Trend Following, 5th Edition

Foreword

True story: Not long after the financial crisis of 2008–09, I was dragged to a posh Long Island country club for some terribly boring social event (those tony golf places are not my idea of fun). On my way out the door, I was introduced to someone—let’s just call him Trader Guy—who is described to me sotto voce as the wealthiest person in the club. The thinking apparently was “Hey, two finance guys! They should meet.”

We exchange small talk. Trader Guy’s diffidence makes it clear he has no interest in chatting. We are both heading out to the valet—these places won’t let you park your own car—and a rather memorable few moments ensued.

Trader Guy knows who I am. My book on the financial crisis had come out the prior year; I had already been a regular in the financial media for a while. He knows my name and, truth be told, he could not possibly have cared less. If only to be polite to the host who introduced us, I ask what sort of trading he does. Trader Guy actually sighs deeply—then says to me, “I trade everything, I am a trend follower, you wouldn’t understand.”

Oh, really?

“What a coincidence” I say. “A friend of mine wrote a book on trend following.”

By now, I have exhausted what little patience Trader Guy had with me to begin with. I actually heard his eyes roll.

“Listen, dude, it’s really cute you have a friend who wrote a book on this, but there is only one book on the topic, every other one is crap. Your pal wasted trees writing his. The definitive book on the ...