Trend Following, 5th Edition

9 Holy Grails

Jesse Livermore described Wall Street as a giant whorehouse, where brokers were pimps and stocks whores, and where customers queued to throw their money away.

—The Economist¹

Tell the truth and then run.

—Proverb

What is dangerous is for Americans not to be in the stock market. We’re going to reach the point where stocks are correctly priced and we think that’s 36,000
 . . . It’s not just a bubble. Far from it. The stock market is undervalued.

James Glassman 
Dow 36,000²

Another psychological aspect that drives me to use timing techniques on my portfolio is understanding myself well enough to know that I could never sit in a buy and hold strategy for two years during 1973 and 1974, watch my portfolio go down 48 percent and do nothing, hoping it would come back someday.

Tom Basso

Al Capone famously said: “It’s a racket. Those stock market guys are crooked.”

That’s dead on.

The crooked abound. Or, to be kind, I will call them ignorant. Or, to be nice, I will call them wrong. I often wonder if my great-great-uncle Frank Mast (Balys Mastauskas; my grandfather’s uncle) passed a little of that good-fight-attitude genetic material along. (Assistant State Attorney Mast is captured on the next page, face to face with famed crime boss 
Al Capone at a Chicago courthouse.)

The rackets found on Wall Street always overflow with Holy Grails—those predictions, secret formulas, and divine interpretations that promise otherworldly knowledge and riches. They are most often delivered ...