How to Make $80 Million in a Brutal Bear Market
By Dr. Steve Sjuggerud
Saturday, April 11, 2009
Who made money in the markets last year?
Bill Dunn did... Bill's biggest fund was up 94% last year – and that wasn't even his best performer.
My friend Michael Covel told me about Dunn's performance over the weekend in San Diego. "When the markets crashed in October of last year," Michael explained, "guys that do what Dunn does made a fortune."
It wasn't just last year... Starting in 1974, Dunn's longest-running fund has returned over 19% a year. "Dunn has beaten Warren Buffett over the last 22 years... but nobody cares," Michael told me.
What did Dunn do to beat the market in 2008? And what did he do that beat Buffett over a 22-year period?
Dunn is a "trend follower." That's it.
Trend followers literally follow the trends... They try to catch the middle 80% of a move up or down. They don't care which way the market is going. They're just trying to hop on for the ride.
To keep their options open, trend followers are willing to trade in anything... According to Alpha Magazine, which tracks the hedge-fund industry, Dunn went long cattle, corn, oil, and wheat in the first half of 2008. In the second half, he shorted interest rates, stocks, and select currencies.
Alpha Magazine says Dunn made $80 million last year... putting him among the top fund managers last year.
But Dunn wasn't the best. Bruce Kovner is also a trend follower... In the horrible fourth quarter of 2008, Bruce netted an 8% return for his customers. Since he manages billions, and charges a hefty performance fee, he made hundreds of millions for himself in 2008. And like Dunn, he has a long track record of ridiculous performance... all from following the trends.
My friend Michael Covel wrote a couple books on the strategies used by guys like Dunn and Kovner, called Trend Following and The Complete TurtleTrader. These are the most readable books out there about successful trend traders...
When you read them, you'll realize what these guys are doing is completely different than what your broker is doing. Some of these guys can deliver better-than-market returns with less-than-market risks – and no correlation to stocks in general.
That's really the Holy Grail for an investment portfolio: It diversifies you and helps smooth out your portfolio's returns.
I suggest you pick up Michael's books and get acquainted with the successful people and methods he covers.
If you're skeptical, just think about Bill Dunn, who managed to grow a nine-figure portfolio by 94% last year... and who's managed to beat Buffett for the last 22 years, simply by following the trend
Good investing,
Steve
P.S. You can find the latest updated versions of Michael's books – Trend Following and The Complete TurtleTrader – on Amazon. |
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27%
Gain in the S&P 500 since March 9... the biggest 23-day gain in since 1933. |
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