With December 2015 behind us, we have now ended one of the most challenging investing years. The US stock market ended flat for the year. All other assets like precious metals, bonds, commodities and emerging markets gave negative returns. For the past 20 years, including the 2008 subprime crisis year, we always had at least one asset group going up considerably (10% or more).
Here is an interesting article about 2015: http://www.bloomberg.com/news/articles/2015-12-28/the-year-nothing-worked-stocks-bonds-cash-go-nowhere-in-2015
For trend following strategies this meant trying to intelligently switch from a ‘worse’ to a ‘less worse’ asset class. Except for the U.S. dollar index, there was no well performing asset for the strategies to ‘hop’ on. Another problem for trend followers was that the 2015 trends were not due to market cycles or economic strength. They were dictated by FED and ECB decisions. These decisions could turn around a market 180° within minutes; hence the heightened volatility. Although these environments are never enjoyable for anyone (think turbulence in a plane), eventually a longer term trend always begins. We will continue to be diversified and nimble moving forward.