The Pros and Cons of Trend Following

By Jack Forehand and Justin Carbonneau

To say that the track record of market timers in general is dismal would be an understatement. There are so many factors that impact market returns that getting them all right is next to impossible. And even if you do, figuring out what is and is not already priced in can be an equally fruitless exercise. Despite the fact that forecasters have consistently failed to predict market turns, there is an option that can help to limit losses in major downturns and can be beneficial for some investors. Trend following has a long-term track record of both limiting major losses and reducing volatility. But like anything in investing, it comes with some trade offs. In this episode, we discuss why market timing is so difficult and take a detailed look at the pros and cons of trend following.  ABOUT THE PODCAST Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES https://www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA https://www.validea.com FOLLOW OUR BLOG http://blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL https://www.valideacapital.com FOLLOW JACK Twitter: https://twitter.com/practicalquant LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter: https://twitter.com/jjcarbonneau LinkedIn: https://www.linkedin.com/in/jcarbonneau

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