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The Game Has Changed

The Compound and Friends

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Using Trend Following to Make Money and Control Your Risk

If you want to make money consistently, keep your blood pressure down, control your risk, trend following is important. When we looked at individual names back to 1957 and used a very simple technique, the 50 day moving average versus the 200 day moving average. In an uptrend, stocks on a annualized basis produce about 104 basis points of alpha. But when the 50 days below the 200 day, it's actually negative 75 basis points. So as a very simplistic measure, you can just say, I'm only going to own stocks and up trends.

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