Trend Following is Boring

trend following

trend followingIt seemed like there was an awful lot of excitement going on in the markets this week, but I didn’t really bother with any of it. The DTAYS Quantitative Growth Fund has been exiting a few positions each week for about a month now, so it wasn’t incredibly exposed to the big losses that many stocks took this week.

Whether this is a significant correction or not, the past few weeks have been an interesting learning experience for me. I am finally beginning to understand what many trend followers mean when they describe their trading as “boring.” Thing have been incredibly boring lately for the QG Fund.

There were a bunch of exit signals, which left the QG Fund sitting mostly in cash. That means that while things might have been boring, they weren’t as bad as most people experienced.

Stocks Exiting the Fund

The exits started last weekend with orders to sell UA and LPLA. Then Monday’s action signaled an exit in KORS and Thursday’s action signaled an exit in GMED. We closed out the week with an exit signal in GRFS which will be executed on Monday morning.

Overall Performance

The QG Fund didn’t completely escape the market’s wrath this week. It is currently showing a balance of $92,987.38, which means it is down about 7% on the year. While losing money is never the goal, 7% is still a long way from the maximum drawdown that was produced in the fund’s backtesting data, so I am not concerned.

Here is what the holdings of the QG Fund look like this weekend:



Stocks Entering the Fund

As you can see below, the SPY has fallen below its 100-day SMA. That means that the trend filter will keep the QG Fund from making any new entries this weekend.


Because I was curious whether any stocks would pass the screens, I took the time to run the entry screen anyways. As you might have expected, there wasn’t a single stock in this weekend’s IBD 50 that closed at a new 20-week high. Even if we didn’t have a trend filter, we still wouldn’t have any stocks to buy this weekend.

With no new stocks to buy and not many stocks left to exit, the QG Fund is going to continue to be boring in the near future. Lucky for us, the goal of the QG Fund was never excitement. The goal is to make and protect money, and we just happen to be going into protection mode.