Golden Point: Trend following gamer
Golden Point is definitely a long-term trend follower, but its performance managed to lose less in poor periods for that method (−5.3% in 2013) and gain more in strong periods (more than 100% in 2014) indicating they are adding value. Graham says, “We risk small losses on each trade for the potential of large gains. The ratio of winning trades is not important; the size of winning trades is.”
He also doesn’t modify the trading model, even when the returns weren’t what he wanted them to be. “The years 2012 and 2013 were a time when most markets were largely unchanged from the beginning to the end of the those years. Markets we track were moving but not moving with any clear direction,” he says.
“In 2014 we saw several sectors pick a direction and stay moving in that direction,” he adds.
“Early in 2014 we caught a long meats trend, mid year it was short grains, then toward the end of the year we saw the U.S. dollar rally against other foreign currencies, and energy markets saw a pronounced downtrend.”
He says that with such a diverse portfolio the fund is able to generate returns regardless of the overall general stock and bond market direction because it is uncorrelated to stocks and bonds.
He stresses that trend following is the way to go. “We do not call tops or bottoms, we just ride trends. Golden Point Capital’s trading strategy requires that we keep losses small, and let our winners run, and to do so we use stops on each and every position entered.”
He adds that as an absolute return fund, the focus is on risk management and discipline. “You have to have confidence and stick to the plan,” he says. “We cannot predict a top or a bottom, but we can profit on the trend.”
It has been a tough go for trend followers since the breakout year of 2008, but the strategy has shown over the long haul to produce returns. Golden Point proves that, when done well, those returns can be substantial.