Description of Core Long-Term Trading Systems
Truly Core Trading Systems:
- Do you have a retirement account with limited allocation choices and restrictions on how often you can switch funds?
- Do you consider yourself an investor rather than a trader but believe you could manage your money more actively to improve returns?
- Do you want a portion of your equity generating consistent returns on an intermediate and long-term basis?
- Do you want to diversify your returns across time horizons and need some longer-term systems?
- Do you have a demanding full-time job but want better returns than your money manager or advisor has provided?
If you answered yes to one or more of these questions, then the eLearning course, Core Long-Term Trading Systems: Market Outperformance and Absolute Returns, is probably a good fit for your needs.
Over the last decade, Dr. Ken Long has taught Van Tharp Institute workshops about trading systems with intermediate to long-term holding periods. Over those years, his trading systems have improved dramatically. In the last few years, he has designed what he considers his best intermediate trading system, and interestingly enough, it has a very simple set of rules.
As a continuous learner himself, Ken reads constantly and has focused some of that time over the years on intermediate/long-term system development – from both a traditional orientation and from some more unconventional sources.
By combining a lot of various ideas he has gathered from academic research, from analysts, from his personal investing experience, and from his Tortoise Mastermind group of traders, he has created a group of trading systems that enables someone to outperform the market on a consistent and long-term basis – all with a minor amount of work. “Minor” amount of work, in this case, means an hour per month – or less.
Ken’s systems require adjustments to positions as often as once a month or as infrequently as once a year.
For each system he presents, Ken provides the logic, academic research on the strategy, the long-term results, and his personal experience trading the system.
What will you learn in Core Long-Term Trading Systems?
The eLearning course has 15 video lectures, each about 30 minutes long and the total amount of video is about 7 hours.
Ken begins the course by talking about one of his passions — adult learning. Why would he start with that instead of trading? First of all, he’s a professional educator, and the area is a personal passion for him. In addition, he believes even a basic understanding of the subject can help you to absorb the lessons of the course more effectively.
Based on some well-documented research by one of the top adult learning theorists in the world, Ken provides a method to help you integrate what you learn in the course. He goes into just enough of the theory to help you understand why a process of writing down certain observations and then thinking about them can help you learn more effectively.
Next, he provides a little background on how he looks at the markets and how that view of the market has to mesh with who you are as a person and how your systems work. Also, being able to think about the market in multiple timeframes helps his overall trading and helps him have a better understanding of what the market is doing.
Further, he defines what the market is doing in a certain way that allows him to classify the market type, much like Dr. Tharp suggests. Ken’s market type classification, however, is unique from Dr. Tharp’s and can provide students an interesting contrast.
After providing that backdrop for the market, Ken then talks about how systems that require adjustments to its positions just once a year can outperform the market over time. To prove his point about the effectiveness of once a year position adjustments, he challenges the students in the workshop to divide a pool of equity into several asset classes and see how their allocation compares with the market performance overall.
You can participate in the exercise and compare your allocation to the various team’s allocations to see what kind of results yours would have generated. You may be surprised, as the teams were, by the results. You will listen as Ken asks the teams to comment on the thinking behind their allocations and several team leaders provide their logic.
Through Core Long-Term Trading Systems: Market Outperformance and Absolute Returns, you’ll learn about Harry Browne’s so-called “Permanent Portfolio” as Ken analyzes the concepts behind that simple idea and its long-term performance. Mr. Browne’s approach probably one adjustment per year and occasionally two but Ken goes on to present several options for improving the performance statistics for those interested in managing their equity a little more actively – with the anticipation of better returns.
Interestingly, some of the strategies for improving the Permanent Portfolio performance also show up in some academic research as well as in a number of books by some well-known money managers. You’ll learn the similarities and differences between about a half dozen approaches and how they have performed over time. Some of these methods require management at the annual interval as well while others adjust positions on a quarterly basis and the rest on a monthly basis. What’s your preference and capacity for managing your funds? You can pick any of the methods he presents and outperforms the market on a regular basis.
You’ll get to learn about Ken’s personal research on a system that integrates some of the best methods from the ones presented in the academic papers and used by a number of well-known money managers. However, Ken’s system has some unique advantages. Rather than screening thousands of stocks, he watches about 15-25 index-oriented ETFs which can be managed like stocks.
Because of the breadth of ETF products, he is able to effectively take positions in global offerings rather than being confined to the US. Also, the ETFs price behavior allows him to participate in moves when they are rising but allows him to stay in cash when they are falling or even just facing conditions less favorable to rising.
He looks back over two timeframes and blends those two for a ranking. Fast recent risers may fizz out, but those with some movement over the longer timeframe help confirm they are in a longer-term trend. The ranking method is quite easy to calculate and only needs to be done once a month or once a quarter. With a pencil, paper, and a calculator, it would take less than an hour for someone to look up prices and rank each of them.
Ken spends the last major portion of the course on this system as it has the best performance for a longer-term system that he’s been able to find. While the system itself is simple, he makes sure everyone has a grounding in the thinking behind it and how he has adapted various ideas to craft the rules. He has traded the system and manages his own money with it, so he’s able to provide a personal perspective on running it. He also covers some of the testings that some other traders have done to verify its performance.
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