Trend Following, 5th Edition

28 The Great Hypocrisy

Josh Hawes and Paul King

Hawking Alpha LLC

As it’s told, Albert Einstein had three rules that guided his work: One, out of clutter find simplicity; two, from discord, find harmony; and three, in the middle of difficulty lies opportunity. For a while I have become more and more frustrated with the financial industry, and in this paper I hope to provide a few points of clarity amidst the mess. While the street has learned how to sell “simple,” sadly simple in its profitable form is not always easy.

Many investors have been complaining loudly about the performance of their funds and the huge capital gains taxes that are tacked on by the IRS. Investors from the small retail client to the ultra-high-net-worth investor would like more transparency in their funds so they could find out what specific stocks that they are invested in. Most investors are feeling like they have lost control over the decision-making process regarding their investments at every level. I truly believe that there are better wealth-building opportunities that an investor can adopt to protect their assets and financial well-being.

In my opinion, the financial investment community, from mutual funds to hedge funds, has become bloated and lethargic. The majority of investors have been slowly losing their wealth for many years in mutual funds as well as hedge funds after 2008; fees and excessive costs are taking a toll in their pursuit to “beat the market.” During the bull market of the ...