Short term vs long term systems

Dear friends..

I’ve came to a conclusion from several short term and long term systems that I know up to now.

Short term systems usually produce these outcomes:

1. Many small profits, usually consecutively. They may come as frequent as 70-80%.
2. A big losing trade will come occasionally, causing drawdowns. This is seldom, but alwas come and never can be predicted. Its just the nature of the system. This may as frequent as 20-30%.
3. Equity curve profile looks like this red lines in the picture at the bottom of this post.

Meanwhile, long term trendfollowing systems have the opposite profile:

1. Small losing trades usually happen regularly and consecutively. They are 60-70% of the total statistics. These are when cuting small losses.
2. Big profit comes when the system ride trends. They are seldom. And hardly are consecutively. We can not predict when it’ll come, but it is promised by the nature of the market.
   
3. The equity curve profile looks like the blue lines in the picture below.

Short term systems includes the bolltrade, the multilot systems, the short term breakout systems, etc.

Long term systems includes the turtles, the aberration, and several others.

They all pretty consistent with those profile I mentioned.
Any other system developers here observe the same situation ?

Rgrds,

Darma

(*)

Goldman Sachs Research: Fundamentally Bad

Following my previous post titled inside Goldman Sachs, here is an interesting article taken from covel’s site. Note the interesting part at the end of the article.

Goldman Sachs Research: Fundamentally Bad

Here’s the bad news: Not all TurtleTrader readers receive Goldman Sach’s daily research. Now here’s the good news: The ones who don’t aren’t missing anything. TurtleTrader is not a client of Goldman’s nor do we endorse them in any way. We just happen to be on the mailing list. Okay. So now we’ve dispensed with the disclaimers.

Goldman daily research is extremely detailed. Projections abound. Discounted cash flow valuations, balance sheets and income statements overwhelm. It’s all there — the market performers, trading buy recommended lists, etc. as well as Goldman analysis. Tons of information right? Yes, indeed, but mostly useless.

For example, let’s take a look at PlanetRX, the online drugstore. Goldman has been promoting this baby as a great buy since shares sunk from the mid-teens to its most recent value of $2 a share. All of Goldman’s promotional analysis is based on its research minutia involving fundamental factors. None of the analysis is based on what the stock is actually doing, which is tanking. If the analysis was based on what the shares of PlanetRX were actually doing, any successful trader would know you would sell, not buy.

Why do large, respected brokerages go through the time and effort to produce such useless drivel by large salaried fat cat analysts? When you are a broker who earns monster fees and big commissions off pushing stocks and underwriting IPOs, you better make the package pretty don’t you think? How does this packaged information help someone who actually trades or invests? It doesn’t.

We would like to know how much of Goldman Sachs’ proprietary trading capital is actually invested as Goldman’s research suggests. It would be difficult, even for a Goldman Sachs investor, since the research never gives the reader solid advice regarding price levels at which to buy or sell. If the truth be told, we believe that Goldman’s trading capital is well positioned with hedge funds and trading firms worldwide that, as you might guess, trade trend following models.