ETF Trading with Larry Connors: Attitude Shift in Markets Sends Macro Managers Scrambling
The market is overbought in a healthy way, as much of the doom and gloom from the past two months has been replaced with an attitude shift. The macro funds are getting whipsawed here and they’ll exaggerate the moves to each side as events continue to unfold. The bottom line is this is still a longer-term uptrend in the U.S. as defined by our 200-day moving average and the Battle Plan Model Portfolio will continue to trade the U.S. indices on the long side until price tells us to do something differently. It remains the best way to trade: quantitatively and systematically.
Weekend Reading: Here is an article from the most recent issue of New Yorker magazine. I love the title (“Mastering The Machine”) and the article gives an inside look at Bridgewater, the world’s largest hedge fund.
Read beyond the somewhat sarcastic tone and get to the heart of this. Ray Dalio, the founder, is doing analysis that’s no different than most macro-hedge funds. So why is his performance so much greater? It’s because he “thinks differently”. His approach to markets is not new. What is different is his approach to his people (whether or not it’s a healthy approach is a different story).
The main point is that Dalio has created an approach that is different than everyone else’s. And by forcing people to look at themselves differently, he has created a firm that outshines its peers in the most competitive industry in the world.
Do I agree with Dalio’s management style? Not really. Do I agree that his management approach is at the heart of creating the world’s largest hedge fund. Yes, I do. It’s different. And doing things differently from the masses is the key to beating the markets. BridgeWater is an example of this.
Enjoy the article (https://www.newyorker.com/reporting/2011/07/25/110725fa_fact_cassidy).
Also, you can now follow me on Twitter at https://twitter.com/#!/LarryConnors1. Click here to visit my Twitter page.
Have a great weekend!