Trend Following the Stock Market like a Hedge Fund Manager
You have the freedom to follow the trends of your choice. Others don't.
Managers of mutual funds cannot apply trend following the stock market in their daily job. Hedge fund managers can. And you as well can use trend following the stock market. In this way you grow your savings faster than most mutual funds can do.
The manager of a Mutual fund is paid to invest the money that the buyers of the fund have paid for it. These managers have to invest. They do not have the choice to step out of the market. Furthermore, they also have to invest in a particular type of asset; for example companies in a certain sector, companies of a particular size or companies in a certain region or country.
When the stock market is in the beginning of a long-term bear market, mutual fund managers will try to let their fund go down as little as possible, knowing that all stocks are going down. Hedge fund managers and you have much more flexibility and options.
You do not have to be invested in a certain type of assets or region like the fund manager. You can apply trend following to any stock market index in the world.
Let the Trends Guide You
If, for example, stocks in the US are in the beginning of a long-term down trend, you can sell your US index funds and stay in cash. You keep your money safe and you can earn an interest on your savings as well.
Or you buy something else. Maybe Chinese stocks are at the same time in a long-term bull market and Chinese index funds are a good investment option. Who knows? You do, when you keep track of the long-term trends in various markets.
Trend Following Indicators
For trend following the stock market, you need a set of indicators for the long-term trend.
These indicators shall be:
- Simple to understand
- Regularly updated (monthly)
- Available for a number of different stock markets
These indicators will help you to start trend following the stock market.