends using statistics and that sort of thing. Still though, money does not come out of thin air so for every winner there will be a looser. Shorting stocks is generally less likely to make you money since the odds are actually against you. This is because in the stock market the average long term trend is up and science and technology gives it about 2% per year in the upwards direction. When you short a stock you are betting that it will go down, i.e. you are betting against the overall trend.

Naturally you can win if you have a monopoly on information, but I don't since I don't work in the City. There is also another trap and that is when institutions can control markets. A free market is only free when there are lots of small players, but this is not the case as financial institutions work as a cartel. This is why the markets have large fluctuations without any material reason for many of these fluctuations. One of their scams is to get as many small and naive investors to buy penny shares. These are the most dangerous since the capitalisation is relatively very small and so cartel practices are made much easier.

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"A government big enough to supply you with everything you need, is a government big enough to take away everything that you have..."

Ea of Dune

No there are many methods for investing in the market. A lot of methods do NOT analyse trends. A lot of investors actually base their investments upon analysing politics and company reports. Trend following is one of the few methods that analysis past price data and uses this to produce a mechanised system for investing and getting out of the market.
A Trend follower will almost never enter at the bottom of the market and the same for exiting the market. It is possible using this mechanised system to do better then those who invest on the S&P for example. I've got comparisons right next to me between small Trend Following funds run by a handful of people out performing the big boys.
A lot of the big boys think they can predict the future, and they can't and they lose because of this.


That is indeed correct, but because you a winner does not mean you had some kind of inside knowledge. Many of the Trend Followers invest in markets they know nothing about. They don't need this knowledge as they are analysing price and not the politics of the stock.

Sorry but you are wrong here. You may have less oppotunities to go short on a stock, but those who did on dot.com bubble made a fortune, as did those who bet against Enron.
Words like generally have no quantifiable value. The stock market may rise 2% a year and you may get lucky using a buy and hold method, although your returns will be far less then those using a Trend following system.

I have a chart here in front of me of the Nasdaq during a bear trend between April 00 and Jan 03. Going short on the Nasdaq in June 2000 and pulling out in November 02 would have yielded massive returns using a Trend based system.
I wonder how many buy and holders where still going long and lost a fortune?

You can win without working in the City. Infact not working in the City is probably a good thing. Many of the City spivs know very little and dress it up in discussion about politics and so and so forth. Look at waht happened with Enron. Many a City spiv lost a fortune when if they had looked at the balance sheet data would have noticed Enron was a bad stock to be in.
Trend followers would have used a mechanised system which would have spotted this and got their clients out before they lost all their cash.

I certainly agree with you that some financial groups do this and use their sheer size to tilt markets. In my opinion this is wrong when they cross the line into illegality, such as with Enron (a number of banks where involved in some very shady business with Enron and are now being sued for billions).


Not always there are a plethora of reasons for the change in price, and as I said we can't predict the market. If you are one of those influencing price then yes you have advanced knowledge of this (if it works) however if you know what you are doing there is no reason why you need to be caught out by this. If it's going against you then get out and let it run it's course and move your funds elsewhere.


My problem is that ultimatly people invest in the market yet want somebody to blame when things go wrong. In the case of pension funds the "people who invest" is the government and when they screw up they always try and pin the blame elsewhere. The public is their customer and government investment schemes are answerable to them. When the gov blames the "market" or "speculators" for losing money on the market what they are doing is trying to pin the blame for not having an exit strat onto sombody else.

Ea of dune

Baron von Lotsov

Yes i take your point about the kind of group psychology that occurs these days. Intelligence it always going to give you the upper hand in this game and if you are better than the rest then you will make money. If you know something that other people don't know/or believe then you might be onto a winner.

According to some insider at the Bilderburg conference oil was decided to be set at $200/barrel. It's not at that point yet but this information came out when it was much lower than it is today since that was rumoured approx one year ago. I could have therefore bet on oil going up and I could have geared up my investment so a small shift in price gave me a large return. The trouble though is the graph is often a spiky one and therefore the possibility of getting a margin call and loosing it all. Likewise knowing what I knew at the time I could have bet on Google and made a fortune but again the age old advice is still relevant, you are much better investing in something you know a lot about and there is always the difference between thinking something will happen and being sure enough to put money on it.

I have talked to some who do this and their experiences vary. I met one person who made millions out of derivatives but he ended up in prison for something to do with tax. I had a friend with a PhD in maths who gave it a go but he neither made much or lost much and another person I know who had mixed fortunes. He lost about £10 000 but at one time he had these QXL shares which he sold to take profit on them. If he had kept them he would be a millionaire by now, so he is rather kicking himself!

__________________
"A government big enough to supply you with everything you need, is a government big enough to take away everything that you have..."

Ea of Dune

Baron> If you are interested in getting into the market I would recommend the Trend method and if possible taking the time to train yourself and do the courses and invest yourself. That way you only have yourself to blame if something goes down, and also you have a lot more control over your investments.

I've been told the best Trend followers are those of normal intelligence from a regular background. If you are a grade A student from Oxford you are used to always being right, and unfortunatly in Trend following you have have to be prepared for being wrong 60% of the time .

Ea of dune