As regular readers will know, I am scornful of market pundits who seek to forecast major turning points. This week, however, I am doing exactly that myself. After four years and three months, I am declaring with total confidence that my bull run as the Trader will reach its final peak today. I am leaving Investors Chronicle to take up a job in private banking. I thought I would therefore use this week's piece to look back on some of the main lessons I have learnt over the last four years and also look to the column's future.
My first column appeared on the inauspicious date of 1 April 2010. Besides the daunting task of trying to live up to the standard set by my predecessor, the great Marc Rivalland, I was soon faced with the violent 'flash crash' of May 2010, where the S&P 500 fell by 8.7 per cent in a single day and ended up suffering a near-bear market. I was then taken back by the sheer strength with which equities bounced back from late August, when the Federal Reserve signalled its plans to print yet more money.
Could I have handled those early gyrations better? Undoubtedly so. Had I simply respected the trend of the market and even more so the actions of the Federal Reserve, I could have saved myself from painful losses and a great deal of egg on my face. But it was a terrific lesson. In November 2010, I embraced the bull market wholeheartedly, a stance that I've held most of the time since. At the same time, I launched the Trader's Outlook email, to provide a more regular view on where I saw the markets going.
My switch to bullishness
My approach to technical analysis (TA) has also evolved a great deal since April 2010. I have come to believe that much of what passes for TA is nothing more than faith-based nonsense. It would be laughable, but for the real money that it helps to lose. I include in this several of the dark arts in which I myself have dabbled in the past, including Fibonacci, the Elliott Wave Principle, and much of Gann Theory. Discarding these techniques and focusing upon the price trend and the strength thereof has served me well. Simple is almost always better in TA.
Great time for trend-following
I have also been very lucky that so many of you have taken the time to write in to me with your own strategies, thoughts and queries. Our correspondence has made writing the column very much easier and also more enjoyable. I've also been privileged to exchange ideas with some of the leading technicians of our age. I should give special mention to Jack Schannep of thedowtheory.com, who has inspired me greatly and whose work is clear proof that plain, objective TA can lead to market-beating returns not just over a year or two, but over decades.
Not over yet
I am delighted to announce that Nicole Elliott will be replacing me as the Trader. Nicole is one of the most familiar faces in UK technical analysis, thanks to her many lively appearances on Bloomberg and CNBC. Nicole formerly headed technical coverage at Mizuho Corporate Bank, where her research was used by the company's own derivatives traders. Inspired by her experiences in this institution, she published the first book in English on Ichimoku cloud charting in 2007. Her recommendations have already appeared many times in the trading section of Investors Chronicle. I leave you in very capable hands, therefore.