Thursday, 23 April 2015

Our Results Over The Last 20 years

Trendinvestor Capital Management Ltd has now been trading for over 20 years, over this 20 year period we have averaged 51.39% per year, which means that $50,000 invested with us 20 years ago would have grown to just over $200 million in this 20 year period.

To us, this clearly shows the wonders of compound interest over a considerable period of time.

We feel it is impossible to try and trade every twist and turn of the market. We only trade the S&P 500 therefore we have the natural diversification of 500 companies, we try and identify the dominant primary trend, we then use sensible margin and trade in the direction of the dominant primary trend.

It takes time to grow an account, a multi decade time frame is necessary. Over the short term the account will be quite volatile, however we agree with Warren Buffett, Volatility is not risk it is simply a natural phenomenon of all markets. Margin used if any, must be commensurate with underlying volatility expectations.

Far too many money managers try and mitigate volatility, by trying to time markets, and therefore trading in and out of the various markets, they are rarely successful, which means that the vast majority of them lag the actual S&P 500 index.

We believe that apart from identifying the dominant primary trend, it is nearly impossible to time the markets, and we make no attempt to do so.

To average 51.39% per year over a full 20 year time frame, with only 1 losing year, it is necessary to identify the dominant in force primary trend, trade in the direction of this primary trend, over a considerable period of time, using limited margin, and let the wonders of compound interest grow the account. Identifying the dominant primary trend is not easy, and having the discipline to stick with the trade is also not easy.

Confusing volatility with risk, and trying to mitigate this risk, by timing the markets, can only lead to a sub par performance. Which is why the vast majority of actively managed funds, perform so poorly.

We prefer naturally diversified, directional long term trades, that simply ride through the underlying volatility or market noise, in the direction of the dominant primary trend. We really adhere to the old saying "The trend is your friend".

It is rarely an easy ride, but it is the only way to produce stella results. We would regard $50,000 to over $200 million in 20 years to be a stella result, and proof positive that our system and method of trading works. 

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