BO15: Why Trend Following is Not a Black Box

Top Traders Unplugged

Niels Kaastrup-Larsen

Business, Business News, Investing, News

4.8 • 670 Ratings

🗓️ 4 April 2019

⏱️ 14 minutes

🔗️ Recording | iTunes | RSS

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Summary

Often, a Trend following strategy is described as being a ‘Black Box’, as if something bad was going on. So it was refreshing to hear Scott Foster talk about Trend Following as being in fact, a ‘White Box’, or a ‘Transparent Box’, in comparison to other algorithmic strategies, which are often embraced by investors to a much larger degree… so I’m delighted to share this blog post with you, from a conversation I had with Scott Foster, where he also touched on the essential question: Why are there trends, and why ought there be trends in the future?

Listen to the full episode here. Part 1 & Part 2.

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Transcript

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0:00.0	Trend following as a strategy is often referred to as a black box, like if there was something
0:06.6	bad going on inside. And it was refreshing to hear Scott Foster talk about why trend following
0:12.3	is in fact a white box or a transparent box compared to many other algorithmic strategies,
0:18.7	which are often embraced by investors to a much larger degree.
0:22.7	So I'm delighted to share these insights from a conversation I had with Scott,
0:26.7	where he also touches on the essential question,
0:30.4	why are there trends and why ought there be trends in the future?
0:35.3	So sit back and relax and enjoy this unique short clip with observations from Scott.
0:41.9	And if you would like to listen to the full conversation, just go to top traders onploc.com
0:47.0	forward slash 27 and forward slash 28.
0:56.0	No, but that was a very important explanation and it ties into so many other things.
1:02.0	And I want to go further than this.
1:04.7	But I want to actually ask you a question that actually doesn't relate to short-term trading.
1:10.9	Sure.
1:11.5	But it's my kind of trying to understand what it is you're saying
1:17.0	and putting into a slightly different perspective.
1:19.5	And that's related to more generally speaking about trend following.
1:24.2	Because obviously, as we know, you mentioned 1994,
1:27.3	and I remember seeing, you know,
1:28.8	all the, all the great guys sitting lined up at a conference in Chicago and talking, you know,
1:34.9	about a very difficult period. But they were convinced that this was just, you know, a difficult
1:39.7	period and things would come back. But let me ask you this.
	...

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